If you’re checking your credit score regularly, you might notice that the numbers change from time-to-time, even if you’re not making significant financial moves. It might lead you to wonder why these little fluctuations happen and just how often your score gets updated, anyway.
If you’re actively working to improve your credit score, there’s good news: your credit report gets updated regularly, probably even more frequently than you think. If you’re content with your current score, though, you might be unnerved to know that the numbers can change at any time… even if you aren’t doing anything different.
Let’s talk a bit about just how often the credit bureaus will update your credit report, what this means for your changing score, and how often you should be tracking it all.
Updated Balances Impact Your Score
One of the biggest changes in your credit report -- and subsequently, your score – will come from updated account balances. This will include both your revolving and installment accounts, and can impact your credit score in either direction when updated.
With revolving accounts, you could see your credit score fluctuate up or down simply based on the balance remaining when your billing cycle closes each month. This is true even if you pay your bill in full after every statement and don’t actually “carry” a balance at all.
Credit card companies will usually report to the bureaus once a month. When they do, they can either choose to report your last statement balance or the balance owed on that very day – and the difference can play a big role in your credit score.
Say for instance that you have a credit card with a $5,000 limit, and you charge all of your monthly spending on it. You rack up a slew of cash back rewards, then pay off the balance in full, which is usually around $3,000. That’s all fine and dandy, but if your card company reports that $3,000 balance to the credit bureaus, you’re going to also be boasting a 60% credit utilization… which can drop your score by quite a few points.
You can expect accounts of all types to update your credit report every 30 or 45 days (rarely more than once a month). Their updated report won’t always coincide with your statement closing date, either.
Old Accounts Age or Fall Off
As time goes on, your existing accounts will age. This builds up your positive credit history and increases your average age of accounts, which accounts for about 10% of your FICO credit score.
This means that as time goes on, your maintenance of accounts alone will slowly increase your score. The actual impact to your credit score will be minimal (1-2 points over a long period of time).
If you have old accounts that were closed a long time ago, they will eventually age off of your credit report. After seven years of inactivity, they will drop off and the account’s positive (or negative) reports will no longer factor into your score. Depending on whether you had a long history of excellent account management – or a handful of late payments – you can expect your credit score to rise and fall accordingly.
When it comes to negative reports and old accounts disappearing, the updates will happen on a seven-year loop.
Nothing Happens in Real Time
When you’re trying to improve your score, you want to see your efforts reflected immediately. Unfortunately, that’s not how your credit report works.
Even if you pay off accounts in full, increase lines of credit to reduce your utilizations, or get a new credit card to start building a positive history, the impacts will take time. Lenders typically report accounts once a month, which means that your actions today won’t even show up for 1-2 months (by the time you make it through a statement cycle and have the activity reported).
The removal of liens or other negative reports can take months, if not years, to disappear entirely. It all depends on their nature and why they’re being removed (incorrect reports versus, say, aging off).
Even a new mortgage or personal loan can take a few months to appear and start building your positive history. While lenders usually report to the credit agencies once a month, a new account could lag by as much a three months.
This is why it’s so important to start monitoring and cleaning up your credit early, if you plan to make a big purchase like buying a home. In the world of credit reports, the moves you make today can take 30-90 days to even start appearing. If you want to see your credit score climb, you need to make changes as soon as possible.