How Often Does a FICO Score Change?

If you use credit cards or have loans, you're probably interested in your FICO credit score. This number can either provide you access to affordable credit or doom you to a future of high interest rates. However, your FICO score is constantly changing, meaning the credit decisions you made yesterday can impact your FICO score today.

FICO Score Basics

Essentially, your FICO score is a snapshot of your financial history. The reason it changes so often is because you're constantly engaging in activity that affects your score. The FICO score formula is based on five major elements. Listed from the most important to least important, the factors that determine your credit score include your payment history, your amount of debt, the age of your accounts, the number of recent inquiries made into your credit file and your mix of credit products.

Negative Marks

Although it takes a long time to build a good credit history, you can severely damage your FICO score by making one or two errors. For example, according to the MyFICO website, your score can drop by 100 points or more by allowing payment for just one account to be more than 30 days past due. A bankruptcy can result in a 240-point reduction in your FICO score.

Impact of Recent Information

Most negative information, such as late payments and collection activity, stays on your credit report for seven years. However, as time passes, that information becomes less influential in determining your credit score. Instead, your most recent information is considered a better indicator of your financial risk. If you've had credit problems in the past, but you're building a solid history of on-time payments and sound financial management, your score will steadily improve. The negative factors are still on your report, but their negative impact may be negated by your improved credit management.

Inaccurate Information

According to Bankrate, nearly 80 percent of credit reports contained inaccurate information in 2004. Of this 80 percent, one out of every four had information that could significantly affect credit scores. If you believe your FICO score should be higher than it is, obtain a copy of your credit report and check for errors. You can order a free copy of your credit reports once each year through the AnnualCreditReport.com website. Your FICO score could be affected by errors that have nothing to do with your ability to manage credit. If you find errors in your credit file of any of the three main credit reporting bureaus -- Experian, TransUnion and Equifax -- you should file a dispute with that credit bureau to have those items removed. This not only cleans up your credit report, but it may result in a quick and easy improvement in your credit score.