Your credit score isn’t updated live, sorry. Although it’d be awesome to see some credit-building magic happen right in front of your eyes, not all dreams can come true. Credit scores don’t update as often as you may think.
You won’t see a change in your score from day to day or even week to week. Your credit score usually updates once a month or at least every 45 days, but don’t give up hope. Your positive actions won’t go unnoticed.
In between credit score updates, you should use all the tactics and tools available to improve your credit score. We all love instant gratification, but credit-building is a long game; you don’t get to see the impact of your actions immediately. Just give the system some time.
What To Do In The Meantime
In the meantime, keep up the good work! As long as you’re taking action to improve your credit score, you’re moving in the right direction. Think about it this way: completing an assignment doesn’t instantly impact your grades. You have to turn in your work, get it graded, have the grade uploaded, and then you see a change in your GPA. Credit scores work the same way.
Just like you do your homework in between semesters, you should work on the aspects that make up your credit report in between updates.
What Goes into a Credit Score?
Your credit score is determined by credit scoring models like FICO and VantageScore. Although the actual formula used to figure out your score is top secret, you should keep some general guidelines in mind when trying to make a change.
Your on-time payment history accounts for about 35% of your credit score. Make sure you’re paying all of your bills on time from month to month. You can even try to get your rent and utility bill payments reported to the credit bureaus if you know you’ll always stay on top of those. A missed payment can stay on your credit report for seven years, so we’re begging you, please stay on top of this. Humans make mistakes so setting up automatic payments can keep your mind at ease.
Your credit utilization accounts for about 30% of your credit score. Try to pay off some of your debts and keep your credit card balances low to ensure your overall credit utilization ratio is in a good place. If you drastically improve your utilization, you’ll see a change in your credit score the next time it’s updated.
Your length of credit history makes up 15% of your score. If you’re fresh to financial independence, there isn’t much you can do but start off strong.
Your credit mix is how many kinds of credit you’re responsible for; it accounts for about 10% of your score. Creditors like to know that you can handle different types of credit, like credit cards, student loans, and mortgages. Although your credit mix impacts your score, stay away from new lines of credit unless you need them. A safe way to diversity your portfolio is by using a safe credit-building tool like the Extra debit card.
Your recent credit applications account for 10% of your credit score. A credit application generally requires that a lender checks your credit score to see if you qualify. When lenders check your credit reports, it’s typically classified as a hard inquiry, which can hurt your score.
Do what you can to keep up with these five components of your credit report. Even if you don’t see a change immediately, your good actions will pay off. Now, if you’re being patient and you’re certain you’re taking all the proper steps towards bettering your score but still aren’t seeing results, there might be an issue with reporting.
Who Updates Your Credit Score?
Your credit score is updated when the credit bureaus receive new information. Sorry, but you can’t call up a credit bureau and tell them you’ve lowered your credit utilization. You have to wait until creditors report your payments themselves.
When credit bureaus receive information, they plug it into their secret formula, and then your credit score is recalculated. The important thing is making sure the credit bureaus only get good news. Always keep an eye out for any errors made; credit bureaus work with the information that’s given to them.
The more you work on improving your credit; the more opportunities will become available to you. As you move your way up in the ranks of credit score ranges, you’ll find that better interest rates, larger credit limits, and more flexibility become a part of your options.