Can I Pay My Self Loan Off Early?

Self Credit Builder accounts feature a 24-month repayment term*.[1] Yet there are circumstances where some customers may want to know, “can I pay off my Self loan early?”

Yes, Self does allow customers to pay off their loans early. But before you make that move, it’s important to understand how paying off your Self loan early could affect both your credit and your finances.

In this guide, we’ll explore how Self Credit Builder accounts work and some of the key benefits of using them as intended. You’ll also learn what happens if you pay off a Self loan ahead of schedule, along with the pros and cons to consider before you make this important financial decision.

How a Self Credit Builder Account works

A Self Credit Builder account is a special type of installment loan with the ability to help you build credit if you make regular, on-time payments. At the end of the loan, you’ll have access to money you borrowed (minus interest and fees), and you can use those funds to build your savings, pay down debt, or however you wish. Here’s a quick overview of how it works.

1. Application

You apply for a Self Credit Builder account and agree to a set loan term (typically 24 months*). Your monthly payment amount will vary depending on the type of credit-builder loan that fits your goals and budget.

Options include*:

• Small Builder: $25/month
• Medium Builder: $35/month
• Large Builder: $48/month
• X-Large Builder: $150/month

2. Self holds the funds

Instead of you receiving your loan proceeds upfront like a traditional loan, Self places the money you borrow in a Certificate of Deposit (CD) with one of its partner Banks. The funds remain in the CD during the entire repayment period or until the balance is paid in full.

3. Make payments

You make monthly payments to Self according to the terms of your loan agreement. The payments include principal, interest and any applicable fees, until the loan is paid in full.

4. Credit reporting

As you make your loan payments, Self reports each monthly payment to the three major credit bureaus. This arrangement allows you the opportunity to establish credit history with Equifax, TransUnion, and Experian.

5. Pay in full

When you pay your Self Credit Builder account in full, Self unlocks your savings (minus interest and fees). Self will also report your account as paid in full to the credit bureaus.^[1]

What happens if you pay off a Self loan early

Anyone can pay off their Self loan early, and doing so has the potential to let you access your built-up savings sooner. When you pay your Self Credit Builder account off early, Self will release any savings you’ve accumulated (minus interest, fees, and an early withdrawal penalty).

To start the payout process you’ll need to log into your account and update your payout settings. Be sure to select “start payout process immediately” if you want to access any potential payout before the original end date on your loan.^[2] You’ll receive your funds in either your linked bank account or via check—typcially within three weeks of your loan payoff.^[3]

However, you should understand that paying off your Self loan early could shorten the amount of time your account is open and reporting to the credit bureaus.^[4] That action may limit the positive impact the account could have on your credit scores.

Length of credit history and payment history are two factors that both play important roles in your credit score, and an early loan payoff cuts the reporting period short.^[5] So, consider the details below before you make your decision.

Why you might not want to pay off your Self loan early

Sometimes, paying off a loan early may have financial benefits. But with a Self Credit Builder Account (which differs from a traditional installment loan), there can be several good reasons to stick with your original repayment schedule as well.

Paying off your Self loan early could:

1. Reduce your credit-building impact

Paying on-time every month over the full 24-month loan term can help you build a strong payment history. Payment history is the most meaningful factor in your credit score—accounting for 35% of your FICO® Score and around 40% of your VantageScore® credit score.^[6][7] Closing your Self loan early cuts off your ability to build additional positive payment history with that account.

Establishing a long stretch of on-time payments could be especially beneficial if you have a thin credit file (aka limited credit history). Those extra months of positive credit could be even more impactful in such situations.

2.Impact your average age of credit

Credit scoring models like FICO and VantageScore also consider the average age of your accounts when calculating your credit score. The older your average account age, the better.

A Self Credit Builder account that stays open longer may help you increase your length of credit history and could support your credit score over time. And since length of credit history is worth 15% of your FICO Score, it’s an important detail to consider before you close any account on your credit report—your Self loan or otherwise.^[8]

No matter when you close your Self Credit Builder account, it’s important to pay it on time and according to the terms of your agreement as long as the account remains open. A Self early withdrawal penalty of less than $1 may apply if you close your Credit Builder Account early without paying it off in full depending on the size of your Credit Builder Account.^[9] Late payments could also result in late fees and negative credit reporting.^[10]

Why you might want to pay off your Self loan early

In some cases, paying your Self loan off early could be a financial decision that makes sense for your current situation. Here are a few reasons why you might consider making this choice.

1. You need access to your built-up savings

The money you’ve paid into your Self Credit Builder account is locked until you pay your loan off in full. So, if you’re facing an emergency and you simply need cash right now, paying off your loan early lets you unlock those funds faster.

2. You want to simplify your finances

Sometimes having fewer monthly payments to manage can reduce money-related stress. (This might be especially true after a job loss or other major financial change.) If you’re trying to simplify your budget or focus on different financial goals, eliminating your Self loan payment might be helpful.

How to decide if early payoff is right for you

Before you choose to pay off your Self loan early, consider the following exercise could make the financial decision easier.

Step 1: Review your credit goals

Take a moment and ask yourself why you opened your Self Credit Builder account in the first place. If your main objective was to build credit, consider whether you’ve accomplished your goal or if you still have room to grow.

Step 2: Check your credit

If establishing credit is one of your goals, review your credit information to track your progress.

