credit

Why does my FICO credit score constantly change?

Janna HerronDear Credit Card Adviser,
My FICO credit score keeps going up and down. I pay most of our bills with the card I have had for well over 10 years. The card is paid off every two weeks. I am never late on any accounts. I have no debt other than my house, which will be paid off this year. I monitor my accounts for fraud. Why is my FICO credit score like a bouncing ball?
-- Pat

Dear Pat,
It seems like a credit score should stay the same if your habits don't change. But the reality is your credit history that is used to calculate your FICO credit score is always changing, if just a little bit. And that could account for the changes, up or down, you see in your credit score.

FICO credit scores are generated anew for each credit score request, so a lender receives the most up-to-date credit score available. The score is based on the person's credit report from one of the three credit reporting bureaus -- Equifax, Experian or TransUnion. These reports are updated frequently with new information from your lenders, such as recent payments, credit inquiries and new balances. FICO calculates the score based on the most recent information available.

Even if you don't open a new credit card or fall behind on your car payment or make any other big credit move, your credit file is still changing. Consider these scenarios.

  • Each time you make a payment on your mortgage, you reduce the amount of overall debt you owe, one of the factors used to calculate your credit score. This could bump up your score.
  • FICO not only considers if you paid your credit card bill on time, but also the balance on your credit card statement. If that balance fluctuates, it affects your utilization rate, or the percentage of available credit you use. If you spend more in one month and use 75 percent of your credit limit, then that could pull your credit score down. If you charge only 20 percent of your limit the next month, that could boost your credit score.
  • Old, negative history falls off your report after seven years (10 years for bankruptcy). That means your credit score will benefit when any old delinquencies or other negative items disappear from your credit files. The impact will be small, but could account for tiny fluctuations in your credit score.

Overall, about a quarter of people will see their credit score shift up or down by more than 20 points versus the previous three months, according to Anthony Sprauve, the spokesman for myFICO.com, the consumer education arm of FICO. Seventeen percent of scores move that much each month. Lower credit scores tend to vacillate more, mostly moving lower, while higher credit scores generally remain more stable over time, Sprauve says.

"I can't say what would cause the fluctuation," he says. "That is an individual situation."

Get more news, money-saving tips and expert advice by signing up for a free Bankrate newsletter.

Ask the adviser

To ask a question of the Credit Card Adviser, go to the "Ask the Experts" page and select "Credit Cards." Read more columns by the Credit Card Adviser. Follow Janna Herron on Twitter.

Bankrate's content, including the guidance of its advice-and-expert columns and this website, is intended only to assist you with financial decisions. The content is broad in scope and does not consider your personal financial situation. Bankrate recommends that you seek the advice of advisers who are fully aware of your individual circumstances before making any final decisions or implementing any financial strategy. Please remember that your use of this website is governed by Bankrate's Terms of Use.

advertisement

Show Bankrate's community sharing policy
          Connect with us
Product Rate Change Last week
Balance Transfer Cards 15.71%  0.01 15.70%
Cash Back Cards 16.36% --0.00 16.36%
Low Interest Cards 10.91% --0.00 10.91%
 
Search
advertisement
CREDIT CARD WEEKLY NEWSLETTER

Get advice for managing credit cards, building your credit history and improving your credit score. Delivered weekly.

advertisement

Blog

Allison Ross

BofA to pay $772 million over credit cards

Bank of America is refunding about $738 million to customers in addition to $45 million in penalties.  ... Read more

Partner Center
advertisement

Connect with us