As you check your credit score over time, you may find that the three-digit number tends to fluctuate—even when it’s generated by the same credit reporting agency (CRA). If this is the case, there’s no need to panic. Credit score fluctuation isn’t out of the ordinary.
Timing is everything
Your credit score isn’t a fixed or static measurement. Instead, it constantly changes based on your credit behaviors and the information in your credit report, which itself is constantly being updated.
Think of your credit score as a moving target. It is always calculated based on the most recent and up-to-date credit information available, so it could change every day as lenders, collection agencies, and public records report new data that is then listed in your credit report.
If you pulled your credit score from one of the three national CRAs at the start of the new year and then viewed it again in March, for example, the score may have changed based on the difference in your credit accounts over those months.
The passage of time—even if the information in your credit report remains unchanged—could also cause your credit score to fluctuate. This is because the information in your credit report actually becomes less significant as time passes. As a late payment or inquiry gets older, for example, the effect it has on your credit score will typically diminish.
Negative information will also completely fall off of your credit report after a designated amount of time has elapsed, which could cause your credit score to change in what may seem like random fashion. In general, negative information will only remain on your credit report for seven years from the date of last activity, while most bankruptcies will typically stay on your credit report for 10 years.
(Pull your credit report for all three bureaus at Equifax.com)
Common reasons your credit score may fluctuate
Payment history is the largest factor used to calculate your credit score, and new payment behavior is a common cause for credit score fluctuation. If you have a credit card or an installment loan, you are likely making payments each and every month. That constantly updated payment history could cause your credit score to change.
In addition, when you make payments on an installment loan, such as a mortgage or car loan, you are decreasing the amount of overall debt you owe. This could also cause an increase in your credit score.
Your debt-to-credit ratio—or how much of your available credit you are using—is another important factor that helps to determine your credit score and could cause credit score fluctuations, especially if your credit card balances change from month to month.
If you rack up high balances on your credit cards one month and use up 60 percent of your available credit, for example, your credit score could drop. If you charge only a few purchases the following month and use 20 percent of your available credit, you could then see your credit score jump. (Note that experts tend to agree that you should avoid carrying a balance of more than 30 percent of your credit limit to be viewed most favorably by lenders.)
Fluctuation between credit reporting agencies
While your credit score may fluctuate within one CRA, you could also find that you have different credit scores between the three CRAs.
Some creditors do not report their information to all three of the national CRAs, which means that each agency could have a slightly different set of data from which it calculates your credit score. Even if your data is consistent among the three national CRAs, each one uses a different scoring model, and this could also generate different scores.
Your lender may also use a credit score that is different from the ones you have accessed on your own. Some lenders use industry-weight scores—meaning a mortgage lender would use a different scoring model than an auto lender—while others use blended scores from all three CRAs.
Even though it’s normal for your credit score to fluctuate, both within and between agencies, it’s important to ensure that the changes are not the result of inaccurate or outdated information in your credit report.
Regularly pull a copy of your credit report and carefully comb through it to make sure your personal and account information is correct and up to date. If you do spot an error, immediately file a dispute with the agency reporting the mistake.
Remember that improving your credit score takes time and patience. Try not to worry about small fluctuations. If you are practicing creditworthy behavior, your score will gradually improve over time—even if it dips down occasionally along the way.
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