Paying off a loan is important to raising your credit score--balances owed account for 30 percent of your FICO credit score, according to the Fair Isaac Corp. Paying off a loan does not mean the payoff appears immediately on your credit report.
Time Frame
The major consumer credit reporting agencies--TransUnion, Experian and Equifax--do not update your credit report until the lender sends them information, according to Experian.
Considerations
Not all lenders report to the major credit rating agencies, according to Credit Factor. You should check your report from all three agencies to see whether the loan has been reported as paid off.
Tips
If you want to build your credit, then before taking out a loan, you should ask lenders which credit reporting agencies they report to.
Be patient. It can take as long as 90 days for a credit rating agency to update your report, according to Bills.com.
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