Like many parts of the Digital You, your credit score reflects a critical part of who you are. Technically speaking, it is a dynamic and constantly updating reflection of your creditworthiness, in other words the likelihood of you being accepted for credit…
The goal, as you may already know, is to have the highest score that you can achieve. What you may also know by now… is that this isn’t the simplest task. For this reason, we have written numerous posts that can help you better understand and raise your Credit score. In theory, by following these tips your score will begin to increase.
But what if it doesn’t? What if, after these changes, your credit score stays exactly the same?
4 Reasons Your Credit Score Isn’t Changing
Normally, if you aren’t seeing any changes in your score, it is likely that there have not been any changes to your report. But, did you know that even if there are changes in your report, your credit score can still remain unchanged?
Here are the 4 reasons why this may be the case:
1) You need more than one trade line in your report.
Your credit report consists of any trade lines (credit accounts) that you have used or are currently using. It is good to have some “diversity” between these lines. In this case, diversity means- the varying types of trade lines you have, the amount of credit you have available in these lines and how much you use relative to what you have available.
For example, if you only have one credit card and have been using and paying it consistently for years, then your score is unlikely to change. While this type of behaviour looks great on your report, it may not be enough to improve on an already healthy credit history.
Now, say you have multiple trade lines with different amounts of available credit. Depending on how you use your credit, this can look favourable to those assessing your report. Of course, you should only consider this if you feel confident in making your payments on time.
2) Changes to your score are dependent on your overall report, not just your recent history.
When reference agencies assess your report, they look to see if there are any changes that affect the way lenders view your overall risk. Recent, or minor changes are less likely to push them to change their opinion for the better or worse.
Of course, this varies from person to person. An update to a credit report could affect two people differently depending on what each of their credit histories consists of.
Take Person 1 – they have a historically negative report. If they implement a positive change it can have enough of an impact to show an “immediate” change in their score. On the other hand, Person 2 already has a good credit history. If they make a positive addition to their report, their score could very well remain the same, as it may not make a notable difference to their overall report.
3) Improving your score takes time.
While it would be nice to see significant jumps in your score on a month to month basis, this will rarely be the case. In an effort to improve your credit, consistency is key. Lenders prefer to see dependable and consistent patterns of good behaviour over long periods of time.
One month of good behaviour won’t always be enough to change an idle score, especially for those with longer credit histories. However, maintaining good credit health will reflect well in your overall report which means all the difference when lenders look at your report.
4) Updates to your score are often slow to appear.
Your score is calculated by credit reference agencies. In order to determine your score, they receive updates from lenders on how you manage the credit you have. It is entirely up to the lenders when they want to send this information to an agency. This means it can take time for updates in your report to appear.
Most lenders only report updates to trade lines once per month. It can then take up to another few weeks for agencies to update the credit itself. This means that a mid-month report may reflect the data from the month before.
Make sure to take this into consideration before you worry about not seeing updates in your score.
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By signing up to ScoresMatter, you can ensure that you are getting a deeper dive into your credit history. You can also receive tips and insight into how you can improve your score. And while a credit score and report may not show instantaneous updates about your financial well being, our Loan Affordability feature can also help. Sign up or sign in to see how lenders view you.
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