Why does my credit score keep changing?

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Changes in credit scores are normal, so don’t worry if yours keeps hanging around.


Key points

  • Your credit score is not a number set in stone.
  • As you pay bills, open and close accounts, and charge credit cards, your score may fluctuate.

Your credit score is an important number: It tells lenders and credit card companies how risky you are as a borrower, helping them make decisions about lending you money or giving you access to lines of credit. A higher credit score sends the message that you are at less risk, while a lower score sends the message that a lender or credit card issuer may want to proceed with caution before granting you credit.

It’s a good idea to check your credit score before applying for a large loan, such as a mortgage. And, generally speaking, it’s a good idea to know where your credit score stands.

But if you check your credit score regularly, you may notice that the number fluctuates quite a bit. And if you have a bank account or credit card that notifies you of updates to your credit score, you may see that number change from month to month.

If you’re wondering what’s wrong, fear not. Changes in credit score are normal. And if they are minor, they are generally not a cause for concern. It’s only when your credit score drastically worsens that you need to start digging deeper.

Small changes can happen a lot

There are different factors that go into calculating your credit score. These include:

  • How punctual are you with your bills?
  • How much available credit you use at a time
  • How long have you had credit accounts open?
  • How often do you apply for new credit cards?

As you make payments on your credit cards or loans, that activity is reported to the credit bureaus, which could change your credit score, for better or worse. Similarly, as you build up balances on your credit cards against your spending limit, that too is recorded in your register. And every time you open a new credit card account, that gets reported, too.

Since paying bills, charging expenses, and opening new accounts are things you might do frequently (okay, maybe not as frequently since the latter, but occasionally), it stands to reason that your credit score fluctuates from one month to the next. to another. . Let’s say you have a larger credit card balance that you built up when some unplanned bills came through. If you manage to lower it a month later, your credit score could go up. And if that balance grows the following month, your score could drop.

Also, when you apply for a new loan or credit card, a thorough check is made on your credit report. A thorough inquiry can result in a small hit to your credit score, typically between five and 10 points, which could explain why your score is different from month to month.

When credit score changes are more substantial

Paying off a large credit card balance could result in a nice boost to your credit score. On the other hand, if you fall behind on a bill, it could cause a substantial drop in your credit score.

For the most part, you shouldn’t worry if your score worsens from month to month by a margin of five to 15 points or so. But if you see your score drop 80 or 90 points, that’s more of a problem. In that case, you’ll want to find out why your score took such a hit.

Maybe you have an outstanding bill that you forgot about and that is more than 90 days past due. Those are the kinds of things that can cause a big drop in your credit score. And it’s also the kind of thing you’ll want to rectify as soon as possible.

However, your conclusion should be that small changes in your credit score are normal. It’s annoying to see your score drop by a few points from time to time, but if those drops are minor, it’s probably not worth losing any sleep over.

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