Hopefully, you’ve been following our blog and working hard to take control of your finances. And if your goal was to clean up your credit report and reach a higher score, then you’ve likely been able to start paying off debt and making payments on-time. But how long do you have to maintain this good financial behavior to see the benefits on your credit report?
The answer is immediately, constantly, monthly, and over several years.
Allow us to explain.
Most businesses and credit card companies operate on a schedule, considering they have millions of accounts. This means that they likely report payments at the end of a billing cycle, once per month. This is where the monthly update comes in.
However once the credit bureau receives the information, your report is updated almost immediately. And because you likely have various credit cards or loans, all operating on different schedules, your report could change from one day to the next if the businesses to which you make payments send their information on different days, which is likely.
Other information, specifically public records, can take a bit more time. If you filed for bankruptcy, a tax lien, or another civil judgement is filed, it could take anywhere from one week to several months for it to appear on your credit report.
Removing items from your credit report also affects your score and history, and also can happen daily. Once the 7-year time-frame for delinquent accounts is up, it is automatically removed, as is other negative items after their respective time has been served. This is another factor that can cause your credit report to change frequently.
How does all of this changing affect your credit score?
Credit scores are not a set-in-stone number, and your credit report is not a piece of paper filed away under your name that is pulled out for companies who ask for it. Rather, your information is simply stored and when someone asks for a report, that information is compiled into a report and given a score based on the information. Then it is thrown out. The very next day, if someone requests your credit report, your information will again be compiled and given a score, which could be different than the day before.
In this way, your credit score is like your weight – it fluctuates daily and even throughout the day, so comparing it over short periods of time is pointless. If you have reason to closely monitor the information on your credit report or are working toward a goal of applying for a mortgage, etc., it’s best to check your report monthly to get an idea of the general direction it’s going. Plan on giving yourself up to 6 months of checking and monitoring to make sure there are no mistakes and that you have time to fix any errors. This will assure you that everything looks good for you to be approved for a mortgage or other loan for which you plan to apply.