Is it Possible to raise your Credit Score by Paying off Your Credit Cards?

When people play most games, they are trying to get the highest score (golf excluded here…) Why does everyone want to be the player with the highest score? Because we all play to win in this life. So, when it comes to the world of credit, are you winning or losing the game? In other words, is your credit score on the higher or lower end of the spectrum? While there is no trophy for people with the highest credit scores (850 is considered a perfect FICO credit score and 300 is the lowest) we all want to “win” with regards to our finances.

With coming out on top of your finances in mind, you may be wondering about some things that you can do to improve your credit score. Paying off your credit cards is a great way to improve one’s credit score. This is because the outstanding debt that you are carrying around at any given time is the second most important factor used to determine your credit score. Not everyone will be able to pay off all their lines of credit at once, but people who can put a larger payment toward their credit card balances may find that their credit scores begin to improve rapidly.

The consumer Federation of America recently conducted a research survey and found out that a large number of American consumers don’t know very much about their credit scores at all. This survey was conducted using feedback from lots of folks, and a full quarter of the survey respondents said that they did not know how to raise low credit scores or to maintain their current credit ratings.

As we have already said, it is possible to raise your credit score by paying off these revolving debts. Your credit cards and other debts are definitely taken into account when the credit bureaus calculate your score. And while it is true that reducing your overall amount of debt will increase your score, how much it will improve is determined by other factors as well.

Remember, too, that no two people are the same. One person might find that paying off a considerable amount of debt raises their credit score substantially, while another person may find that doing so only has a minor positive effect on their score. It is important to remember that payment history is the most important metric. So even if you were to pay off a lot of your credit card debt, but still had a poor history of making payments late or not at all, you may find that the positive rub from a payoff is not quite as dramatic as you might have hoped.

The biggest mistake that people make when they manage to pay off a lot of their credit card debt quickly is that they tend to close those accounts down. The thinking is that if the account is closed that the person will not be tempted to make any more charges. While this may be true, closing the account down after you pay it off will actually damage your credit score. Cut up your cards if you must, but don’t close down credit card accounts after you pay them off. Do your best to make regular payments, and even large payments to bring your balances down, but never make the mistake of closing your accounts, when actually having them remain open for years at a time – even if you don’t use them very much – can actually improve your credit rating over the long term.


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