When a lender requests your credit score from a credit bureau, your score will be a reflection of what’s in your credit report at that point in time.
Your credit report doesn’t stand still for long, so when it’s updated again, it usually produces a different credit score. This cycle can occur many, many times just over the course of one day. Understanding how this process works can help you plan when you want to apply for credit.
Here’s what you need to know about the ever-changing nature of your credit report.
How Quickly Do the Bureaus Update Your Credit Report?
Experian, a major credit bureau, handles about 220 million credit reports. According to Rod Griffin, director of consumer education and awareness at Experian, this results in billions of accounts reported every day.
“Once reported, updates to your credit report happen quickly,” says Griffin. “It’s not in real time, though, because we have processes in place to ensure that the information we get makes sense.” If there’s an error or something looks out of place, Experian has to go back to the source to verify what was reported. That can take some time.
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Another major credit bureau, Equifax, handles more than 210 million credit reports. Nancy Bistritz-Balkan, vice president, consumer education and advocacy for Equifax, says, “One of the most important things to understand about credit reports is that they are living, breathing documents. At Equifax, once we receive the new information from the creditor or lender, a consumer’s Equifax credit report is updated within 24 to 72 hours.”
How Often Do Lenders Report?
There isn’t one answer to this question. Most lenders, especially credit card issuers, report once per month to the bureaus. “Discover reports payment history to all three major credit bureaus on a monthly basis,” confirms Brittney Mitchell, a spokeswoman for Discover.
But other types of lenders might report less often. And even then, not all lenders report to all three credit bureaus. If you’re unclear about this, ask your lender to clarify how often it reports your payment history and which bureaus it reports to.
Types of Information Reported
Credit bureaus collect a variety of information about your credit accounts. “We report all necessary data elements as required by the Consumer Data Industry Association guidelines,” says Mitchell. “Examples of this data include balance, credit limit and delinquency.”
At least there’s good news about delinquencies and other negative items. There are time limits for how long they can stay on your credit report. After the time expires, they automatically drop off your report.
Here’s a quick rundown of the most common things people can’t wait to get off their credit reports:
Late payments: These stay on your report for seven years starting from the date of your missed payment. Keep in mind that you don’t usually get reported to the bureaus until you’re more than 30 days late for your monthly payment. Do whatever it takes to set up reminders for when payments are due so this doesn’t happen to you.
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And don’t forget to pay attention to all of your bills. If you default on a cellphone bill, for instance, it could show up on your credit report if the creditor decided to report it.
Bankruptcy: This is the big one for most people. A Chapter 7 bankruptcy stays on your report for 10 years. But a Chapter 13 bankruptcy is removed after seven years. A Chapter 7 bankruptcy stays on your report longer because most of the debt isn’t repaid.
Other negative items: Things such as collection accounts, repossessions, some lawsuits and foreclosures stay on your report for seven years.
New Accounts On Your Credit Report
If you don’t see your new credit card account on your credit report, be patient. “Generally speaking, new credit card account activity would show up on a consumer’s credit report within 30 to 60 days,” says Bistritz-Balkan. “However, a consumer would likely see initial activity — in the way of a hard inquiry — prior to that.”
So, don’t freak out if you see a hard inquiry on your credit report, but the new account isn’t listed yet. An inquiry is like a quick hit on your report. But all the details that go along with your new account have to go through a verification process that takes a little more time.
Other Reasons Your Credit Report Could Change
Sometimes, changes are made due to new reporting standards. For instance, as of Sept. 15, 2017, there is a new, 180-day waiting period before medical debts are allowed to show up on credit reports. This was designed to give consumers more time to work out billing and timing issues.
If you had a medical debt that didn’t meet the new requirement, it was removed from your report. So, while your credit report changes due to the credit activity in your life, it can also change due to new policies.
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When You Need to Speed Things Up
Let’s say you’re about to apply for a mortgage, but your score is a little low due to inaccurate information on your credit report. Or maybe you’ve paid off a large amount of debt, but it hasn’t shown up on your report yet.
When it comes to interest rates, a few points off your credit score can keep you from the best rates, which can be costly over time. But given the nature of a mortgage application, you can’t wait for 30 days or more for your report to show your current credit status.
Rapid rescoring is one way to address this dilemma. If your lender sees the potential for you to get a better rate, then the lender can request a rapid rescore from a credit bureau. This involves offering proof that the rescore will make a difference in your rate. The lender also has to pay a fee for this service.
Note that only the lender can make this request, not you. But don’t hesitate to ask a potential lender about rapid rescoring if you think it will help your case.
Be Proactive With Your Credit Report
Remember, you can get a free credit report every year from each major bureau. If you plan to apply for credit, don’t wait until the last minute to see what’s on your credit reports.
“Check your credit reports at least three to six months in advance so you know if there are issues that need to be addressed.” says Griffin. That way, you’ll avoid unhappy surprises that could derail your application for credit.
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How Often Does My Credit Report Update? originally appeared on usnews.com