How long does it take for my credit score to increase after paying a negative account?

Question

I recently paid off an auto loan. It had quite a few times that it was 30 days or more late. I was not responsible for paying the loan as I gave the car to a friend and they were not paying on time. The car was still in my name and my husbands name. My question is now that it is paid off, how long will it be before I see an increase in my credit score. This was the only account that I had that has a negative paying history. It says closed and balance 0 on my credit report now.

Also what is the average time it takes for a persons score to increase if they are paying all their bills on time and paying down installment loans and credit cards. How much should it increase in say 7 months. We are trying to get ready to buy a house and hoping to get everything in order in the next few months. We filed bankruptcy (ch 7) 4 years ago.

Answer 1

60 days for every 30 days is what Experian told me. However, since it is paid off, that is a huge positive that will help counter the past dues. This is what a lending officer told me last fall because I was past due on a few accounts. Scores only increase with timely payments consistently. A bankruptcy will not necessarily keep you from buying a home but your interest rate will be higher as you will be shopping for a loan in the "sub-prime" market. Mortgage interest is a tax deduction but a house that may have only cost $1000 a month could end up costing $1300 a month and that is where the interest comes into play.

Answer 2

I agree with Neil T. Although banks and loaners can see your credit history for 7 years. If you filed for bankruptcy, it will be with you for 10 years for sure. You can help build your credit by paying things off. and be on time with payments. Also, you can apply for credit cards, that you initially give them money to cover the credit limit. This way you build your credit, and it shows that you are trying to acquire a higher standing. It also provides the credit card company with stability, in that you have already paid the balance if anything were to happen. Yes, this does make a difference. But bottom line, pay everything on time, and you will see your credit rating rise very slowly. It may take a couple of years. Also, don't apply for credit too often. Anything more than twice a year looks bad.

Answer 3

Paying off the loan may make very little impact. It's not the outstanding balance on the loan, but rather the late pays-- and those stay on whether the loan is open or closed.

A good idea for you to do NOW is to dispute EVERY negative item- late pays, collections, etc. Claim no ownership of them. In 30 days you'll find out if you are successful at getting anything deleted. This is the same thing those "credit repair" places do.

Your score will not rise much in 7 months if you dont have any other significant changes (lowering utilization ratios, for instance). Any changes are relative to your current report.

Answer 4

It usually takes 60-90 days for the credit score to increase. Most companies report every month or every 2 months to the credit reporting agencies, and there is usually a slight delay because payments won't be reported until the current billing cycle ends, etc. However, all items on your credit report stay on there for 7 years.

Answer 5

As said in other post, just keep paying on time and your score will improve. 7 months is not a really long time to expect an increase, but it should be increased some by that time.

I would not suggest disputing everything on your credit report. Correct items are suppose to stay there. When you dispute something, you state that you agree that you are telling the truth regarding the disputes. Any credit repair company that willingly disputes correct items on your credit should not be in business and is in violating many acts.

Answer 6

Usually, creditors will update your credit report within 30-90 days from paying an account off. But, if you need something in writing, you could always call the creditor for a paid-in-full letter. By the way. I AM A BILL COLLECTOR, so I know what I'm talking about.

Answer 7

as long as you are paying down your debt and your income to debt ratio is not greater than say 35-38% you should be fine. Also, the loan to value ration is a big factor too. How much is the home you are purchasing and how much of a loan will you be needing? in other words, how much of a down payment are you going to have? 5, 10, 20%??? I am a loan officer so if you have any questions, send me an email [e-mail]

Answer 8

I'm pretty sure credit data lasts 5 years. 7 Months won't make much difference.