With credit playing such a huge factor in your financial future, it’s extremely important that we look for ways to maximize our credit scores.A lot of things can affect your credit score (i.e. credit card payments, student loans, etc.) which is why it is important for you to stay on top of all the payments you need to make. Paying off a loan and eliminating debt, especially one that you’ve been steadily paying for an extended period of time, is good for both your financial well-being and your credit score.

Your mortgage is a line of credit. This means that by you maintaining your payments you are building good credit which will benefit you in future purchases. These payments that go on record toward your credit score so, even those with poor credit, by having this line of credit, it can contribute to building a better credit score. Keeping up with those payments shows that you are reliable and that you can make consistent payments. By having that on an official record that shows other companies (i.e. banks, car dealerships, real estate agents, and other private loan agencies) that you are a good candidate for future loans. Paying off a loan early will most likely not hurt your score, but leaving it open and managing it through the term of the loan shows that you can manage and maintain the account responsibly over a period of time — which is very good for your credit score.

Even with an unstable housing market in the past few years, having a mortgage is still considered “good debt” because it’s debt that’s tied to a physical asset — unlike credit card debt that’s not backed up by any asset. Lenders want to look at your credit report and see you have a variety of debts – mortgage being one of the best types on the list. If you have a good payment history, the more you use credit, the higher your rating will be.