How Long Does It Take for Credit Score to Go up After Paying off Debt?

Many consumers presume that once they pay off debt, their credit score must jump instantly. In reality, this process is quite intricate. First, you will not see immediate results. Secondly, some types of obligations will actually bring down the score when they disappear.

How Soon Will the Changes Happen?

On average, this takes 1-2 months. The duration depends on two factors: your billing cycle for the loan/card and the reporting cycle followed by the lender. For example, banks report to credit bureaus every month. Once the information appears on your personal report, the score is bound to change. However, the impact may not be significant, and it is not always positive.

What Your Score Reflects


Have you checked your score lately? You can do it on My FICO, in apps like Credit Karma, and other sources. The number of points serve as a summary of your credit experience. Both FICO and VantageScore rely on a scale from 300 to 850. The metric is dynamic. Lenders share information with the bureaus every month, and your score changes as new data appears on your file.

Both scoring models consider a similar combination of factors. FICO looks at your prior payments (35%), the total amount owed/credit utilization (30%), age of history (15%), credit mix (10%), and new accounts (10%). Thus, the size of the overall debt is one of the many elements.

Why Your Score May Drop Instead of Rising

The plunge may be connected to unrelated causes, such as reporting errors. You can visit this website to read Lexington Law Reviews and learn how to get rid of these mistakes. The score may also fall due to perfectly valid reasons.

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The act of paying off may affect your credit mix, utilization, and the average age of accounts. As we have mentioned, 15% of FICO is determined by the length of history alone. If you close the oldest account, this automatically shortens it. Here are the most common scenarios that bring unexpected results:

  • You closed a credit card


All of your cards determine the utilization ratio, which is the proportion between the total balances and the total limits. When a credit card is closed, the second factor shrinks, so the ratio goes up. Experts recommend using no more than 10% or 30% of your available credit, depending on who you ask. In this case, you must pay off more of the remaining balances to restore the proportion.

For example, if you have two cards left with a total limit of $2,100, you may charge no more than $210 or $700.

  • You paid off your only installment loan

10% of all FICO is determined by your experience with different types of credit, such as auto loans, installment loans, mortgages, credit cards, etc. Closing an account affects this mix.
You have eliminated the oldest account

To maintain a favorable rating, you should keep your accounts open as long as possible. For example, if one of them has been open for two decades, this is interpreted positively even if you are not using it anymore. If you close it, and the remaining accounts have a shorter history, this is guaranteed to affect your status.

  • You have applied for new credit


This is a coincidence. If you pay off your debt and apply for a new loan or credit card around the same time, the score may fall due to hard inquiries. These are marks left on your report whenever a financial institution checks it. Hard inquiries have a lifespan of two years. Rate shopping is acceptable, but applications for different types of credit in quick succession are guaranteed to lower the score.

  • Your report contains errors

On average, 34% of Americans have one or more mistakes in the reports that underlie their scores. To see if this is the case, head to and download the files from Experian, Equifax, and TransUnion. If you see any dubious information (accounts that do not belong to you, wrong amounts, etc.), you are entitled to correction under the Fair Credit Reporting Act. Consumers can file disputes on their own or enlist the help of credit restoration companies to save time and effort.

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General Effects on the Score


When you pay off an installment loan, it does not disappear from your report on the same day. Suppose your track record is positive, meaning that the obligations were always met on time, so the account was maintained in good standing. In this case, the information will be reported for up to a decade. Being diligent with payments has long-term implications.

Now, suppose the loan was associated with derogatory marks. The negative effects will be prolonged, as any information related to missed or late payments has a lifespan of seven years. Even after you pay off those accounts, they will still affect the rating negatively. All you can do is wait and work with other elements of your history in the meantime.

Paying off Collections

In some older assessment models, collections continue to affect the score negatively even after they are paid. Other systems disregard these entries. The effects also depend on the number of these accounts. If you have paid off the only collections account on your record, this may impact the score favorably. Unfortunately, in the case of multiple collections, the rise may be negligible.

To Sum up

Paying off debt is almost always a great idea, particularly when the interest rate is high. Even if you see a drop in your score, this is only temporary, and the long-term benefits are undeniable. There is no way to accurately predict the effects, as too many factors are at play.

As long as you continue making payments on time and budgeting wisely, your score should rise eventually. If the drop is connected to disputable information on your report, hire a credit restoration agency or file a dispute yourself to exercise your rights under the Fair Credit Reporting Act.

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