Why Does My Credit Score Keep Changing?

Your credit score is a measurement of how well you manage credit. It takes into account how much credit you have, how long you have had credit, how much debt you have and whether you pay your bills on time. Because of this, it changes over time as new information is added to your credit report and as old information drops off.

Calculating Your Score

The Fair Isaac Corp. weighs different aspects of your credit use to produce its proprietary FICO score, which is the most commonly used credit score. The FICO scoring model gives the most weight to your payment history -- 35 percent -- and to the amount you owe to creditors -- 30 percent. It assigns lesser weight to your credit history, types of credit and how much new credit you obtain. The MyFICO website cautions, however, that this is a general scoring model and certain aspects may be count more or less depending on your situation. For example, opening a new account may have more of an effect on your score if you have a limited credit history.

Positive Information

If you have good credit habits, your credit score will increase over time. Paying all your bills on time is one good way to increase your credit score. Another is to keep your debt levels low, especially in relation to how much available credit you have. Another important step in increasing your credit score is to ensure there are no errors on your credit report. You are entitled to a free credit report annually from all three major credit bureaus, and you should utilize this benefit. Dispute any errors you find in writing and provide copies of any supporting documentation you have.

Negative Information

There are a variety of things you can do that will lower your credit score. Not paying your bills on time and carrying too much debt are the biggest. Also, opening too many credit card accounts, applying for several loans and closing accounts -- especially those you have had for a long time -- can all ding your credit score. Serious credit problems, such as bankruptcy, foreclosure and accounts sent to debt collectors, can lower your credit score by more than 100 points in some cases.

Considerations

The fact that your credit score changes over time is not necessarily a bad thing. If you have made some late payments or gotten yourself into debt, it's easy to get your credit score back on track, because your more recent credit history carries more weight. Even serious credit issues, such as bankruptcy or foreclosure, have less of an effect over time and eventually drop off your credit report altogether. Conversely, it's good to keep in mind that any credit misstep can hurt your score, no matter how good you've been in the past. In fact, for certain credit problems, such as bankruptcy, the higher your score is, the farther it will fall.