Will I Maintain a Good Credit Score If I’m Debt Free Except the Mortgage?

Debt Free Except the Mortgage and Credit Score EffectsMost people I know are debt free except the mortgage, or they want to get there very fast.

The question then arises, will you be able to maintain a good credit score if all you are doing is paying on a mortgage?

If you are in this situation, the term that you need to familiarize yourself with is “credit mix”.

Credit mix is the different types of credit that you currently have. For instance, you could have revolving credit, like a credit card. You could also have installment credit like a car loan or mortgage. All else being equal, the more types of debt you have the better your credit mix and the better your score.

Given that, when you pay off everything but the mortgage you are reducing your credit mix, UNLESS you keep your credit card accounts open. Even though you’ve paid off your credit card, if you keep the account open, your available credit line will still be reflected on your credit report and in your score.

Of course, there is a possibility that if you aren’t using your credit card, the issuer could drop you or reduce your limit, reducing your available credit. At that time, you’d have more than credit mix to worry about, you’d have an available credit issue.

The good thing is that in the immediate your credit mix only makes up 10% of your credit score. So, even if you reduce your credit mix, a 10% knock against your credit score isn’t crushing.

Credit expert Jon Ulzheimer said this about credit mix in a Credit.com article, “it’s certainly not a priority to address, anyone who has hopes of maxing out their credit scores should pay attention.”

Want to see this in action? Five Cent Nickel has a post about what happened to his credit score when he paid off his mortgage. He took a 17 point hit.

Another obvious question to ask yourself (that many of you have already been thinking in your head) is “why do I need a good credit score?” Well, you may not.

If borrowing is in your future, either through a refinance or new real estate purchase (or other type of credit for that matter), then you probably want to consider maintaining a quality credit score.

Additionally, a lack of credit score, or poor credit score could hurt your chances of renting a house or apartment. Not every landlord uses credit scores/history, but some will. I do. But I know that lack of score would not automatically put someone out of the running for me. It’s bad history that I’m mostly concerned with.

But if this (getting more credit, renting, etc.) is not a big deal for you, then you could definitely stop caring. Many people who have reached financial freedom are proud about their lack of credit history and the fact that they don’t care. Here’s one of Adam Baker’s latest tweets:

I’m not quite to that point myself. I enjoy maintaining a responsible credit history and I like that it gives me more financial options. But I do plan on being there one day.

So the bottom line is this, if you maintain a decent credit mix (mortgage and a few “open” revolving account) and pay all your bills on time, you should not have a problem maintaining a good credit score. If you close the revolving accounts (i.e. credit cards) you will take a slight hit to your credit.

Overtime, as your credit history begins to fade away and all your report shows is a loan for a mortgage, your score could take additional hits. But by that time your goal of financial freedom may have been achieved and your need for a credit history could be a thing of the past.

What’s your take? If you are debt free except the mortgage, what are your credit score concerns, if any?

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About Philip Taylor, CPA

Philip Taylor, aka "PT", is a CPA, blogger, podcaster, husband, and father of three. PT is also the founder and CEO of the personal finance industry conference and trade show, FinCon. He created this website back in 2007 to share his advice on money, hold himself accountable (while paying off over $75k in debt), and to meet others passionate about moving toward financial independence. He uses Personal Capital to track his wealth. All the content on this blog is original and created or edited by PT.


  1. khaney1116 says

    People have to keep in mind that credit scores behave differently for various profile types.
    For example, the FICO score has 16 different model splits, with a unique algorithm for each split. Models are often split based upon thick vs thin, old vs new, derogatory vs current.  Two dimensions to the third power yields 16 model splits. 
    Paying off all debt may impact your score in very different ways depending upon which split applies to your score.  Each split considers different variables, and assigns different weights. 

  2. Great article PT! As you know, I recently embarked on the “no credit use, but the mortgage” journey. We’ve been debt free, but the house, for a while now.  However, we somehow manage to spend all that we make every month. So, cash only for us for a while – maybe permanently – to see if using cash alone can help me make some traction on other financial goals. I use True Credit to monitor my credit, and I can check my scores every 30 days with the 3 bureaus. I’ve started a spreadsheet and am going to track this for the foreseeable future – I’ll let you know what my scores do over time.

    • PT – Follow up to my score tracking – from July to August, my scores actually went up 5pts w/ TransUnion, 14pts w/ Experian, & 9pts with Equifax.  From August to September, there was no change +or- in my score.

      • PT – Follow up to my follow up.  So, we’ve been on the “no credit use, but the mortgage” journey since July 2012 now, and as promised, I have been tracking my scores using my credit monitoring service every 30 days.  I refinanced my mortgage last month, and was really concerned when I first embarked on this journey that I would have problems qualifying for a refi due to my inactivity on my credit cards (FYI – I haven’t closed the accounts, I just have not put anything on them).  Well, interestingly enough, my scores have maintained and I qualified for the best rate without any issue.  I did a follow up check this morning to see where my score were one month after the refi – my TransUnion and Equifax scores were basically unaffected – my Experian score took about a 7% hit.  I don’t know if this helps anyone, but it has been interesting to me.

        • Philip Taylor says

          Thanks so much for circling back with this, my friend. I’m pumped for your score and situation. I can’t wait till that day when we can look at each other and say we’ve dumped that mortgage debt too.

  3. retirebyforty says

    I pay off the credit card every month and don’t have any revolving debt. My credit is pretty good and I’m happy with that. 

  4. Mac Hildebrand says

    Having only a few credit cards open and putting minimum spending on them could help maintain a higher score with no risk. As long as there are no annual fees to the cards, it could be an easy option to have the credit mix on your side. As was already mentioned though, it shouldn’t be a priority to focus on building a small percentage of the credit score.

  5. We have no debt other than our mortgage, but given we are currently refinancing, our credit score is very important to us.  However, I do use a credit card regularly for points/discounts.  I just don’t ever pay interest or any fee to use a credit card.  I am also still more comfortable using a credit card for online transactions.  My husband and I have credit scores in the 820’s. 

  6. Money Life and More says

    I have other types of credit and don’t see any reason to close the accounts. I don’t have a problem with spending on them so I see no reason to close them. I’d rather have the option to get an awesome deal on some cheap credit and then put the money in a CD that pays more than the loan.

  7. candygirl7 says

    I take exception to the comment that “not every landlord uses your credit score/history”. I am a landlord and I always check a potential renter’s history and will decline any that don’t meet my criteria. It is imperative , and for your own financial well being, that you must check all potential applicants credit history. You will avoid a major headache down the road if you do your checking into a tenant’s credit history. I have declined many applicants based on the poor credit they maintain.

    • Philip Taylor says

      I did not say that someone shouldn’t check credit score/history. I just said that some landlord don’t. How could you possibly take exception to that unless you have some evidence proving that all landlords check credit? Your story is just an anecdote.

  8. krantcents says

    For more than 12 years, I had only a mortgage and no other debt.  My FICO score was consistently over 800. 

    • Philip Taylor says

      Thanks for the report. Can you share what might have been on your credit “history” during this time? I would have suspected at the 7 year mark your mortgage would be the only debt reported on your credit file? Was that the case?