How Does My Credit Score Change?

Your credit score changes as often as new information appears on your credit report. These changes usually occur monthly and can both positively or negatively impact your credit score. Some of the changes that trigger a score change include updates from lenders, closing or paying off old accounts, opening of new accounts, aging of data, change in credit card balance, or new information.

When you borrow on credit from lenders, they will periodically report your payment history to the credit bureaus. This is usually done monthly and can have a big impact on your credit score. This report will include the payable balance, original credit limit, date opened, and terms late if applicable (30, 60, 90 days).

Closing an old account will usually negatively impact your credit score. By closing an account, you are lowering the available credit at your disposal. If you only have a few accounts open, it would be beneficial to leave them open, since closing them would negatively impact your score. If you are juggling numerous accounts, closing accounts would be seen as beneficial and can positively impact your score. Either way, closing an account will not have a major impact to your score.

Opening new accounts is seen as a negative and thus will negatively impact your credit score. As with closing an account, this will not have a significant impact to your score anyway.

Negative payment information will remain on your account for seven years. Debts that go into collection are removed after those seven years. Accounts that have been recently charged-off, sold to collection agency, foreclosed or filed for bankruptcy will all have significant negative impact to your credit score.

Increases and decreases the balances owed on a credit account can impact your score depending on how significance of the changes. Increasing a balance will usually negatively impact your score, since you are putting yourself more at credit risk. The general rule is to try to keep your credit balance no more than 30% of the available credit limit to maximize your credit score.

In addition to the changes than can change your credit score, it should also be noted the score before changes is also taken into consideration when an impact occurs. The higher the score is, the more the negative information impacts it. For example, a 30 day delinquency for a business with a credit score of 90 will see a much larger drop than a business with a credit score of 60.

As you can see, there are many factors that can change your score. As long as you are on time with your payments, keeping credit balances low, and not opening or closing accounts unnecessarily, you should not see excessive variance in your credit score.