If I Pay Off My Credit Card in Full, Will My Credit Score Go Up? (2024)

Are you ready to pay off a credit card and wonder if it will improve your credit score? Generally, yes, you should expect your credit score to go up when you pay off a credit card in full.Making a credit card payment in full helps your credit score by adding an on-time payment to your credit history while lowering your credit utilization.

However, don’t make the mistake of thinking a single large payment will be a magic bullet for your credit score. If you’ve neglected your credit card account for months or years with late or only minimum payments, paying it off in full won’t erase all of your adverse credit history. And you can hurt your credit score if you pay off your credit card and then close the account.

Still, paying off your credit card is a great way to boost your credit score as you maintain good credit habits. And clearing a credit card balance can help you avoid interest charges, so you can improve your credit and save money at the same time.

Let’s look into how credit cards can positively and negatively affect your credit score and what happens to your credit score when you pay off a credit card in full.

How Credit Cards Affect Your Credit Score

Credit cards can significantly influence your credit score, whether negatively or positively. If you use most or all of your credit limit, make late payments, or open a string of new accounts in succession, that can negatively affect your credit score. Using a small amount of your available credit, making payments on time (and ideally in full), and only opening new credit card accounts when needed can positively affect your credit.

Does paying off your credit card improve your credit score? Yes, a paid-in-full credit card can have a distinctly positive effect on your credit score because credit card payments can positively affect your payment history and credit utilization — the 2 most important factors for your credit score.

»Related:Credit Score Guide: Take Control of Your Finances in 2023

Let’s look at some of the factors that influence your credit score and how using credit cards affects each aspect.

Payment History

Payment history makes up 35% of your FICO credit score and 40% of your VantageScore. It’s the most important credit score factor because creditors want to see that you can consistently pay your bills on time.

What happens when you pay off your credit card in full: You positively affect your payment history when you pay off your credit card in full, assuming you make the payment on time. Over time, that can help you build a positive payment history. A positive payment history — months and years of on-time payments — is the foundation of a great credit score and is less easy to improve than credit utilization quickly. Ideally, you should pay off your credit card in full every month, but at least make the minimum payment on time.

Hot Tip:

Credit Utilization

Credit utilization is nearly as important as payment history, making up 30% of your FICO credit score and 20% of your VantageScore. It’s also related to balances, which make up 6% of your VantageScore, and available credit, which is 2% of your VantageScore. Credit utilization matters because using most or all of the credit available to you is a red flag that tells creditors you may be overextended.

The rule of thumb is to keep your credit utilization ratio under 30%, though you may want to aim lower if you seek a perfect credit score. According to FICO, people with exceptional credit scores generally use about 7% of their available credit.

You don’t have to carry a balance to maintain a healthy credit utilization ratio. Your credit utilization relies on your statement closing balance, which is how much you owe when you get your statement. You can pay off your balance each month and make new charges, and your credit card company will report your new balance each month. You also have the option to pay your bill — in part or in full — before your statement closes, and your credit report will reflect the balance after your payment.

What happens when you pay off your credit card in full: Paying your credit card bill in full can positively affect your credit utilization ratio, though it depends on how much you’re charging each month in relation to your credit limit.

  • If you’re using 50% of your available credit each month and then paying it off, your credit report will still reflect that you’re using half of your available credit, which can drag down your credit score.
  • If you pay off your credit card bill in full before your statement closes, your credit report would reflect a 0% credit utilization.
  • If you aim for perfect credit utilization, you can charge about 7% of your available credit and then pay it off each month.

Length of Credit History

The length of your credit history makes up 15% of your FICO credit score and 20% of your VantageScore. While this factor isn’t as important as payment history or credit utilization, creditors like to see that you have a long history of responsible credit use.

What happens when you pay off your credit card in full: Paying your credit card in full doesn’t do anything to your length of credit history other than allowing you to continue to maintain an account. For example, if you didn’t pay your credit card bill, your account might be at risk of charge-off and closure.

When you pay your credit card off in full, don’t make the mistake of closing the account. You might think it would be good to close the account if you’ve been carrying a balance and finally pay it off. However, doing so can shorten your credit history if it’s one of your oldest accounts.

Consider keeping old, paid-off accounts open. If your old credit card accounts have an annual fee, talk to the issuer about downgrading it to a no-annual-fee product so you can maintain the account at no cost.

Credit Mix

Credit mix is a lesser credit score factor, only making up 10% of your FICO credit score. Still, it can make a difference if you’re trying to get to the next credit tier.

Your credit mix is the various types of accounts you have on your credit history. For example, lenders like to see a mix of credit cards and installment loans so you can demonstrate responsible use of various types of credit.

What happens when you pay off your credit card in full: Paying your credit card in full doesn’t change your credit mix. However, it can help you keep your account in good standing, so it’s still a positive entry on your credit report. Paying your credit card bill on time could help you qualify for an installment loan such as a personal loan, mortgage, or auto loan that can add to your credit mix.

