Our members ask us this question a lot.
The quick answer is that your credit scores change about once a month, but only if there was a triggering event.
The next, and more complex, question is: “Why only once a month?”
Well, let’s geek out for a minute and crack the code.
How credit bureaus generate your score
First, it’s important to know how the major credit bureaus create a credit score.
A credit score is composed of financing data from several angles–from the age of your credit accounts and the amount of credit extended to you, to how promptly you pay on your debts and how often you seek new credit.
Any time you receive something that you do not immediately pay for, you are receiving credit from a creditor. That could be from any bank, credit union, supplier, or manufacturer. You may be surprised at the number of ways credit impacts your business.
Bureaus obtain the data needed to generate a credit score through partnerships with all your creditors. Once they have this data on hand, the bureaus use a variety of credit score calculation algorithms to determine your score.
Each bureau may use a different algorithm (like Vantage or PAYDEX®), giving differing weights to each individual factor on your credit report. This is why your credit score can be so different between bureaus, and also why a late payment on a single account may impact your Experian credit score more so than your TransUnion score.
Great, but WHY does it only change once a month?
Now that we know how your score comes to be, we’re ready to answer the question.
Generally, creditors will report your debts to the bureaus at the same time they report them to you. When your bank sends you a credit card statement, they’re likely sending that same data to the bureaus. It’s certainly not a guarantee, and each creditor may differ in the way they report your data, but it’s a fairly safe assumption.
So if you want to see the largest changes in your credit score, pull your report after all of your bank statements and invoices are in for the month.
Regular monitoring can keep your credit in check
Monitoring a credit score is a lot like monitoring weight loss. Fitness experts will tell you to weigh yourself once a week at the same time for the truest indicator of progress. The same holds true for a credit score.
If you pull your credit report once a month at the same time, you’ll be able to see real progress over time and you won’t get tripped up by momentary hiccups in your score.
You’ll also be aware of any large credit events like inquiries, new accounts, and late payments—all of which can have a major impact on your score and wind up costing you thousands of dollars.
Learn more about how credit monitoring can give you peace of mind and save you money.
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