Why you shouldn’t apply for credit right away after positive account activity, like payments and promises of bad debt deletion

It happens all too often. A consumer pays down a large balance or receives a promise to have a bad debt or other negative mark removed from their credit report. The consumer, rightfully proud and excited, applies for credit almost immediately. The problem is that account activity isn’t reflected on your credit report instantly. So, even if you pay off all of your debt today, tomorrow, or a few weeks from now, your credit report will still display your previous balance/account history.


In some instances, some lenders have been known to report new balances to credit bureaus after the customer’s balance reaches $0. But, this practice is likely very rare and should not be relied on. Instead, when there are any changes to your credit accounts (payments, promises of the deletion of bad debt, credit limit increases, etc), you should be prepared to wait at least 30 days for the activity to be visible on your credit report. 


It’s also important to check your reports at all three major credit bureaus (Experian, Equifax, and TransUnion). Don’t assume that because you see the update in your report at one bureau that it’s also reflected at the other two bureaus. In fact, it’s highly unlikely that all bureaus will start displaying the updated account data on the same day.


Unfortunately, if you’re applying for credit and are expecting the lender to base their decision off of your current credit report, that may not happen. Some credit card companies, like American Express and Capital One, have been known to use credit reports that are months old. This occurs when the consumer has an existing relationship with the lender. It’s common for credit card companies to perform regular customer account reviews, which include a soft pull of the customer’s credit report. This is how a lender may be able to access an older credit report and use it to determine how much they’ll lend to you. So, if you’re applying for credit with a lender that you currently have a relationship with, it’s important to contact them to determine which credit report you can expect them to pull from. This applies whether it’s an impromptu application or one that you’re planning well in advance.