New Credit

Like credit mix, new credit is a lesser credit score factor that only makes up 10% of your FICO credit score and 11% of your VantageScore. But it still matters because opening too many new accounts quickly could be a red flag to lenders.

What happens when you pay off your credit card in full: As long as you’re not opening a new credit card account after you pay off your credit card in full, new credit isn’t affected by credit card payments.

Bottom Line:

Paying off your credit card in full can positively influence your payment history and credit utilization. These are the most important credit score factors, but credit card payments can’t directly help you with all of the credit score factors that matter. You’ll still need to maintain a lengthy credit history, hold varied types of accounts, and avoid opening too many new accounts quickly.

Paying Off Credit Cards: What Happens to Your Credit

If I Pay Off My Credit Card in Full, Will My Credit Score Go Up? (1)

How much your credit score will increase after paying off your credit card depends on several factors. You could see your credit score increase by 10 to 50 points after you pay off credit cards, though your score could drop if you close accounts after paying them off.

First, consider your overall credit utilization. If you’re carrying a balance close to your credit limit on your only credit card account and you pay it off in full, you could see significant credit score improvement because it takes a lot of pressure off your credit utilization. But if you’re only using 30% or less of your credit limit on your card and have other cards with little to no utilization, you won’t see much difference in your score since you’re already doing well with that credit score factor.

Let’s say you have a couple of credit cards with balances, but 1, in particular, has a high balance relative to your credit limit and a high interest rate. If you pay off that account first, you’ll see the most improvement to your credit score (and save the most on interest).

Also, consider the timing of your payments. Sure, you can pay off your credit card, but if you’re doing it after months or years of late payments, you can’t expect a single on-time payment for the full balance to erase a series of mistakes. Once you’ve paid off your credit card bill, focus on paying your bills on time so you have a long history of on-time payments each month.

If you plan to close the account after you pay it off, you could hurt your credit score rather than help it. When you close an old credit card account, it can negatively affect your credit score. For one, it reduces the amount of available credit you have. And if you’re closing one of your oldest accounts, it can shorten the length of your credit history.

It’s best to keep old credit card accounts open, even if you’re paying them off and don’t plan to use them anymore. You can downgrade to a no-annual-fee option, lock the card, and log in once a month to ensure there aren’t any new charges.

Hot Tip:

Read our explainer on why your credit score can drop after paying off debt to understand how closing accounts can hurt your credit score.

How Long After Paying off Credit Cards Does Your Credit Improve?

You should see the effects of paying off credit cards reflected on your credit score within a month or so. Generally, you should expect a change within 30 to 45 days.

The exact timing depends on when your statement billing cycles close and when credit card companies report to the credit bureaus. Let’s say you pay off your credit card bill in full right after your statement cycle closes. You’ll need to wait until the next statement for the credit card company to send your updated balance to the credit bureaus and see an effect on your credit score. If you pay off your balance right before your statement closes, you could see improvement within a week or so when it hits your credit report.

Still, paying off credit cards is one of the fastest ways to improve your credit score. While payment history and length of credit can take years to establish, credit utilization is much more fluid, and it depends on your balances month to month. That’s why you may see your credit score dip when you’re spending a lot on your credit cards relative to your credit limit, and you may see your credit score improve if your balances are lower.

Once you’ve improved your credit score by paying off a credit card in full, keep the good momentum going with positive financial habits that can give you sustained credit score improvement.

Best Practices for Credit Score Improvement

If I Pay Off My Credit Card in Full, Will My Credit Score Go Up? (2)

Paying off a credit card bill in full can improve your credit score, but it’s just a single action. You’ll need to do more than pay off a credit card bill once for a great credit score.

Creditors prefer to see a long history of on-time payments and low credit utilization. Paying your credit card bill is a good step, but you must keep making payments on time and using credit responsibly to see real credit score improvement.

Use these best practices to improve your credit score over time:

  • Pay your bills on time — not just once, but every month.
  • Pay more than your credit card’s minimum payment, ideally the full balance, each month.
  • Pay off debt; don’t just move it around with balance transfers.
  • Maintain a good mix of accounts, including credit cards and loans.
  • Don’t close old credit cards.
  • Avoid applying for an overabundance of new credit.
  • Regularly check your credit report so you can identify and correct inaccuracies or spot trouble early on.

Making a plan for paying off credit cards before you spend can help you stay on top of payments. It’s also a good idea to lock cards you don’t plan to use. Set up account tools such as balance alerts and automatic minimum payments to stay on top of your credit card account status and payments.

Bottom Line:

Read our guide, 10 Tips and Strategies To Improve Your Credit Score, to get the complete list of actions you can take to improve your credit — including paying off credit cards.

Final Thoughts

Paying off your credit card bill in full can help you jumpstart the improvement of your credit score. It influences positive credit score factors, particularly payment history and credit utilization, and can save you money on interest. If you’ve paid off your credit card or plan to do so, plan for continued healthy credit habits, including paying all your bills on time, ideally in full, each month.

