Your credit report is a record of your payment history of your financial accounts.
Banks, credit card companies, auto lenders and mortgage companies that you do business with report your payment history monthly to one of more of the three main credit reporting companies, Experian, Equifax and TransUnion. However, all these companies may not report data at the same time in the month.
So What Does That Mean?
What that means is that your credit report can be constantly changing, especially if you have a lot of accounts. And since your credit report can change often, so can your credit scores since scores are based off the data from your credit report.
Let's put this into a real world example. Let's say you had a really rough month with your kitchen appliances and they all broke beyond repair at the same time.
You decide to buy new appliances for $7,000, and pay with an existing credit card account with a $10,000 limit. Also hypothetically, say this particular credit card company reports data to the credit reporting companies immediately after you make your purchase. For a period of time, your account will have a high credit utilization ratio, meaning that your spending is close to the credit limit.
Of course, once you start paying down the balance on the account, your credit utilization ratio will decrease, and your credit scores will reflect that positively.
To learn more, check out these additional articles about your credit report and what it means to your life.
- How Often Is My Fico® 8 Score Updated?
- Credit Report Basics
- How Disputing Information On Your Credit Report Affects You
You can get more information about how to monitor, protect and manage your credit at experian.com/education.
If you have questions, submit them through Experian's Facebook or Twitter with the hashtag, #AskSusie. You can also email me your questions directly at AskSusie@experian.com and I will answer them here.
Editorial Disclaimer: Opinions expressed here are author's alone, not those of any bank, credit card issuer or other company, and have not been reviewed, approved or otherwise endorsed by any of these entities. All information, including rates and fees, are accurate as of the date of publication.
This article was originally published on April 4, 2017, and has been updated.