How long does it take for your credit score to go up after paying off debt? We’ve got this question answered and lots of other common questions about your debt and your credit score. Get your scrolling finger at the ready and find the information you need, here!

What Is a Credit Score?

A credit score is a rating of your ability to manage your money. Everyone in the UK has a credit score based on their ability to pay debts on time. For example, if you pay your council tax bill, rent and utility bills in full on time each month, this will help improve your credit score.

At the same time, you might have unpaid debts that took you longer to pay off than you hoped, or you might have had debt written off that you couldn’t afford. These things will make your credit score less impressive.

How Is Your Credit Score Rated?

Your credit score is rated between 0 and 999 with five categories to determine your overall score. For example, your score can be categories as excellent, good, average, poor and very poor.

The three biggest credit rating agencies in the UK usually have the same categorisations based on your score, but there could be some differences.

Why Is a Credit Score Important?

A credit score is important because it will help or hinder you from taking out more credit or opening other bank accounts. For example, if your credit score is not as good as it should be, you might struggle to get a mobile contract, open the latest savings account or credit card, take out another loan, or much worse, fail in your mortgage applications.

One recent study even found that almost 50% of tenancy rejections occur because the landlord received a bad credit report on their potential renters. 

Is All Debt Bad for Your Credit Score?

The answer to this question depends on what you mean by ‘debt’. If you are asking if having credit (such as a loan or credit card) is bad for your credit score – absolutely not. In fact, if you have credit and are paying back on time and the right amount, this is very good for your credit score and will make it go up.

Having no credit history is much worse than showing you can pay back the money you borrowed on time.

Why, you ask? Well, having credit and paying back as promised shows that you can handle your finances and stick to an agreement.

But if you are asking if ‘debt’ is bad for your credit score and you mean debts from unpaid loans and credit cards, then yes, this is probably bad for your credit score. It shows you failed to keep to an agreement and repayments and will send your credit score down as a warning to any other loan company or bank that may consider lending you money.

Does Your Credit Score Get Better After Debt?

If your situation is the latter one and you failed to keep up with repayments, your credit score would have deteriorated. But it doesn’t mean you can’t turn things around. You can improve your credit score after paying off your debts

Ways to Improve Your Credit Score After Debt

There are many ways to achieve this. Here are some examples of ways to improve your credit score after paying off your debts:

  1. Keep up with other credit repayments
  2. Keep up with bills and other contracted repayments
  3. Look for debt solutions for other existing debts
  4. Don’t apply for lots of unnecessary credit or bank accounts (applications can affect your score too)

How Long Does It Take for Credit Score to Go Up After Paying Off Debt?

The length of time it will take for your credit score to improve after you pay off the debt will depend on multiple factors, some out of your control. The first is how quickly your creditor updates your credit report. Most of them are very fast and will mark that the debt has been paid off within a month. This means your score could improve within a month of paying off the debt. However, you may have to wait a few more months – and manage your finances well – to see a significant improvement.

How long is a piece of string in this case? Around 1-3 months, typically. 

What About Settled Debts?

Sometimes you might not pay off a debt in full and may agree on a debt settlement figure. This means you didn’t manage to pay off the whole debt and it will show as such on your credit score. If you settle a debt for less, then this will show on your credit file for six years like many other debts. However, your score might not increase as much if you settled the debt without paying everything back. 

Is It Time to Check Your Credit Score?

You may want to check your credit score after you pay off the debt to make sure it has been declared as paid off. It is also a good opportunity to go looking for any mistakes on your file. It is not that uncommon for people to find mistakes and have an unjust bad credit score. 

This is highly recommended before applying for a mortgage. 

Where Can I Check My Credit Score for Free?

In the UK, you have a right to check your credit score and there is a way to do it for free. There are three agencies who can provide this service, namely Equifax, Experian and TransUnion. They all have paid-for services but all provide 30-day free trials. Sign up these free trials to uncover your credit score for free, but don’t forget to cancel the subscription!

About the author

Scott Nelson

Scott Nelson is a financial services expert, with over 10 years’ experience in the industry, including 6 years in FCA regulated companies. Read more
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