DID YOU KNOW: Credit scores do not update continuously in your credit report?
Over the course of many credit-related conversations with consumers, a misconception that comes up again and again is the notion that the credit reports maintained by the three national credit bureaus include a record of your credit score that changes constantly, updating like a ballplayer’s batting average over the course of a season.
This image of fluctuating score is wrong, but like many myths, it is a misconception built around a grain of truth.
The most basic flaw in this mistaken belief lies in the fact that a credit score is not a component of your credit file. Credit information stored in your credit reports at each of the national credit reporting companies (CRCs)—Equifax, Experian and TransUnion—is the basis for your credit scores, but your scores are not stored in CRC files. In fact, they’re not stored anywhere.
When a lender requests your credit score from a CRC, the CRC compiles your credit report from its credit-file database, and then runs the data it contains through a credit scoring model—software that analyzes the data and produces a three-digit score. (The VantageScore 3.0 model is one of many commercially available credit scoring models.) This is a reactive process: it only occurs when a party with permissible purpose—the legal authority to do so—requests your credit score.
The three-digit score produced by the scoring model is a snapshot. It reflects the contents of your credit file at the moment it is calculated. The score is provided to the party who requested it, but it is not kept anywhere, so it cannot be updated or changed.
The grain of truth in this misconception has to do with the idea that credit scores obtained on different days can, and likely will, be different. In the normal course of business, information in your credit file gets a full update every 30 days. Different lenders make their monthly reports to each CRC on separate schedules. So if, for example, you have five active loans or credit card accounts, the information in your credit files could change five times each month.
These updates include reports of account usage (e.g., new charges on a credit card account) and payment information, including payment amounts and whether or not they were made before the due date. The age of each account—how long it has been open—also gets updated each month.
The net result of this update cycle means that credit scores pulled one week might be different from one obtained the next.
You can think of these changes in score like the changes you might see in family photos. Newer photos—those taken days, or even hours after earlier ones—will reflect changes in the subjects, some significant, others more subtle.
Just as new snapshots don’t change what appears in older snapshots, new credit scores can’t and don’t change older scores. Pre-existing scores remain static, tied to the date and time at which they were pulled. Scores that have already been pulled can never change, but if you weren’t happy with them, you can take steps today to improve your credit habits and improve future credit scores. Think of it as a chance to retake a less-than-flattering photo.