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Credit Cards

How long after paying off a debt does my credit improve?

It can take up to two billing cycles or one or two months for your credit score to improve.

It can take up to two billing cycles -- or one or two months – for your credit score to improve, depending on how your lender or card issuer reports changes.

Date:
January 4, 2022

Improving your credit score is a great goal, giving you access to more credit, more loans and lower interest rates. But how long does it take to see a change?

How long does it take for my credit score to improve?

Most lenders and card issuers report to credit agencies at the end of each billing cycle, and to see a change on your credit report typically takes up to two billing cycles.

However, some lenders and card issuers report every two weeks, which means a paid-off debt will show up faster. 

Because reporting cycles can vary, some activity, like a late or partial payment or a cleared debt, may not show up as quickly as others.

This can be frustrating if you've paid off a loan or a credit card and don't see it reflected on your credit report right away. If you’re worried, reach out to your lender and make sure your activities are getting reported correctly.

What do credit bureaus do?

Your activity on your credit cards and loans is reported to the three major credit bureaus: Experian, TransUnion and Equifax. 

These credit bureaus function as databases that store this information about you. They use it to create a credit report and a credit score for you, and they sell that information to let lenders know your financial habits and to allow them to judge your creditworthiness.

Here are the primary types of information credit bureaus collect:

  1. Personal information (your name, address and employment history)
  2. Public records (to check for bankruptcy)
  3. Hard inquiries (to see how often you’re applying for more credit)
  4. Tradelines (record of loans)

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Use Bright to pay off credit cards.

What information do credit bureaus track?

Credit bureaus look at how responsibly you manage your debts, tracking your on-time payments, how much credit you use and how you use different kinds of credit. 

Here are the four top factors credit bureaus use to determine your score:

  1. Payment history (35%). Your track record of on-time payments is the biggest factor. Whenever you miss a due date, your lender or issuer reports it to credit reporting agencies, which can ding your score. 
  2. Credit utilization ratio (30%). Your credit utilization is the portion of the total amount of credit available to you. It is the second most important factor in calculating your credit score. Credit reporting agencies consider a utilization ratio of 30% responsible credit management and will likely lower your score if you use more. 
  3. Age of credit accounts (15%). Credit reporting agencies look at the length of your credit history as well as the average age of your loans and credit card accounts. The longer you’ve managed your debts responsibly, the more it helps your credit score.
  4. Credit mix (10%). Using different kinds of credit, like a personal loan or an auto loan, in addition to credit cards can help raise your credit score. When you manage different kinds of credit responsibly, reporting agencies will reward you with a healthy score.
  5. New credit inquiries (10%). Applying for a new loan or credit card can trigger a “hard inquiry.” Each hard query remains on your credit history, and for some lenders, too many raises a red flag, suggesting you’re unable to manage the credit you already have. 

How Bright can improve your credit score 

Bright can help boost your credit in a few different ways, automatically building a positive payment history and improving your utilization ratio.

Week by week, Bright finds the fastest, smartest ways to pay off your cards, always on time and always optimized to lower your interest charges.

Bright Credit Builder can help too, automatically building a positive payment history, and with a new line of credit, improves your credit utilization. Credit bureaus love it!

If you don't have it yet, download the Bright app from the App Store or Google Play. Connect your bank and your cards in a snap, set your goals and pace, then let Bright get to work.

Recommended Readings:

5 ways to pay off debts comfortably

How to payoff credit card debt step-by-step?

MoneyScience™ Team
Bright Money

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