Why Do Your Credit Scores Change?
Reading time: 5 minutes
- It's completely normal for your credit scores to change over time.
- Information in your credit reports is updated as it is reported to the three nationwide consumer reporting agencies (CRAs).
- A variety of factors can cause changes in your credit scores.
If you're tracking your credit scores over time, you may notice the three-digit numbers may change, even if the most recent score is generated by the same consumer reporting agency as previous scores.
It's completely normal for credit scores to change. But why does this happen?
Why do your credit scores change?
Your credit scores are a snapshot in time, and they change based on your credit behaviors and the information on your credit reports. As new data is reported by lenders, collection agencies and other sources, your credit reports are updated, and the information across your various credit reports may be different depending on what is reported to each of the three nationwide CRAs (Equifax, TransUnion and Experian).
Factors in calculating a credit score
Lenders use many different scoring models. However, in general, credit scores are calculated by considering the following factors:
- Payment history. Your payment history, including on-time, late and missed payments, often accounts for the largest portion of your credit history.
- Used credit vs. available credit. Also known as your credit utilization rate, this ratio refers to the amount of credit you're using compared to the total amount available to you. Lenders and creditors typically like to see you use 30 percent or less of your total available credit.
- Types of credit accounts. Lenders like to feel confident that you can handle a mix of different types of credit. This includes revolving debt, such as credit cards, and installment loans, such as mortgage, student, auto and other types of loans.
- Length of credit history. Credit scoring models often consider the age of your oldest credit account and view longevity favorably.
- New credit. Lenders may also take into consideration any accounts you've opened recently.
Changes to these and other factors on your credit report are what result in adjustments to your credit scores. That data could also include balance changes, the opening of new accounts, payments on existing accounts or closed accounts falling off your credit report after a period of time. If you check your credit score in January and then again in March, for instance, the number may have changed based on account activity reported to the three nationwide CRAs during that time.
It's important to remember that credit scoring models vary. One model may place more importance on payment history, while another might emphasize something else entirely. So, it's not unusual for your credit scores to vary based on the scoring model used.
Reasons your credit scores may have changed
Multiple factors might cause a sudden change in your credit scores, many of which can occur without any action on your part. If your credit score has recently changed, consider the following:
Credit scores may vary across the CRAs.
While a credit score from one CRA may rise and fall, you may also see differences in credit scores furnished by the other two agencies.
Some lenders and creditors report to all three of the nationwide CRAs, but others may report to only two — or none at all. That means the information that each agency uses to calculate your credit score may differ. In addition, the three nationwide CRAs and other credit reporting entities use different scoring models to calculate credit scores, so even if your data is the same across the board, your credit scores may differ.
Some lenders use industry-specific credit scoring models.
In addition, some lenders may use a credit scoring model that's specific to a certain industry, which may not generate the same score you receive from one of the three nationwide CRAs. For instance, if you're buying a car, the lender may look more closely at your payment history regarding auto loans.
While credit score fluctuation is normal, it's important to ensure the changes don't result from inaccurate or incomplete information on your credit reports. Therefore, it's a good idea to regularly review your credit reports from the nationwide CRAs.
The passage of time affects your credit scores.
Even if there are no changes to your credit reports, the passage of time could cause fluctuations in your credit scores. If you have a late credit card payment, for example, its effect on your credit scores may diminish over time. That doesn't mean that it's okay to make a late payment. One of the best habits you can get into is paying your bills on time every time.
Your recent payment history may affect your credit scores.
Making payments on credit accounts is a common cause of fluctuation in credit scores, as payment history is often the largest factor used to calculate credit scores. If you make payments on your credit cards or installment loans, your payment history may be reported to one or more of the three nationwide CRAs, which may cause changes in your credit scores.
Charging or paying down debt may affect your credit scores.
Your debt to credit ratio (also known as your credit utilization rate) is the percentage of available credit you're using. It also factors into credit scoring and may cause your scores to fluctuate. For instance, if your credit card balances change month to month, causing the amount of available credit you're using to move up or down, you may see fluctuations in your credit scores. Payments may also impact your debt to credit ratio, leading to changes in your credit scores.
How often are credit reports and credit scores updated?
When it comes to your credit reports, creditors usually report information to the three nationwide CRAs monthly. However, each creditor may report the information at a different time.
Similarly, you can usually expect your credit scores to update at least once every month. However, it's possible your scores may update more frequently depending on how actively you use your credit accounts.
You should also note that credit scores refresh at different times throughout the month, and there may be instances where it takes a few days or weeks before your scores are updated following new credit activity.
When you check your own credit scores, what you generally see are “educational” numbers that are intended to give you an idea of your scores for informational and monitoring purposes. So, it's a good idea to check your credit scores to gauge your credit health and regularly review your credit reports to make sure the information is accurate and complete. For a free monthly VantageScore 3.0 credit score and Equifax credit report, create a myEquifax account and click "Get my free credit score" on your myEquifax dashboard to enroll in Equifax Core Credit™. A VantageScore is one of many types of credit scores. You can also get free credit reports annually from the three nationwide CRAs at AnnualCreditReport.com.
Make sure your personal details and account information are correct and complete on your credit reports. If you find accounts or balances you don't recognize or something else you believe may be inaccurate or incomplete, contact the relevant lender directly. You can also file a dispute with the CRA that reported the information. At Equifax, you can create a myEquifax account to file a dispute. Visit the dispute page to learn other ways you can submit a dispute.