You are not doing anything differently with your bills, credit cards, or purchasing habits but your score changes on a weekly basis. What is going on? First off it is great you are monitoring your credit score consistently to ensure no one has made any unauthorized purchases or stolen your identity. But why is your score slightly changing every week. What’s what?
Your credit score is a composite number comprised of five basic portions; payment history, credit utilization, length of credit history, types of credit and recent inquiries. When you retrieve a credit score it reflects your credit picture at that exact moment in time and something may change that may slightly alter your overall picture. The best example to explain a common change is a credit card balance. Right now you are mentally stating “Wow, I pay off my cards each and every month”! From a financial aspect that is the perfect way to handle a credit card as you will not be paying any interest if you pay them off each month. But from a credit score angle the timing can make all the difference in the world.
For example if you recently made a large purchase on one of your credit cards, the day before you pay off the large balance you would be using a greater portion of your available credit. Your credit score on that particular day would be slightly lower than your score might be on the day after you paid off the large balance. If you have a mortgage, your principal is dropping every month when you make a payment. Additionally, as time goes on your length of credit history increases. There are so many components to your score that even a minor change in your credit may cause a slight variation in your score. Additionally, your various lenders may not report your activities immediately after you have paid your balances but possibly only once a week, month or even only once during a longer time frame which would certainly have an impact upon your score.
As you can surmise from the above, your credit score is going to fluctuate on a day to day basis but it still is a good indication of your ability to handle credit as well as your ability to pay your bills in a timely manner. Therefore, do not be too concerned about slight fluctuations in your score but continue to monitor it to ensure you have no large fluctuations you did not initiate.
Submitted by Kathryn Shrader
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