Veracity found this general question posted, and thought we’d give our insight on the subject:

So I’m ready to apply for a new credit card, and I understand I should pay off the balance on my main card now, so that my “credit utilization” isn’t too high. Once I do that, how long does it take for the credit agencies to see that change and update my credit reports accordingly?

First of all, you’re applying one of Veracity’s key pieces of advice to your own credit repair: paying your bills. At Veracity, unlike some other credit repair agencies, we ALWAYS suggest you pay ALL your bills, and on time. This is the single easiest way to to achieve the best credit possible.

Now, when the question refers to “credit utilization,” we’re pretty sure what they’re referencing is your usage-to-limit ratio. No matter how many credit cards you have, this number is always very important. The more cards you have with little or no balance the better: this shows a low usage compared to a high limit. In most cases, by keeping your overall usage balance to 30 % or less of your overall limit, you can maintain your credit. And lowering that percent (or, as the person in question suggests, paying if off altogether) will likely improve your credit score.

Now, as far as how long it takes credit agencies to notice your progress… Well, it really depends on when the creditors being paid off report to the agencies (referred to as “The Big Three” credit bureaus in the credit industry). For instance, maybe your Capital One account sends its information on the 5th of the month and your Chase account sends in their reports at the 25th of the month. Now, if you pay you make your payments in full on the 15th of the month, that means that you CapOne account will show a balance for 10 days previous, while your Chase account may never show a balance at all.

The best option, clearly, is to pay your balances in full, especially if you’re aiming to achieve an optimal credit score for a home mortgage application. Otherwise, remember that there will always be small swings in your credit report, but so long as you keep your balance below 30 % and make regular, timely payments, your credit score should reflect your diligence in due time.