How Often Is Your Credit Score Updated?
For those working on improving their credit, seeing changes is important. But, how often is a credit score updated and when should you expect to actually see that number budge? As a general rule, expect to see changes within 30 to 45 days; however, when new information is received, credit bureaus recalculate your score immediately.
How Often Does a Credit Score Update?
There is no law requiring lenders to report information to credit bureaus at a specific time. Every account submits the information on its own schedule, which results in credit scores that can change as quickly as the credit bureaus receive the data.
Keep in mind that creditors are not required to report to the three major credit bureaus — Equifax, Experian and TransUnion — but they do so because it is in their best interest. Creditors need to ascertain a borrower’s creditworthiness and lenders do not necessarily send your information to all three bureaus, making the process even more confusing. That is why there is no one-size-fits-all answer to how often a credit score updates. Since there is no particular rule, the process is somewhat fluid.
Factors Affecting Your Score
Some factors will impact your credit score faster than others. Paying off a credit card improves your score relatively fast, but paying off a car loan, mortgage or other installment loan can actually cause your scores to dip for a while. Although the loan closure means these accounts are inactive, your score should rise within two months.
Remember that lenders like to see a credit mix. That mix may consist of credit cards, car loans, personal loans, or a mortgage. A mix of various types of credit instruments shows that you are capable of managing different kinds of debt. Although a credit mix is positive, applying for substantial amounts of credit in a short time is not. Every lender must request your report when considering a credit application, and that results in a “hard inquiry.” Hard inquiries can deflate your score, as these applications could signal your financial situation is unfavorable.
Working on Your Credit Score
Nothing gives more of an incentive to control your future credit score than taking action. Contrary to popular belief, checking your credit score regularly does not affect you negatively. In fact, periodic checking is necessary to discover any errors on your credit report. Such errors can really hurt your score, so the sooner they are found and corrected, the better.
When it comes to your credit score, nothing will affect it as much as not making payments on time. If you continue missing payments, your credit score will keep declining. Although an account going into collection is bad, it is not considered as detrimental by credit bureaus as bills that simply go unpaid. That is because paying off a collection account shows that even with past financial problems, you are committed to paying off this debt. That is especially true if the collection account involves a credit card.
Credit utilization is another area that can make a big difference in your credit score. This term is finance-speak for the percentage of credit authorized versus the amount of credit used. For best results, your credit utilization rate should never exceed 30 percent of your available credit. If you are using more — such as maxing out your credit cards — that indicates financial difficulties and thus less creditworthiness.
Calculate your credit utilization by adding up the balances on all of your credit cards and comparing them to your borrowing limits. Take the total balance amount and divide it by the total of all credit card limits. Then, multiply that number by 100 to determine the percentage. You want the lowest credit utilization rate, so if your rate is high, pay down your balances as much as possible.
There are situations in which you can rapidly have your credit rescored, but the activity requires a request by a lender. This rapid rescoring usually takes place for mortgage seekers who are just below a credit score allowing them a lower interest rate. You will have to take some action — such as paying down a credit card balance — but after that is done, the lender will ask a credit bureau for a rapid rescoring. Once this is completed, you should receive the results within days.
Everyone wants to control their future credit score so they qualify for the best terms possible for mortgages, car loans and credit card rates. With SmartCredit tools, you can outline a plan in no time. ScoreTracker allows you to see your different credit scores and their progress; ScoreBuilder* is a personalized, 120-day plan that shows you what is helping and hurting your score and the actions to take; and ScoreMaster assists you with timing, monitoring, spending and payment decisions. Find out how SmartCredit® can help you achieve your credit goals today.
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