You can get free copies of your credit reports from Equifax, TransUnion, and Experian at AnnualCreditReport.com. There are several online tools that let you check your credit score for free as well, including free and fee-based options from myFICO and TransUnion.^[11][12] And Self customers have the option to access their credit score at no additional cost.

When you review your credit information, look for signs that your Self account could be helping you. For example, are your credit scores trending upward or is your Self loan with on-time paying history appearing on your credit reports? If so, keeping that account open for its full term could be worth considering so those positive changes have a chance to continue.

Step 3: Evaluate your financial situation

If you’re facing a financial emergency or unexpected expense, paying off your Self loan early might make sense so you can access your built-up savings. But if you don’t have an urgent need to access that cash, keeping your Self Credit Builder account open could likely do you more good in the long run.

Alternatives to early payoff

If you’re thinking about paying off your Self loan early, it may be because you’re facing financial pressure or an unexpected expense. That’s completely understandable. But before you move forward there are a few other options to consider that could help you stay on track with your credit-building goals while also addressing short-term needs.

Adjust your budget for temporary relief

Consider reviewing your budget to see if you can make any temporary spending adjustments in nonessential categories. Look at variable budget categories like dining out, entertainment, or subscriptions to see if you can find any financial wiggle room. Depending on the situation, directing even small amounts toward regular bills or paying down debt might free up space in your budget without disrupting your credit-building progress.

Increase income (even temporarily)

If you’re trying to cover unexpected expenses or make faster progress toward financial goals like paying down debt, finding ways to boost income can help. Even short-term income opportunities can provide breathing room without adding long-term commitments.

Side hustles, gig work, part-time jobs, or selling unwanted items are all potential options. Earning extra cash, even temporarily, can give you the money you need to handle immediate expenses while still allowing you to stay focused on your long-term credit-building objectives.

Build a small emergency fund

While this solution won’t help if a financial crisis is already here, building an emergency fund in advance can help create a safety net for future unexpected expenses. Saving even small amounts like $10 to $20 per paycheck can add up over time.

Pause new credit applications

Try to avoid applying for too much new credit before you complete your Self loan. New credit lines could add extra financial pressure. Plus, applying for a large number of new accounts in a short period might damage your credit score by reducing your average age of accounts or by adding too many hard credit inquiries to your credit report.

Bottom line

Paying off your Self Credit Builder account early is possible, but it may not always be the best move. While early loan payoff can give you faster access to your built-up savings, it may also limit the credit-building benefits the account can provide.

If possible, consider sticking with your original repayment schedule to get the most potential value from your account. By completing the full loan term and making consistent, on-time payments, you can give your credit the best chance to benefit from positive payment history.

*$25/mo, 24 mos, 15.92% APR; $35/mo, 24 mos, 15.69% APR; $48/mo, 24 mos, 15.51% APR; $150/mo, 24 mos, 15.82% APR. See self.inc/pricing

Sources

1. Self.inc. “Build credit with a Self plan.” https://www.self.inc/credit-builder-loan#
2. Support.Self.inc. “What happens when the Credit Builder Account ends?” https://support.self.inc/s/article/What-happens-when-the-Credit-Builder-Account-ends
3. Support.Self.inc. “When do I receive the money from my Credit Builder Account?” https://support.self.inc/s/article/When-do-I-receive-the-money-from-my-Credit-Builder-Account
4. Support.Self.inc. “Can I pay off my Self Credit Builder Account early?” https://support.self.inc/s/article/Can-I-pay-back-my-Self-Credit-Builder-Account-early
5. myFICO.com. “What’s in my FICO® Scores?” https://www.myfico.com/credit-education/whats-in-your-credit-score
6. myFICO.com. “What Is Payment History?” https://www.myfico.com/credit-education/credit-scores/payment-history
7. VantageScore.com. “The Complete Guide to Your VantageScore.” https://vantagescore.com/resources/knowledge-center/the-complete-guide-to-your-vantagescore
8. myFICO.com. “What Is the Length of Your Credit History?” https://www.myfico.com/credit-education/credit-scores/length-of-credit-history
9. Support.Self.inc. “Is there a fee for closing my account early?” https://support.self.inc/s/article/Is-there-a-fee-for-closing-my-account-early
10. Support.Self.inc. “What happens if you miss a Self payment?” ‘https://support.self.inc/s/article/What-happens-if-you-miss-a-Self-payment
11. myFICO.com. “Your FICO Score, from FICO.” https://www.myfico.com/
12. TransUnion.com. “Your credit score every day…for free.” https://www.transunion.com/free-credit-score

About the author

Michelle Lambright Black is a nationally recognized credit expert with two decades of experience. She is the founder of CreditWriter.com, an online credit education resource and community that helps busy moms learn how to build good credit and a strong financial plan that they can leverage to their advantage. Michelle's work has been published thousands of times by FICO, Experian, Forbes, Bankrate, MarketWatch, Parents, U.S. News & World Report, and many other outlets. You can connect with Michelle on Twitter (@MichelleLBlack) and Instagram (@CreditWriter).

Editorial policy

Our goal at Self is to provide readers with current and unbiased information on credit, financial health, and related topics. This content is based on research and other related articles from trusted sources. All content at Self is written by experienced contributors in the finance industry and reviewed by an accredited person(s).