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Will my credit score drop if I pay off the loan early?

I have taken out a mortgage 6 months ago. I have been making the loan payments every month. I have primarily taken out the loan to buy a house. The problem has started from another area. My family does not want to stay in this new house. The locality is very bad. My children are terribly scared. I am thinking to get out of this loan and house. Will it have an adverse effect on my credit score? by nyueng_386_876 from Philadelphia, Pennsylvania. May 18th 2012 Reply


William J Acres (William_Acres)
#73 ranked lender in Arizona - 8,726 contributions

If you're talking about selling your home and paying off the mortgage, then it should not have a negative impact on your credit, in fact it should improve your score. If you're talking about a short sale or just letting it go back to the bank, then that will have a major negative impact on your credit score and would prohibit you from getting another mortgage for several years. Most loan officers can run a "Scoring Model" and do scenarios to see what the potential impact/improvement would be to your credit score in certain scenarios. The best advice I can give you is to contact a LOCAL mortgage broker, not the local "Big" bank, and certainly not one of those 50 states internet lenders...By applying with your LOCAL Broker, you have an advantage because he's familiar with local customs and works with numerous lenders, seeking out the best loan terms for your particular scenario. Because he has lower overhead, he can offer you lower rates and lower fees than most of the larger lenders.. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. 480-287-5714 WilliamAcres.com

May 18th 2012
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Linda Wintersteen (Linda123)
#62 ranked lender in Arizona - 1,256 contributions

basically no, but you need to check on your security note, to see if their was any language regarding early payoffs, etc there should not be in this day and age, but it is wise to check...

May 18th 2012
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Robert Le (robert_le)
#620 ranked lender in California - 36 contributions

You credit escrow will not drop if you pay off the loan or sell the house early. You credit score will drop if you short sale or foreclosure. The credit score is a # to see how well you manage your financial life. You can pay credit card off early, but you need to use credit card and manage them. Recommend that you have at least 3 tradelines (3 credit card).

May 18th 2012
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Mark Simon (mark.simon)
#10 ranked lender in Delaware - 83 contributions

There are various options , however you want to handle this in a way that will not create credit issues as you pursue another home or rental. I work with homes in Philadelphia and the surrounding areas. Give me a call and we give you some direction today so you can move forward over the weekend. Mark 800-485-1387 Extension 107

May 18th 2012
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Gene Neal (eneal@athccorp.com)
#31 ranked lender in New York - 273 contributions

Just confirm you don't have a pre-payment penalty but you should be okay. The main thing with credit is keeping your Ratio to Credit limit or RTC within 30%. So if your limit is $10,000 your balance needs to around $2,500 to$3,000 range.

May 18th 2012
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Bert Carpenter (BertCarpenter)
#37 ranked lender in Arizona - 1,823 contributions

Probably. BUT unless you are doing other bad things like missing payments or letting an account go to collection, the impact on your score will be so small it's not worth worrying about. I would be really surprised if the hit to your score was more than a couple of points. Anytime you close an account , you lose an item that could be adding to your score. The bottom line though is if your family is afraid of where you are living, even if the hit was 10-20 points, (and it's not), you should make the move. ~ Bert Carpenter, The LoansA2z team of NOVA Home Loans ~ NMLS 40586 ~ www.LoansA2z.com 888-889-9950

May 18th 2012
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LAMIN YUMKELLA (lyumkella)
#53 ranked lender in Maryland - 3 contributions

No it SHOULDN'T affect your credit score if everything is settle with the lender. These are few things that might be harmful short selling (because the lender might take a loss), not paying remaining fees if any. Things to consider...how long it will take to find a buy for that neighborhood...but you can give them our contact information and we can pre-approve them to speedup the process (Lamin at Equity Mortgage Lending 1-800-949-0101x2413). If you can, try to ask your lender for a payoff estimate for the date + two months of when you hope to sell the property and you will know almost everything you need to be ready for including the minimum you can sell the property for. If you have more questions call us.

May 18th 2012
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