Keeping an eye on your credit score is one of the most important things you can do to track your financial progress. But what does it mean if your credit score hasn’t changed at all?
Your credit score can help you understand how lenders view you, which is a useful insight if you’re thinking about applying for credit any time soon. Checking your credit score regularly can help you to keep track of how you’re doing. But if your credit score hasn’t changed it can be equally useful to understand why.
Your credit report is a record of all of your borrowing behaviours. This information is held for around 6 years, and it’s updated every month. So you might think that if your report changes regularly, your credit score will change too. But this isn’t necessarily the case.
Typically, if your credit score hasn’t changed it’s because nothing in your report has changed. But sometimes, even if the information in your report has changed, it won't always be reflected in a change to your score.
Here are the four main reasons why your score may not have changed:
1. The information within your report hasn’t changed enough to alter your score
Your credit score is calculated by a credit reference agency. It's based on all of the information in your credit report and how this will look to a lender (i.e. if you're a high or low risk person to lend to). For example, if your credit report shows you're a low risk person to lend to, you're likely to have a higher credit score.
Even though your credit report gets updated every month, it doesn’t mean that your score will always change. This is because any changes that have taken place may not affect how lenders view you overall (i.e. your level of risk, in the eyes of a lender, remains the same).
This means that sometimes a small update to your credit report won’t have an impact on your credit score.
Another thing to consider is that changes to a credit report will have different effects for everyone. Individual factors – such as missing a single payment or making a credit application – will affect each person’s score in different ways, because it will depend on what else is going on in your credit report.
So if you miss a payment but have a good credit history, it is not as likely to lower your score, as it would if you have a history of managing your debt poorly. It all depends on how your report looks overall.
Equally, if you have a number of negative factors then adding a single positive factor may not have enough of an individual impact to immediately boost your score.
But it can still make a difference in the long run. The more positive steps you make, the more you are laying the groundwork for a stronger score in the future. If you use your credit card once and pay it off, it may not immediately have an impact on your score. But if you keep paying off your bil in full every month, it proves to lenders you are consistently reliable. This is likely to have a positive impact on your score in the future.
2. Building up your credit score takes time
Your credit score is something which builds up steadily over time. You may not always get to see a satisfying boost month on month.
Lenders tend to prefer to see a long-term pattern of dependable behaviour. All the changes to your report help to build up an overall picture of what kind of borrower you are. This means it can take some time for your score to increase. You need to consistently show the behaviour to prove it’s not simply a one-off.
So taking steps to improve your score will help to improve the overall health of your credit report and add to your standing with lenders. Lenders will look at your whole report, and not just your score when they are deciding whether or not to lend to you. This means all the positive information on your report can still be worthwhile, even if it doesn’t change your score.
3. Some lenders may like to see diversity in your credit report
This is all about the types of credit products and accounts that you have and is one reason why your score may stay the same for long periods of time.
If the credit accounts you have and the way you use credit has pretty much stayed the same, then your score can also stay relatively stable. Now that’s not necessarily a bad thing – but it’s good to be aware of it.
If you’ve only got one credit card that you’ve had for years, and nothing else changes on your report, then your score may not change that often. This is because nothing is really changing that significantly month to month.
4. Updates can take time to show up
The last reason why your credit score may not have changed is to do with how your credit score is calculated.
Your credit score is calculated by a credit reference agency (CRA).
Each CRA is sent information by lenders about the credit you have and how you manage it. CRAs also receive other information about you, for example public records such as electoral roll information. Lenders will typically send information to the CRAs once a month – and for some public records offices it will be longer.
However, exactly when lenders and other organisations do this is up to them. This means if your information is sent to a credit reference agency after ClearScore pulls your monthly report from Equifax, then that change won’t show until your next report.
For example, it can take 4-6 weeks for new account information to show up on your report as Equifax waits for the information from the lender. If the information is more than six weeks out of date you can dispute this directly with Equifax here.
Think of your credit score as just the tip of the iceberg. While this stays steady little things can still be changing underneath in your credit report. That’s why it’s good to login and check your credit report, even if your score hasn’t changed.