If you have an outstanding debt and you want to get it cleared, you may spend months on end saving up so you can finally get your credit back on track again. A few days after paying off your debt, you may find that your credit score still hasn’t increased and this can be a real problem if you are trying to apply for a mortgage or even a credit card.
One thing that you need to know is that even when you do pay off your debt, you might not see your credit score jump up. After all, your FICO score is largely based on the fact that you have had debt, rather than the fact that you have paid it off. That doesn’t mean that your score won’t increase over time, however, but it does mean that it won’t jump up instantly.
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So why is this the case? It’s all because your score is based on a debt to credit ratio. For this reason, your rating won’t drop the second you go into debt, but it won’t rise the second you are in credit either. If you want to see your score increase then you need to have more credit than debt, and this is why most people choose to go to a credit repair agency when they are trying to get their finances back on track.
Of course, there are many other things that could affect your credit and it isn’t all based on the fact that you are in debt, or have been in debt. For example, it could be because you have been a victim of identity theft and not even realized, so it is always a good idea to keep a track of your rating.