Credit guru warns sudden loan payoffs can damage your score

Micah Smith cautions that rushing to settle installment debts such as mortgages or car loans can backfire because closed accounts shrink credit mix and stop reporting positive payments, potentially lowering a FICO score. Instead, she advises consumers to manage revolving credit by maintaining utilization below 10%, preferably under 7%, and to align balance reductions with the card's statement closing date, not the payment due date.

Smith suggests requesting credit limit hikes, which may add a few points, and negotiating lower interest rates, noting that 84% of borrowers who asked succeeded in a June 2026 LendingTree survey. She emphasizes that quick score gains are useful but must be followed by habit-building and automated financial practices for lasting stability. The overall message is to allocate funds wisely, targeting the factors that most influence credit calculations.