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Wondering why your credit score seems different every time you check it? Credit scores can change frequently, reflecting updates to your credit files at the three national credit bureaus. Here's what you need to know about how and why credit scores rarely remain stagnant.
Your Score Can Change When Your Credit Report Is Updated
Credit scores are calculated by performing complex statistical analysis on data compiled in your credit reports at the national credit bureaus—Experian, TransUnion and Equifax. The bureaus update your credit reports to reflect new information about your credit usage, including:
- Payments you've made (and whether they were made on time)
- Changes in your credit card balances
- Your total outstanding debt
- New credit applications you've made or new loan or credit accounts you've opened
- If you use Experian Boost®ø, your credit scores based on Experian data can also reflect your utility and cellphone payments.
The credit bureaus receive information about your activity in reports from the credit card issuers, lenders and potentially other companies with whom you have financial relationships.
How Often Do Creditors Report to Bureaus?
Each creditor reports to the bureaus according to its own schedule—typically every 30 to 45 days. Reports are seldom made to all three bureaus at the same time; for example, a given creditor might send a report to Experian this week but not get it to TransUnion until next week (or vice-versa).
Every new report from a creditor brings potential adjustments to your credit report, which are reflected in changes in your credit scores. Depending on how many credit accounts you have, it's possible for your credit score to change weekly or even daily. (And depending on the time of day your report happens to get updated, differences in scores taken just an hour apart could reflect changes in credit file data.)
Exactly how much your score will change with each update depends on how much your credit card balances fluctuate, how often you apply for and open new accounts, and whether you're keeping up with bill payments. Some score differences are also attributable to the specific credit scoring system used to calculate the score—FICO® Score☉ or VantageScore®, for instance—and even which version of the specific scoring system is used.
Factors to Focus On to Improve Your Credit Score
If you were to check your credit score every day, no matter which credit scoring system was used, it would be normal to see the score move up and down a bit. Rather than worrying about these small fluctuations, your focus should be on long-term score improvement.
Fortunately, no matter which scoring system is used, you can promote credit score improvements by cultivating good habits around a set of factors that influence all credit scores.
Those factors are:
- Payment history: Making timely payments is the most important contributor to any credit score, and no single event has a greater negative impact on your score than a late payment. (Bankruptcy has a longer-lasting impact on credit scores, but it's very rare for anyone to file bankruptcy before accumulating one or more late payments that have already lowered their credit scores considerably.) Payment history accounts for 35% of your FICO® Score.
- Credit utilization: Your credit utilization ratio, the percentage of your credit card borrowing limits represented by your outstanding balances, accounts for about 30% of your FICO® Score. Using more than 30% of your available credit can have a negative impact on your credit scores.
- Average age of your credit accounts: You can't do much to influence this factor, but over time, as long as you keep up with your bill payments, your credit scores will tend to improve. Closing credit card accounts can eventually reduce the age of accounts, so think twice before closing older accounts, even if you don't use them often. The age of your credit accounts is responsible for about 15% of your FICO® Score.
- Credit mix: Credit scoring models consider how many credit accounts you have. A mix of loan types—including installment loans and revolving credit accounts—is seen as a sign of solid debt management, and tends to promote credit score improvement. Credit mix accounts for about 10% of your FICO® Score.
- New credit activity: Credit checks related to new credit applications, known as hard inquiries, typically have a short-term negative impact on credit scores, as does opening new loans or credit accounts. As long as you keep up with your bills, your scores typically rebound from these dips within a few months. New credit activity is responsible for about 10% of your FICO® Score.
Continual updates to your credit report can cause frequent credit score changes, but day-to-day and week-to-week fluctuations are less important than long-term improvements you can achieve when you develop good credit habits.