How Quickly Does a Credit Score Increase After Full Payment of Credit Card Debt?

Your credit score reflects your creditworthiness at a particular point in time; it tells lenders how much risk they would be taking by lending you money. You can expect your credit score to increase within 30 days of paying off your credit card debt. Paying down a significant chunk of your credit card debt can also raise your score within a month.

Time Frame

Typically, creditors update consumer accounts with new information on a monthly basis. Federal law allows credit bureaus 30 days to report on your payment activities.

Debt Management

In addition to paying off credit card debt, keeping your credit card balances below 50 percent of your credit limit --- or better yet, at no more than 30 percent --- will increase your credit score over time. The system that credit bureaus use to calculate your credit score takes your utilization rate into consideration, as well as the actual amount you owe.

Utilization Rate

Credit bureaus calculate your utilization rate by comparing your total credit card balances to the total available credit on your cards. The higher your utilization rate, the more likely it is to affect your credit score adversely. Therefore, it may not be wise to close a credit account once you've paid the balance in full. For example, if your total credit limit is $30,000 and you have a total balance of $17,000 on your cards, your utilization rate is 57 percent. If you close an account that had a limit of $10,000, you will raise your utilization rate to 85 percent (i.e., $17,000 divided by $20,000).

Prioritizing Accounts

You've probably heard that you should always pay down the credit accounts with the highest interest rates first. This may be the best plan, provided your individual balances are at or below 50 percent of your credit limit. Otherwise, you should first pay down the account that is closest to being maxed out, or has the highest balance.

Considerations

Paying off installment loans like mortgages, car loans and student loans can help your credit score over time, but full payment of credit card debt will boost your score dramatically. Even if you pay your balances in full each month, charging large amounts on a regular basis can hurt your credit score.