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Working to improve poor credit can feel like waiting for a bad haircut to grow out. You may be disappointed at how slowly change seems to occur. On the other hand, if you have a great credit score, one major misstep can send your credit score plummeting, quickly.
To understand how often and why credit scores change, it helps to know how often credit reports update.
Credit scores come from credit reports
Credit scores are based on the information in credit reports.
Your credit reports are detailed documents showing how you've handled borrowed money in the past. They include information about your credit accounts, such as the limits, balances and whether you've paid on time. They also track how many applications you've made for new credit and negatives like collections accounts.
Credit reports are collected and maintained by three major bureaus — Equifax, Experian and TransUnion.
It's wise to periodically check your credit reports to make sure they're accurate. Consumers have free weekly access to their reports from all three bureaus through April 2021; request them by using AnnualCreditReport.com. If you have accepted payment modifications related to the coronavirus pandemic, make sure the accounts are reported correctly to avoid credit damage.
How often do credit reports update?
Most creditors report to credit bureaus monthly. However, they report data at different times throughout the month, and they may report to only one or two credit bureaus instead of all three.
The credit bureaus add new information once it’s reported to them, according to TransUnion. That means your reports are continually evolving.
Once your credit report updates, the new data will be reflected in your credit score next time it's calculated.
How often is your credit score updated?
Credit scores typically are calculated at the moment they’re requested by a lender. To calculate a score, information on one of your credit reports is run through a proprietary formula. The most common ones are by FICO and VantageScore.
Because your credit reports are being updated whenever new information arrives, scores will also fluctuate and can theoretically change many times during a day.
The score you get will vary, depending on:
Which scoring company was used. FICO and VantageScore consider much the same credit score factors but weight them a bit differently.
Which credit bureau supplied the credit report information. Not every creditor reports to all three bureaus, so your report data varies at each.
What the score will be used for — a credit card, mortgage or car loan, for example. Most scores use a range of 300-850 but some specialty scores have a different range.
Big credit score swings
Most changes to your credit scores happen incrementally, but there are exceptions. The biggest factors in your score are paying on time and how much of your available credit you use. Big, sudden drops in your score are likely to come from:
A late payment: Falling behind on a bill payment by 30 days or more could cause your score to take a big hit. Late payments stay on your credit report for seven years and have a powerful effect on your score. If you've fallen behind with one of your accounts, do your best to get current as soon as you can. A 60-day delinquency is worse than a 30-day delinquency, and a 90-day delinquency is worse still, so it pays to get back into good standing quickly.
Using more of your credit limit: Another major influence on your score is your credit utilization, or how much of your credit limits you're using. A spike in credit card debt will push up your utilization, which can drop your score. But the opposite is also true. If you use a big windfall to pay down credit card debt, your score can benefit. Your score will change once the new balance is reported to the credit bureaus.