In general, consumers understand that positive behaviors, such as paying down credit card balances or loans, usually translate into improvements in a credit profile and ultimately, a higher credit score. Unfortunately, there is no exact deadline or formula as to when a credit score will update. Let’s dig deeper to find out why.
When Credit Reports Get Updated
Credit reports get updated when lenders provide new information to the nationwide credit reporting bureaus. This usually happens once a month, or at least every 45 days. However, some lenders may update more frequently, depending on their data policies and the relationship that that lender has with a particular credit bureau.
Because lenders don’t all provide updates on the same day, new information may be added to one credit bureau’s report more frequently than to others. Naturally, credit scores fluctuate as information on your credit report gets updated. New balance amounts, bill payments, credit applications and account openings are only a few factors that appear on a credit report and that influence your credit score. To summarize, the following factors affect the updating of a credit score, though again, there is no exact deadline or formula.
Lender Reporting
When a lender reports new consumer activity to the bureaus, the consumer’s file is updated and a new credit score is generated.
Scoring Models
Each credit bureau has its own scoring model, in addition to a timetable, as to when scores are updated based on the model. Internally, each bureau is constantly honing its model, so changes in the model can also affect the changing of a credit score.
Big Credit Score Swings
Most changes to credit scores happen incrementally; however, there are exceptions. The biggest factors in a score are paying on time and how much available credit a borrower uses, also known as credit utilization.
Dramatic, sudden drops in a credit score are likely to come from:
- A late payment: Falling behind on a bill payment by 30 days or more could cause a score to drop significantly. Late payments stay on a credit report for seven years and have a powerful effect on a score. Making an account current can help, as 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 a higher portion of a credit limit: Another major influence on a score is the credit utilization, or how much of a credit limit a borrower is using. A spike in credit card debt will push up utilization, which can cause a score to drop. However, the opposite is also true: A large payment to reduce debt can benefit. A score will change once the new balance is reported to the credit bureaus.
Unfortunately, a large, unexplained swing could also be an indicator of identity theft and should be investigated. Consumers should keep an eye on their credit score and credit report information as frequently as possible and can consider a service like ScoreMaster to monitor credit.
References:
TransUnion – How Long Does It Take a Credit Score To Update?
CNBC.com – Constantly Checking Your Credit Score? Here’s How Often It Updates
NerdWallet – How Often Do Credit Scores and Credit Reports Update?