Will My Credit Score Go Up After Paying Off a Credit Card?

Paying off debt, particularly high balances, does increase a credit score. The increase depends on total amounts owed, debt-to-credit ratios, initial credit scores and charging habits. Additionally, when your score changes depends on the credit card issuer's reporting time frame and how often credit reporting agencies update your score. Consumers are encouraged to check their credit history for accuracy after paying off debt, closing accounts or any other credit-altering activities.

Credit Scoring

Many factors such as payment history, length of credit and inquiries influence your overall credit score. The total amount of debt and amounts owed compared to available credit determines 30 percent of your score. While having credit cards near the available limit or numerous cards with balances lowers your score, low balances in comparison to high limits increases scoring. Any delinquency marks remain on your credit report for up to seven years regardless of the payment status. However, the further back on your credit history delinquencies are, the less they affect your score.

Time Frame

Generally, most creditors report to credit reporting agencies every 30 days. While a report may reflect an account is paid, it may not immediately reflect on the score depending on reporting agency scoring adjustment dates. It may take a month or two for the reporting agency to change a credit score, but lowering overall debt eventually increases scoring. Adversely, if you charge a card up each month after paying it off, your score may continually reflect the high balance dependent on your issuer's reporting date. Waiting a month between paying the balance and making charges helps your score reflect accurate debt ratios.

Concerns

Closing revolving lines of credit alters your debt-to-credit ratio and the length of credit history. While closing accounts to avoid spending is always a good idea, consider leaving paid accounts open to increase your credit score. If you decide to close a credit card after paying it off, do it in writing and check your credit report to make sure the account reflects the paid status and states "closed by consumer" rather than the issuer.

Considerations

Check your credit report regularly for errors. While many errors are minor, multiple listings for the same debt, inaccurate balance reporting and account status mistakes occur. Federal law entitles all consumers to a free copy of their credit report from all three major credit reporting agencies --- Equifax, Experian and TransUnion --- once yearly. Correct errors by calling the lender to have the information changed or by contacting the credit-reporting agency to have the information removed.