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Paying off credit cards is an excellent way to work towards greater financial freedom and stability.
You can typically see your credit score improve thirty days after paying off your credit cards.
How Fast Will Your Credit Score Go Up After Paying Off a Credit Card?
After you pay off your credit card, you can expect your credit score to go up within 30 days. Check credit scores regularly to see these changes.
Finally paying off a debt can do wonders for your credit score. Granted, it’s not going to immediately get rid of delinquent payment history or other factors dragging it down. However, it will eliminate one major factor suppressing your score.
But the benefits of paying off credit card debt don’t stop there. Making the effort to pay off your credit card debt will:
- Lower your credit utilization rate. Once you pay off debt, you’ll no longer have that unpaid amount taking up your available credit. This gives you more spending power and boosts your score. Just make sure you don’t purchase anything that could put you back at risk of delinquency.
- Put an end to interest rates and late fees. Some consumers forget that missing credit card payments affects more than just their credit score. Higher interest rates and fees can skyrocket your existing debt. This makes it significantly harder to pay off over time. Once that debt is gone, you’ll want to keep it manageable.
- Free up room in your budget for other things. No longer having debt looming over you can be liberating. Now you have more money to spend on essentials and can worry less about the debt you previously carried.
Of course, everyone’s situation is going to look quite different. The average credit score raise will vary. How much your score improves depends on a wide range of factors. These include the following.
Factors That Influence Your Credit Score
Learning how your FICO credit score is calculated makes it easier to take control of it. Here’s a closer look at each of the major factors and how much they impact your credit score.
Your payment history makes up 35% of your credit score.
Payment history is one of the most impactful categories because it tells lenders more about you as a borrower. Do you have a solid history of paying back your bills on time? Or, are you someone who consistently falls behind and fails to make on-time payments?
If you’re the latter, your payment history will take a toll on your score. The lower you go, the more difficult it is to access better credit opportunities. Once you’ve cleared your debt, always make on-time payments moving forward.
Amounts owed make up 30% of your credit score.
Now, having some money owed isn’t necessarily indicative of you being a bad borrower. Take, for example, someone with student loans.
However, some lenders will turn away from those with multiple accounts with high utilization. You shouldn’t be maxing out your cards and using more than 30% of your available credit. Lenders will see you as a greater risk as a result.
Keep your credit utilization low and don’t overextend yourself financially.
Credit History Length
The length of your credit history only makes up 15% of your score.
Overall, this factor isn’t going to have a major impact on your credit score. However, it does inform lenders as to how long you’ve been successfully paying back bills. The longer your credit history, the better you will be perceived.
More recent credit history length won’t prevent you from getting credit. However, it might be a part of the reason why your score is lower.
Credit mix is another minor category, only making up 10% of your FICO Score.
Credit mix consists of revolving and installment accounts. Revolving credit accounts are tradelines like credit cards. While installment accounts are car loans, credit builder accounts, or mortgage loans.
Having a good credit mix proves to lenders that you know how to manage different kinds of accounts reliably.
New credit also only makes up 10% of your score.
New credit might not be super impactful, but there’s a reason why it’s considered. Those who open up a lot of credit accounts in a shorter period of time are seen as a high risk. This is especially true for those who don’t have an established credit history.
This shouldn’t deter you from opening an account when you need it. However, you should avoid opening up credit account after credit account in a relatively short window of time.
Keeping these factors in mind will make it easier for you to build your credit and maintain a high score.
What Happens After I Pay My Credit Card Off?
More than a credit score adjustment happens once you pay your credit card off. Here’s what you can expect once you’ve cleared your debt.
- It takes time for your credit score to reflect the change. Credit scores generally update every 30 days. If you don’t see the score change immediately, don’t fret. Your changes will show up the next time your credit score is updated.
- You will benefit from an absence of late fees after you’ve paid your credit card off.
- You’ll be able to see better terms and rewards in the future. Some credit card companies reward you for on-time payments and good behavior. You may get access to these after you get back on track.
Why Is My Credit Score Not Going Up After Paying Off a Credit Card?
Paying off a credit card should boost your score, but it won’t always.
Let’s imagine your credit score is being weighed down by delinquent accounts and high credit utilization. Paying off one credit card might not put much of a dent in your overall debt.
It’s important to be aware of what has brought your credit score down so that you can work on those things to bring it up. Can you increase credit score overnight, or will it take time?
Is It Better to Pay Off the Credit Card in Full?
Paying off your credit card partially means becoming subject to interest rates.
If you’re not careful, this can quickly add up over time. The last thing you want after being in debt is to accumulate more debt.
Paying in full when you can is often the better option. This keeps your debt in control and makes sure you’re not falling behind with interest payments.
Does Completely Paying Off a Credit Card Raise Your Score?
As we stated above, it depends. For those who have limited debt, paying off a credit card can offer a major improvement.
For those who have many more debts and high credit utilization, it may not do much. Everyone’s credit situation is unique. Consider what your credit usage looks like and what will happen when you pay off a card.
Keeping up with your credit score is vital to your financial health. Paying off your credit card debt can be an excellent step forward. The good news? Changes can be reflected in your credit score in as little as 30 days.
The bad news? Paying off one card might not always be enough to raise your score. Use the guide above to learn more about your credit and how to effect real change that boosts your score.
Dylan Buckley is a freelance finance writer and editor with 7 years of professional experience. Specializing in personal finance, cryptocurrency investments, and Fintech, Dylan is deeply passionate about creating content that helps readers make informed, confident financial decisions. He studied finance in college and maintains a credit score over 780.