If I Pay Off My Credit Card in Full, Will My Credit Score Go Up? (2024)

FAQs

If I Pay Off My Credit Card in Full, Will My Credit Score Go Up? ›

When you pay off credit card debt, you almost always see an improvement in your credit score. It's hard to predict how much your credit score will change, but hopefully, this guide helps you estimate the potential change.

How much will my credit score go up if I pay off all my credit cards? ›

Your credit score could increase by 10 to 50 points after paying off your credit cards. Exactly how much your score will increase depends on factors such as the amounts of the balances you paid off and how you handle other credit accounts. Everyone's credit profile is different.

What happens if I pay off my credit card in full? ›

If you regularly use your credit card to make purchases but repay it in full, your credit score will most likely be better than if you carry the balance month to month. Your credit utilization ratio is another important factor that affects your credit score.

How much will my credit score go up if I pay off a collection? ›

VantageScore® 3.0 and 4.0, the most recent versions of scoring software from the national credit bureaus' joint score-development venture, ignore all paid collections and all medical collections, whether paid or unpaid. As a result, those accounts will not affect your VantageScore.

How to raise credit score 100 points in 30 days? ›

Steps you can take to raise your credit score quickly include:
  1. Lower your credit utilization rate.
  2. Ask for late payment forgiveness.
  3. Dispute inaccurate information on your credit reports.
  4. Add utility and phone payments to your credit report.
  5. Check and understand your credit score.
  6. The bottom line about building credit fast.

How to get 800 credit score? ›

Making on-time payments to creditors, keeping your credit utilization low, having a long credit history, maintaining a good mix of credit types, and occasionally applying for new credit lines are the factors that can get you into the 800 credit score club.

Why did my credit score drop 40 points after paying off debt? ›

It's possible that you could see your credit scores drop after fulfilling your payment obligations on a loan or credit card debt. Paying off debt might lower your credit scores if removing the debt affects certain factors like your credit mix, the length of your credit history or your credit utilization ratio.

How can I boost my credit score fast? ›

4 tips to boost your credit score fast
  1. Pay down your revolving credit balances. If you have the funds to pay more than your minimum payment each month, you should do so. ...
  2. Increase your credit limit. ...
  3. Check your credit report for errors. ...
  4. Ask to have negative entries that are paid off removed from your credit report.

Is it bad to max out credit card then pay it off full? ›

Absolutely, while it's possible to max out your Credit Card and subsequently pay off the balance, it's generally ill-advised. Maxing out your card can lead to a high Credit Utilization Ratio, which may negatively impact your Credit Score.

Is it bad to immediately pay off a credit card? ›

Bottom line. Paying your credit card bill early is not intrinsically good or bad, but it can help you avoid negative habits such as high credit utilization and late payments. Paying your credit card early won't directly influence your credit score, but it can help in creating good financial habits down the line.

Should I pay off my credit card in full or leave a small balance? ›

Bottom line. If you have a credit card balance, it's typically best to pay it off in full if you can. Carrying a balance can lead to expensive interest charges and growing debt.

Does paid in full increase credit score? ›

Consistently paying off your credit card on time every month is one step toward improving your credit scores. However, credit scores are calculated at different times, so if your score is calculated on a day you have a high balance, this could affect your score even if you pay off the balance in full the next day.

Should I pay off a 3 year old collection? ›

Paying off old debts before they reach the statute of limitations or credit reporting deadline can positively influence your payment history, a significant factor in your FICO score.

Is 650 a good credit score? ›

As someone with a 650 credit score, you are firmly in the “fair” territory of credit. You can usually qualify for financial products like a mortgage or car loan, but you will likely pay higher interest rates than someone with a better credit score. The "good" credit range starts at 690.

What boosts credit scores the most? ›

Paying your bills on time is the most important thing you can do to help raise your score. FICO and VantageScore, which are two of the main credit card scoring models, both view payment history as the most influential factor when determining a person's credit score.

What credit score is needed to buy a house? ›

The minimum credit score needed for most mortgages is typically around 620. However, government-backed mortgages like Federal Housing Administration (FHA) loans typically have lower credit requirements than conventional fixed-rate loans and adjustable-rate mortgages (ARMs).

Is it good to have all credit cards paid off? ›

It's a good idea to pay off your credit card balance in full whenever you're able. Carrying a monthly credit card balance can cost you in interest and increase your credit utilization rate, which is one factor used to calculate your credit scores.

How many points can your credit score go up in 6 months? ›

In fact, with some concentrated effort, it is entirely possible to raise your score by 100 points or more within six months or so. Of course, everyone's credit situation is unique, so it's difficult to pinpoint an exact range of improvement.

How long does it take to build back up your credit score? ›

How long does it take for your credit score to go up?
EventAverage credit score recovery time
Bankruptcy6+ years
Home foreclosure3 years
Missed/defaulted payment18 months
Late mortgage payment (30 to 90 days)9 months
3 more rows
Jul 27, 2023

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