Installment account

Installment loans start with a balance near the amount borrowed and pay down on a schedule. FICO looks at how much of the original amounts you still owe, as part of amounts owed, and at whether you've handled installment debt, as part of credit mix. Card utilization is one of the most heavily weighted parts of a score, which is why moving card debt to a personal loan can change scores while total debt stays the same.

Paying off a loan early saves interest but closes the account. If it was your only open loan, FICO stops seeing an active installment account, and Experian says the resulting dip is usually small and short-term. That's no reason to keep paying interest. A credit builder loan is an installment account designed for people with thin files.