If you’re one of the millions of Americans working on improving your credit score, you probably already know how slowly it can tick upwards. Even by making regular on-time payments and using your credit responsibly, credit scores take a while to recover.
Whether you’re trying to rebuild a low credit score, or starting from scratch with little or no existing credit history, you may be wondering – how often does your credit score update?
To begin with, let’s go over the different ways you can find your credit score.
What Companies Can Provide Me With My Credit Score?
A credit report is a basic record of your payment history when it comes to your lines of credit: student loans, credit cards, etc.
A credit score, on the other hand, is more like a high school GPA – it is a single number that is used as a measurement for how credit-worthy you are. Banks and credit card companies use credit scores to assign interest rates to its borrowers. The higher the score, the lower the interest rate your lender is willing to give you. Meanwhile, lower scores typically mean borrowers are quoted with higher interest rates – or aren’t eligible for certain loans at all.
Apart from banks, these days you’ll find employers, insurance companies and landlords asking if they can run a credit check.
There are three major credit reporting bureaus (the only three anyone ever needs to know about) are Equifax, Experian and TransUnion. Once per year, anyone can get a free copy of their personal credit report from any of these three organizations.
Nowadays, however, there are easier ways to check your credit. There are two scoring systems that use borrower data from the three main credit bureaus to give a single cumulative number: the FICO Score and the VantageScore.
Beginning in 1989, the Fair Isaac Corporation has been providing its FICO score to borrowers – and it combines data from Equifax, Experian and TransUnion. FICO didn’t have any real competition until 2006, when the three credit reporting bureaus teamed up to create VantageScore.
The two scoring mechanisms are extremely similar in how they evaluate credit, and the end result is usually only slightly different than the other.
Both FICO and VantageScore produce credit scores ranging from 300 to 850, and both take the following into account (putting different weight on different categories):
- Your payment history
- The length of your lines of credit
- Which types of credit you have taken out
- Credit usage
- Recent “hard” inquiries (explained in more detail below)
How Often Are the FICO and VantageScore Updated?
When a FICO or VantageScore are usually calculated at the time they are requested – they are a snapshot of what’s in your credit report at a certain point in time. Because these scores reflect what is on your credit report, how often your score is updated really depends on how often each of the big three credit bureaus update your credit report.
Experian, Equifax and TransUnion are all sent information from your lenders – your credit card companies and banks typically send the three bureaus your payment information once per month.
These days, most of our online banking accounts (Chase Bank and CitiBank, for example) provide us with a free FICO score that’s also updated once per month. You’ve probably already seen this feature when you log on to your online banking profile.
With so many big-name retail banks giving us our FICO scores for free once per month, a lot of people don’t find it necessary to look for their credit scores through other means.
How Often Should I Check My Credit Score?
If you can believe it, there are a lot of Americans who have never even checked their credit scores – or only do every few years when they are applying for a new line of credit. But checking your credit score so rarely isn’t a great idea.
It is important to keep an eye on your credit score for a number of reasons:
- It’s free! As we’ve discussed above, FICO scores are available for free once per month.
- If your identity has been stolen, you may not know it until your credit score plummets – checking up on it regularly means that you will notice anything strange as early as possible.
- You can keep track of your progress, especially if you are trying to raise your score.