How Often Do Credit Scores Change?
It’s easy to check your credit score for free. But the widespread availability of credit monitoring and tracking apps makes it tempting to think that you always have a credit score. It’s going up and down behind the scenes waiting to be checked, right? Not quite.
A credit score is a snapshot of your credit at a specific moment. When a creditor requests your credit report and an accompanying score, the credit bureau sends a copy of your report, and a score is generated based on that report. Any change in the underlying report, or even the passage of time, can lead to a change in the score.
When does your credit score change?
In a sense, your credit score is always in flux because the factors that influence a score can change at any moment. At the same time, you don’t actually “have a score” because a credit score is only generated when it’s requested.
But if you’ve been monitoring your credit and see the score frequently change, you may be wondering what’s happening. Or perhaps you get different scores when you use different apps to check your credit. You may even check your score before applying for a loan and find that the loan officer gets a different score when she pulls your credit.
Here’s what’s going on.
Generic consumer credit scores from FICO and VantageScore, the two primary credit scoring agencies, rely entirely on the information in one of your credit reports from Equifax, Experian or TransUnion. Because the information in your credit reports may not be identical, what you see as a change in your score may be due to credit scores being generated based on different data.
FICO and VantageScore also have several versions of their credit scoring models. FICO creates models for different types of creditors (such as a credit score for auto lenders) and has different versions of its scoring models that work with reports from the three bureaus. VantageScore has one scoring model, and it can work with a report from any of the three bureaus. But both VantageScore and FICO periodically update their base scoring models.
In summary, your credit score can change or vary depending on:
- Which credit report the score is based on
- Which credit scoring model is being used
- When the credit report and score were generated
What can cause your credit score to change?
Assuming you’re checking your score based on the same scoring model and credit report, a change in your score is likely due to information being added to or removed from your credit report.
Many factors can impact credit scores, and the factors in your reports can change throughout the month as the bureaus receive and update their records.
In general, the following could lead to a rise in a credit score:
- Paying down loans
- Lowering revolving accounts’ balances
- Making on-time payments
- Derogatory (negative) marks falling off your credit reports
- Opening a new type of credit account
- A longer average age of accounts
- More time passing since a derogatory event
There are also some events that could lead to a drop in a credit score:
- Letting a bill go unpaid for 30 or more days past the due date
- More delinquent late payments (i.e., a 30-day late payment becoming a 60-day late payment)
- Defaulting on an account
- Having an account sent to collections
- Declaring bankruptcy
- Applying for or opening new credit accounts
Because the age of your accounts and the time since a derogatory mark was added to your report can also impact a credit score, your score could also change simply due to the passage of time.
Small ups and downs in your score are normal
If you carefully track your credit, you may see your score increase or decrease throughout the month. You may now have a sense of why that occurs and may be glad to hear that small fluctuations aren’t necessarily a sign that something is wrong.
But if you see a large unexpected drop in one or more of your scores, you may want to review your credit reports for any unfamiliar accounts or activity. An unexpected new account, inquiry, late payment or collection could be an indication of identity theft and fraud.
If you find something, you can contact the creditor to limit the potential damage, take steps to secure your other accounts (such as changing passwords), add a fraud alert to your credit files and dispute the account or information with the credit bureau or creditor.
You may also want to review your credit reports if you notice a large difference between scores based on different credit reports (assuming both scores are created using the same scoring model). Differences between your reports may not be a reason for concern on its own, as creditors may only report account activity to one or two bureaus. But it may still be worth checking to make sure there isn’t any fraudulent activity.
How to increase your credit score: Focus on the fundamentals
Although the world of credit scoring can seem like a large, tangled web, most of the credit scoring models use similar criteria to score consumers. Also, major creditors often report account activity to all three major credit reporting bureaus.
So if you’re trying to improve your credit, it may be best to ignore the slight ups and downs and focus on the actions that could increase all your credit scores.
- Pay down revolving debt
- Don’t miss a bill payment
- Be strategic when you apply for credit
- Don’t close your old credit card
- Stay the course
1. Pay down revolving debt
Credit utilization is one of the most important credit scoring factors. Your credit utilization rate is the percentage of your combined available credit on revolving accounts (e.g., credit cards and line of credit) that you’re currently using. A low credit utilization rate is best for your credit score.
If you regularly carry a credit card balance or have a credit line balance, paying down that debt could help lower your utilization rate. You may also be able to contact your creditors and ask for a credit line increase, which could have a similar result. Although, paying down debt could have an additional benefit of saving you money on interest.
Credit card issuers may report your current balance to the credit bureaus around when they send you your monthly statement. As a result, even if you never revolve any credit card debt, you could still have a high utilization rate that’s hurting your credit scores. You can address this by using a different form of payment throughout the month. Or you could make early payments on your credit card to lower your balance before the card issuer reports it.
2. Don’t miss a bill payment
Your payment history is another important credit scoring factor. Late payments could hurt your credit scores and eventually lead to other negative marks, such as when a creditor sends your account to collections.
Signing up for automatic payments for at least the minimum amount could help you avoid accidentally missing a payment and getting charged a fee or having a late payment reported to the credit bureaus.
3. Be strategic when you apply for credit
Companies may check your credit when you apply for a new loan or line of credit. A record of this check, known as a hard pull or hard inquiry, can remain on your credit reports for up to two years and affect scores for 12 months. Hard inquiries can hurt your credit scores, although the impact from a single hard inquiry is often small and doesn’t last long.
However, you can still benefit from shopping for loans without worrying about the impact on your credit scores.
FICO’s credit scores treat multiple mortgages, auto, and student loan inquiries as a single inquiry if they occur within a 14- to 45-day window (the length depends on the scoring model). VantageScore “de-duplicates” all hard inquiries across account types if they occur in a 14-day period.
You also never need to worry about checking your own credit reports or scores. When you check your file, that’s recorded as a “soft inquiry.” Soft inquiries never impact credit scores.
4. Don’t close your old credit card
If you have a credit card that you rarely use and it doesn’t charge an annual fee, keeping the account open could help your credit scores. The credit limit on the card will add to your available credit, which could help you maintain a lower utilization rate.
Closing an account could also have other consequences in the future. While closed accounts can stay on your credit reports for up to 10 years, when the account does drop off it could also decrease your length of credit history and your average age of accounts, which could hurt your scores.
But if you have to pay an annual fee for your card and don’t benefit from the card’s rewards or perks, keeping the account just for credit scoring reasons likely doesn’t make financial sense.
5. Stay the course
Increasing your scores can take time, and there isn’t necessarily a shortcut. A long history of on-time payments, experience using different types of accounts and positive credit-related behavior can help you build an excellent credit score. And if you do have negative marks on your credit reports, their impact can decrease as time passes.
While you’re working on the fundamentals — keeping your balances low and making on-time payments that get reported to the credit bureaus — you may want to also focus on your financial health. After all, even if having an emergency fund doesn’t improve your credit score, it could help you make on-time loan or credit card payments during a financial crisis.