There is a Company Preference option: “Automatically Use Credits”

if this is switched on then the credits you created were immediately applied

I believe they get applied to the oldest open bills first.

Resolution for 'bills first issue: 'I’ve posted Supplier credits, but, when I’m making a payment, these credits are not appearing so I can apply them to the payment.' available: Yes.

The bills first issue or error code is a known issue in Quickbooks Online (QBO) and/or Quickbooks. Support for this issue is available either by self-service or paid support options. Experts are available to resolve your Quickbooks issue to ensure minimal downtime and continue running your business. First try to resolve the bills first issue yourself by looking for a resolution described in the article. If it is a complex bills first issue or you are unable to solve the issue, you may contact us by clicking here or by using other bills first support options.

For more information about resolving issues related to bills first in Quickbooks/QBO or to get support for the issue 'I’ve posted Supplier credits, but, when I’m making a payment, these credits are not appearing so I can apply them to the payment.', click the link below: