Once you put all the work into cleaning up your credit history you want to see your efforts pay off fast. That makes sense. The reality is the speed at which your credit improvements are reflected in your score can sometimes be manifest quickly and other times rather slowly. The same holds true with credit blemishes. Sometimes these credit problems degrade your score fast and other times they don’t. It relies on several factors, most of which are beyond your control.
How does the credit score change process work?
Factors that Affect Your Credit Score
Before even delving into the question of how fast your credit scores change, you first need to consider the factors that will cause it to happen. In theory at least, unless one of the below events takes place, your credit score will remain relatively constant.
Here are some examples of factors that will cause your credit score change noticeably:
- Recent inquiries for new credit
- New loan accounts
- Late payments
- Newly paid loans
- New public records
- A recently added collection account
- Recently paid collections
- Recently opened or closed credit lines
- Corrected errors on your credit report
Each will cause a change in your credit score, but to the degree that happens will vary based on each event. For example, a new late payment reported in your credit report will have a more dramatic effect on your credit score that a recent inquiry for new credit.
The bottom line is that it isn’t just how frequently your credit score changes, but what it is that’s causing the change.
The General Rule
In the normal course of events, your credit score will update roughly once every 30 days. This is because your creditors typically report to the credit repositories on a monthly basis. The credit repositories may not adjust your credit score for each entry, but they certainly will with multiple updates from various creditors.
The process isn’t as fast as we’d generally like, especially when trying to accomplish improvement in your credit score. For example, you could pay off one or more small collections, that will add several points to your FICO score, but the change won’t show up for several weeks.
Mortgage lenders have an advantage here. Since so much rides on a credit score when applying for a mortgage, they have access to a service that is generally referred to as rapid rescore. This service enables a mortgage company to request a rescore based on the submission of new information to credit repositories.
Once the information is submitted to the credit repository, a rescore will generally take place within a few days. It’s important to understand however this is not credit repair in any way, shape, or form. In order to make it work, the debtor must either take action that will increase their credit score – such as paying off a debt or a collection – or submitting conclusive evidence that negative credit information has been reported in error.
The service actually isn’t anything revolutionary. It’s just an expedited rescore, based on the submission of legitimate information.
Much Depends on How Much Derogatory Information is on Your Credit Report
Unfortunately, negative information has a greater impact on your credit score than good credit history does. Timing has a major hand in that arrangement.
For example, a late payment reported by one of your creditors can have a swift and significant impact on your credit score. Your score may drop 20 or 30 points as a result of a late payment with a revolving credit line. The drop maybe even greater if the delinquency occurs on an auto loan or a mortgage.
Credit repositories generally view a recent late payment as a distress signal, so it will take on disproportionate importance. Needless to say, several late payments made within a few months could drop a credit score in a big way. And a bankruptcy or foreclosure entry can take a credit score down in a heartbeat.
Good credit however takes much longer to impact your credit score. That’s because it takes a long time to develop a strong credit history. Where delinquencies can occur in a matter of weeks, good credit history takes years to come about. Making all of your payments on time this month, won’t raise your score as much as a single late payment will drop it.
This is why achieving and maintaining a good credit score is so important.
Different Credit Repositories, Different Changes
There’s yet another factor that affects how fast your credit scores change. There are three credit repositories – Equifax, Experian and TransUnion. Not only do each of them have slightly different ways of calculating your credit score, but not all creditors may report to all three repositories. For example, a creditor may report to only one or two repositories, which is why you may have much better score with one repository than you do with another.
The timing of creditor reporting can also be a factor. If a creditor reports to TransUnion on the seventh of the month, but to Equifax on the eleventh, there will be a difference in your scores between the two repositories for the four days in between the reports.
The Most Effective Ways to Raise Your Credit Score
If you want to increase your credit score, there are some ways that will be more effective than others.
Two of the best ways to increase your credit score – fairly quickly – include having errors removed from your credit report, and paying off a past due balance, or a large number of smaller ones. (Important: If you have an error removed from your credit report, be sure that the change is reported to all three credit repositories. A change on one will not automatically carry through to the other two.)
If your credit score is well below where you need it to be, you may want to involve the services of a credit repair company – particularly a law firm. They will know exactly what to do in order to improve your credit score both in the short term and in the long run.
Given that bad credit can impact your credit score immediately, while a good credit score needs to age like fine wine, you should want to get moving on this as soon as you can. Time is your best friend in improving your credit score, but you may need to take care of a few credit issues first.