Your credit report is a fluid, ever changing record of your financial obligations. It’s
updated possibly dozens of times each month, at different times. In fact, every active
account that you have, regardless of whether or not there’s a balance, is likely updated
on your credit file at different times once every 30 days.
Add to that the fact that there are four credit reporting agencies (don’t forget about
Innovis Data Solutions) and you have constant updating of one or more of your credit
reports at any given time. The credit reporting agencies don’t collaborate on when
they’re going to update your credit files with new data. And, this is the very reason that
your credit scores change so often.
First off, credit scoring systems have no memory. That means just because you scored
out at a 730 yesterday doesn’t mean you’re going to have a 730 today or tomorrow or
next week. This is good news and bad news at the same time. For consumers who have
poor scores there is light at the end of the tunnel if they can get negative data removed
or they pay down credit card debt. Their scores would change immediately when the
data is updated.
This can also be bad news, especially for consumers who have just taken on new debt
or just had something negative hit their credit files. This is the primary reason some
mortgage lenders are pulling a second set of credit reports just before closing. They
want to see if your risk profile has changed during the underwriting process.
Credit scoring systems are what’s referred to as “dynamic.” The score is calculated
based on the then current snapshot of your credit report, and then it’s forgotten. The
credit bureaus don’t store your score, which is why it’s not a permanent part of your
credit files. And, it’s also the reason none of the mandatory free credit report disclosure
laws apply to credit scores.
It’s certainly possible that your credit file could change and NOT cause a change in
your credit scores. But, that’s not terribly likely considering just how much of your
credit report changes from day to day and month to month. Think about how often the
balances on your credit cards change, and by how much. Each time your balances go
up, or go down, your scores are likely going to change.
Michael B. Citron is an internationally known public speaker and author. He lectures for professional associations worldwide. Michael is a serial entrepreneur who is dedicated to living the American dream, and helping others to do the same. His role at DisputeSuite.com has placed him in the spotlight of the credit repair industry. DisputeSuite is the largest provider of technology and education services to the industry, and has been a catalyst in the forward movement to standardize the credit repair industry.