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Possible consequences of paying off a loan
I have a short credit history (exactly six months old). I have two open credit cards, and one small 6 month installment loan that i opened about 4 months ago. As of right now, my average age of history stand at approx. 5 months. The installment loan will be closing shortly, as my balance is nearly paid off.

Usually (as far as i understand..and i could be totally wrong with this analysis) closing (or paying off) an account would adversely affect you, by shortening the age of your credit history. In my case however, once this drops off, my average history would go up.

Now: 6 Month CC + 6 Month CC + 4 Month Loan = 18 months total / 3 Accounts = 5.3 month average.
After the loan is paid off: 6 Month CC + 6 Month = 12 months total / 2 Accounts = 6 month average.

Does paying of installment accounts affect the age of history as I've outlined above? If so, would opening another short-term installment loan initially hurt my score (due to balances inceasing), but have the same effect on my average age history?

Thanks for the help.

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When you took out the loan, you signed a contract agreeing to pay it off in six months, which is exactly what you should do.  Keep those credit cards paId in full monthly to develop a sound payment history.  And take the time to read the articles on this site so you can fully understand how credit works.  This is something that will be useful for the rest of your life.

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You have been receiving score increases as the balance of your installment loan balance as increased.  Your average age of accounts will adjust, although not by that much.  When the loan is paid off, you would loose in the category of "types of accounts".   If you "need" the initial influx of cash for a new installment loan, you might consider one of the cards that offers you 0% interest for 12-18 months.   It would be financially benefitial to you as you aren't paying the interest if you pay it off in the same period of time.  Yes, your Utilization may skyrocket for a short period, however, in a matter of months that will come back down and you saved money in the process.

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