You know the commercial that shows a guy with a credit score tattooed on his arm? That’s one of the worst ideas ever since your credit score isn’t a fixed number. Info on your credit report determines your credit score. The data constantly changes on your credit report, every time you have credit activity.
Not only does your credit score change, but you’ve got hundreds of different versions of your credit score. A credit score is an algorithm developed by a company. Some are general while some are specially designed to assess risk for a mortgage, car insurance, or a vehicle loan, for instance.
Plus, there are thee credit bureaus – Experian, TransUnion, and Equifax. Each has slightly different data on your credit file so each of their standard credit scores will differ. With this in mind, one question consumers often have is how often their credit score changes. Let’s dig into that.
Why Does Your Credit Score Change?
The basis of your credit score is your credit report. That report is data-driven by updates from creditors, debt collectors, and the court system. If the court issues a judgment or lien against you, it will be reflected there.
When you file bankruptcy, the court enters it, and it reports to the credit bureaus as well. If you pay a debt collector, they should report the payment and alter the record. If a debt collector buys a debt you owe, they’ll enter a collection item on your credit report.
Each month when you pay on your credit card, mortgage, or vehicle loan, the activity should report to the credit bureau. If you miss a payment, that shows up too. The balances also change each month. Your data changes based on changes to vehicle, mortgage, and credit card balances.
How Often Does Your Credit Score Change?
You can see above what factors influence your credit score. These items update to your credit score often. Some creditors report monthly, some more often. The courts might report the judgment the day it goes through or at the end of the month.
A debt collector might report at any time. There is no set schedule to determine when a creditor or other source of data will report to the bureaus about your activity with them. But it’s safe to say, at a minimum, that your credit score will change at least once a month.
Your credit score isn’t sitting in a vault. It’s also not a big ticking display like on the show “24”. Your credit score generates when you authorize a creditor to access it. The information available at the time determines the score.
Some credit card companies provide you a monthly score update. They do this by running a soft pull and crunching the data. Your credit score will change every month unless you have no accounts, no activity, and no movement in credit and finance data. This is a rare situation.
Sudden Changes to Your Credit Score Can Occur
Ordinarily, changes to your credit score are minor. You might move down a few points month to month if you had some credit inquiries or the balances on your credit cards increased by a few hundred dollars.
For your score to make a bigger movement, something bigger must occur. For instance, if you miss a mortgage or credit card payment, your score could plummet 50-100 points. If your student loans move from delinquent to default, you could see a significant dip.
How Often Should You Monitor Your Credit Score?
You need not obsess and watch your credit report daily to make progress. However, you want to keep a recurring eye on it throughout the year. This lets you know if there are signs of identity theft or fraud, errors on your record, or if you’ve moved up or down a bracket.
When you’re working to improve your credit score, regular monitoring is essential. One of the easiest ways to keep an eye on your score without a hassle is to sign up for a low-cost monitoring service that alerts you when there are changes and activities.
When you’re ready to re-establish your credit score after bankruptcy or a financial fiasco, check out the useful information in the Credit Score Keys DVD.