Why is my credit score going down when I pay on time?

Quick answer: If you’re paying on time and in full and you’re seeing your credit score going down, it’s likely something else is impacting it. Check your credit report to see what could be affecting your score.

Paying your lender on time is good for your credit score. So, if you’re being careful not to miss payments, it can be confusing to see it go down. It’s likely something else is hurting your score — like being close to your credit limit, or making lots of credit applications in a short space of time. Also, remember your score doesn’t update immediately. It can take 4–6 weeks for payments to show on your credit report.

Want to know more? We’ll look at several reasons why your score might be going down when you’re paying on time or have paid off debt.

Reasons your score is going down when you pay on time

First, it’s great that you’re making payments on time. Don’t stop just because your score is going down. Late payments will hurt your score more and can lead to fines, defaults and even legal action.

Check whether you’ve forgotten any payments. For example, you might be making loan payments on time but forgot about a one-off purchase on your credit card.

If you’re sure you’re not missing payments, something else on your credit report is the reason why your credit score is going down. Here are some common ones:

Carrying a balance — While it’s important to make at least the minimum payment on your credit card, this might not be enough to pay off what you owe. Try to pay the full balance or as much as you can each month.

Using most of your credit — If you’re getting close to your credit limit, lenders may think you’re struggling for money. Your score may go down to reflect this.

Sharing finances — If you have a financial association with someone, their credit report is linked to yours. If the other person does not have a good credit history, for example if they have made late payments, this can negatively affect your credit score.

Credit applications — Your score may have gone down if you made lots of credit applications recently, as lenders may think you’re having money problems.

Check your credit report in the free Experian app. Our app automatically highlights the key things from your report to keep an eye on. Or check your free statutory credit report to look for anything that may be bringing your score down.

Why is my credit score not going up when I pay on time?

If you’re managing credit well and avoiding things that hurt your score, it might seem odd if your score doesn’t improve. Here are a few possible reasons why your score isn’t going up even though you’re making payments on time:

Your score hasn’t been updated yet — It takes 4–6 weeks for new information to appear on your credit report and update your score. This is because lenders report your data at different times.

You need a longer payment history — Lenders like to see you’ve built a habit of making payments on time. Be patient and keep up the good work!

You need to do something else — If you’re doing the same thing month after month and not changing anything, it’s unlikely that your credit score will change. Even if what you’re doing is paying on time every month. Luckily, there are more ways to build a good credit score. Try paying down credit cards or connecting to Experian Boost for example.

Why might my credit score drop after paying off debt?

Paying off debt is usually a reason to feel good. It can take the pressure off and give you more financial freedom. But sometimes you’ll see your credit score dip. Don’t worry — this should be temporary. Here are a few common reasons why it happens:

You have fewer types of credit

Some lenders like to see you can handle different types of credit, like a mortgage, credit card and overdraft. So getting rid of one might dent your score. Keep managing your credit well and you should see your score recover.

You’ve closed an account

Closing a paid-off account can feel like a win, but you may see your score dip for a bit. This is because lenders often see older bank, loan and mortgage accounts as a sign of stability. Your score should bounce back over time if you look after it.

You’re using more of your available credit

Credit cards and overdrafts give you a certain amount of available credit. The percentage you use is your credit utilisation rate. It goes up if you use more credit. But it can also go up if you close an account and lose some of your available credit.

Here’s an example:

Let’s say you have a credit card with a £2,000 limit and an arranged overdraft with a £1,000 limit. This means your total available credit is £3,000.

You owe £800 on the card and £100 on the overdraft, meaning you’re using a total of £900 out of the available £3,000. This means your credit utilisation rate is 30%.

Now imagine you pay off your overdraft and close it. Your debt goes down by £100. But you also lose £1,000 of available credit, having closed the overdraft. You’re now using a total of £800 out of £2,000 available credit. This means your new credit utilisation rate is 40%.

Lenders tend to prefer it when you’re using a smaller percentage of your available credit. So, if your credit utilisation rate goes up, this could lower your credit score.

When will my credit score improve after paying off debt?

You might see your score rise within 4–8 weeks of paying off things like a credit card or overdraft. It is likely to take longer with mortgages and loans. Remember, each credit reference agency makes their own decisions about how your score is calculated.

Paying off debt is just one way to improve your credit score. For example, you can register your current address on the electoral roll or consider connecting to Experian Boost.

Why did my credit score go down when nothing changed?

It may seem like your credit score went down for no reason. Don’t worry, there’s always an answer. Learn about the different reasons for a score drop and check your credit report for clues. If you didn’t change anything, it’s possible that:

• Your available credit went down — Sometimes lenders can decrease your credit limit without your permission, even if you haven’t changed anything. But they must tell you about this in advance.
• Your bank account closed — Banks will sometimes close an old account if it hasn’t been used in over 12 months. They must tell you they’re going to do this.
• You share finances — Someone else’s credit information can affect your score if you have a financial association with them.
• Someone’s using credit in your name — If there are accounts or applications on your report that you don’t recognise, it could be identity fraud. If you think you might be a victim of fraud, it’s important to act quickly and contact your bank as soon as possible. For more information, see our guide to what to do if you’re a victim of fraud.

Credit Score Specialist

What our expert says

Lenders like to see on-time payments on your credit report. But other factors can have an impact too, such as using most of your available credit or making lots of credit applications over a short period. Payments are just one part of the picture. Jacqui Hamilton, Experian UK

Get your credit score with Experian

Checking your score can help you know when something’s changed, so you can stay on track or investigate if there’s a problem. Your score updates every 30 days if you log in, or every day with Experian CreditExpert. Check as often as you like — it’s free and viewing your score will never hurt it.