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, but a month can make a difference.
The same goes with grooming your credit. How often credit scores update might surprise you, and you might see progress more quickly than you expect.
Credit scores come from credit reports
Credit scores are based on the information in credit reports.
Your credit reports are detailed documents that describe your history with handling borrowed money. Three major credit bureaus collect and maintain this information.
Credit scores typically are calculated at the moment they’re requested by a lender. The information on one or more of your credit reports is run through a credit scoring model (the most commonly used ones are FICO and VantageScore). The result is a numerical score that represents the information on that particular report at that moment.
You have many different credit scores, depending on which scoring company was used, which bureau it pulled report information from and what the score will be used for.
To answer the question of how often your credit scores change, it’s important to know how often your credit reports are updated.
Lenders usually report your information monthly
Generally, lenders report both positive and negative information to the credit bureaus once per month. So your credit scores can change a bit each month, depending on the information that’s landing on your credit reports.
There are three major credit bureaus in the United States: Experian, Equifax and TransUnion. Your lenders may report to all three, two, one or none at all. In most cases, big banks report to all three.
So what kind of information are lenders sending to the credit bureaus each month? The data about you or your account may include:
- The timeliness of your last payment (that is, whether you were 30 or more days late)
- Account status (in good standing, closed, delinquent, defaulted, in collections, etc.)
- Account balance
- Activity by authorized users
- Recent credit inquiries
Big fluctuations can happen
Most changes to your credit scores happen incrementally: a few points gained or lost one month, a few more the next. Over time, this can add up to something big, but you’re unlikely to see a significant swing in a short time.
There are exceptions. The following could cause a big fluctuation in your score (think 25 points or more) in one or two months:
A delinquency: Because payment history is one of the biggest influences on your score, it will pinch to have a significantly late payment on your credit report. Falling behind on a bill payment by 30 days or more could cause your score to take a big hit.
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.
A change to your credit card debt load: Another major influence on your score is the amounts owed, or your credit utilization ratio (how much you owe compared to your credit limit). A spike in credit card debt will worsen your utilization ratio, which can drop your score.
But the opposite is also true. If you get a big windfall and use it to pay off your credit card debt, your credit utilization ratio will plunge. This could cause your scores to rise dramatically in just one month.
Lindsay Konsko is a staff writer at NerdWallet, a personal finance company. Twitter: @lkonsko.
Updated June 27, 2017.