Paying Off Debt to Increase Credit Score

Reader Question: I have paid my debt in full. How long will it take for my score to rise?

In the previous Q&A session, I explained how certain types of debt have a bigger impact on your credit score than others. If you paid down a lot of credit card debt, then you'll have a much better credit utilization ratio. This can account for as much as 30% of your overall score.

As for how long it takes to see a difference, this is much harder to answer. In most cases, your score will go up as soon as your credit reports change in some positive way. Remember, your score is computed from the information contained within your reports -- so when those are updated, you should see an increase in your score as well.

Here's another article you might want to peruse. This person asked a very similar question to yours. They wanted to know how long it would take to improve a credit score significantly, so it's worth a read.

There's something else worth mentioning here. By paying down your debt, you have also improved your debt-to-income (DTI) ratio. This is one of the factors a lender will look at when considering you for a loan. They consider your credit score and DTI ratio more than anything else. That's a big plus too.

I know this answer is not as exact as you would like, but there's no way for me to say exactly how long it will take for your score to rise. If I were you, I'd wait a couple of months and check my credit score again. You'll probably see a difference.

Hope that helps you out some. Good luck, and happy holidays.

-Brandon