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Key takeaways
- Credit scores update whenever lenders report information to the major credit bureaus, meaning your scores can fluctuate multiple times a month.
- Some factors that can cause your credit score to change include hard inquiries, loan payments, bankruptcies, credit utilization, and the age of credit accounts.
- Scoring models like FICO® and VantageScore® use data collected by the three major credit bureaus – Equifax, Experian, and TransUnion – to calculate your credit score.
Your credit score is a key part of your financial life. But it can fluctuate throughout the month as lenders report new information to the credit bureaus. Taking out a new loan, increasing or decreasing your credit card balances, and making payments on your debts can all cause your credit score to rise or fall.
We’ll explore the main factors that cause your score to fluctuate so you can take the first step toward building a stronger credit history.
How often does your credit score update?
The frequency at which your credit score updates depends on your lender. Every month, lenders report information from your credit accounts, like credit cards, to the three major credit bureaus. Creditors choose their own reporting schedules, so the timing for credit score updates can vary.
Some report at the beginning of the month, while others report at the end of the month or somewhere in the middle. In general, your lender will report information to the credit reporting agencies on your statement date.1
If you’re checking your credit regularly, you may notice that your score fluctuates throughout the month. That’s not necessarily bad; it just means that credit scores aren’t fixed or static.
Why do credit scores update?
Credit score updates can happen for several reasons. Positive changes, like making an on-time payment on a loan, can add points to your score. Negative changes, like a missed payment, can lower your score.
Here are some of the most common reasons for a credit score change.
1. Hard inquiries
A hard inquiry occurs when you apply for credit and a lender requests a copy of your credit file. Hard inquiries account for 10% of your FICO credit score, and each one can cost you a few credit score points.2
Soft inquiries, like checking your credit yourself or getting pre-qualified for a loan, won’t affect your credit score.
2. Late payments
Payment history accounts for 35% of your FICO credit score, making it the most important overall scoring factor.3 Paying credit cards or other debts late could cause a significant drop in your score.
As a general rule, the higher your score is before a late payment shows up on your credit report, the steeper the decline tends to be.4 A late payment stays on your credit report for seven years.5
3. Bankruptcies
Bankruptcy can help you wipe the slate clean on debt and get a fresh start. However, one of the major downsides of filing for bankruptcy is that it can significantly harm your credit score. As a result, it could make it very difficult to qualify for new loans or credit cards.
The length of time it takes for a bankruptcy to fall off your credit reports depends on which type you filed. Chapter 7 bankruptcy can stay on a credit report for up to 10 years, while Chapter 13 can stick around for seven years.6,7
4. High balances
Amounts owed, particularly your credit utilization ratio, is the second most important FICO credit scoring factor. Credit utilization refers to the percentage of your credit limit you use at any given time and accounts for 30% of your score.3
Maxing out credit cards can negatively affect your credit utilization ratio and cause your credit score to dip. A good guideline is to only charge what you can afford to pay off in full each month. This will keep your credit utilization low, as well as help you avoid interest charges.
5. Age of accounts
Credit age makes up 15% of your FICO credit score.3 The longer you’ve been using credit, the better. Why? Because lenders want to see that you have a lengthy track record of using credit responsibly.
As your credit accounts age, they can positively impact your scores. Opening new accounts or closing old accounts, on the other hand, can drag your average credit age down and negatively impact your credit score.
How are credit scores calculated?
The three major credit bureaus that collect data from lenders to create your credit reports are Equifax, Experian, and TransUnion. Credit scoring companies use the information inside these reports to calculate your credit scores.
One of the most popular credit scoring companies is FICO – around 90% of lenders consider your FICO score when deciding whether to lend you money.8 Based on FICO’s most popular credit scoring model, credit scores range from 300 to 850.9 Another popular scoring model, VantageScore, has the same range.10
Although the scoring models are somewhat different, both consider your:
- Payment history
- Amounts owed
- Length of credit history
- New credit
- Credit mix
Your score can vary depending on which credit bureau’s report is used and which scoring model version is applied. Plus, some lenders don’t report your account activity to all three bureaus. If a payment is reported to one bureau but not another, the scores calculated from those reports may differ.
How can you check your credit scores?
There are several ways to check your credit score for free. All three credit bureaus let you check your credit score by signing up for a free account. Some lenders, credit card companies, and banks also provide free FICO scores to their customers.
To read your credit reports for free, visit AnnualCreditReport.com and request a free credit report. Federal law gives you the right to access your credit report once every 12 months, but the three credit bureaus have permanently extended a COVID-era program to provide free weekly credit reports via AnnualCreditReport.com.11
Reviewing your credit reports on a regular basis helps ensure they are accurate. If you spot an error that could be unfairly dragging down your credit score, you can submit a dispute to try to have it removed.
Keep an eye on your credit score
Credit scores are ever-changing. If you check your credit and notice that it’s decreasing, don’t panic. Investigate the cause of the change, and then make a plan to reverse it. The more proactive you are about staying on top of your finances, the better your credit health is likely to be in the long run.
If you’re considering a new loan or credit card, learn how to improve your credit score to secure lower rates and better terms.
Frequently Asked Questions
What day of the month does my credit score update?
There’s no single day of the month that your credit score updates. Lenders report to the credit bureaus on their own schedules, so your score can change multiple times throughout the month.
Why is my credit score different across the three bureaus?
Not all lenders report to all three major credit bureaus – Equifax, Experian, and TransUnion – which can cause slight differences in the information on each report and lead to score variations.
How quickly does a payment update on my credit report?
Lenders typically report your payment activity once a month, so it can take up to 30 to 45 days for a recent payment to appear on your credit report and potentially affect your score.