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If you’re getting tired of seeing your credit score rise and fall like the tides, then you’re not alone. We’ve found that among people’s chief complaints about their scores is the fact that they don’t understand why they go up and down.

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To understand why scores fluctuate, it’s important to understand some basics about the credit scoring process. A credit score is a snapshot in time. In other words, your score reflects only the information
in your credit report at each individual credit reporting company (“CRC” – Equifax, Experian and
TransUnion are the big three) at the date and time that the lender (or you) requested your score.


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The most obvious reason for score fluctuation is that new payment behavior data is reported to the CRCs by your lenders. Each of the CRCs receives billions of pieces of information monthly, so it’s common for scores to fluctuate based on the new information. Whether the score goes up or down depends on the nature of the information the lender has reported. For example, a consumer may have applied for credit, used a credit card, cancelled a card, paid off a loan, or otherwise initiated payment behavior that was recently reported.

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And even the clouds of negative behavior become less bleak with time. For example, different types of negative information will have a diminishing impact on your score at varying rates even while it remains in your credit file. For example, bankruptcy is such a significant event that the impact on a credit score will remain longer than the impact of a single missed payment. So even if you have one or more of these less harmful types of negative information in your file, it is still possible to rehabilitate your score by practicing good debt management, as good debt management is positive and is also reported by lenders and calculated by the credit score model.

Most negative information, such as a missed payment, will drop off your credit file after seven years, although some bankruptcies may stay in a consumer’s file for ten years. Below is a list of those items and the general length at which they will remain on your credit report:

Late Payments 7   Years
Foreclosures 7   Years
Chapter 13 Bankruptcies 7   Years
Chapter 7 Bankruptcies 10 Years
Collections 7   Years
Public Record 7   Years

Remember, while this information stays in your file for a particular length of time, the value of the data from a credit scoring perspective diminishes significantly well before it is removed from the credit report.

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Your credit score can also be different based on which CRC is used to provide the score and when. This happens because the information reported by the lenders to the CRCs may occur at different times each month. For example, a lender may send information related to the payment of a credit card to one CRC at the beginning of the month, and then later that month send the same information to one or both of the other two CRCs. This means that your credit file information is potentially different at the three CRCs throughout the course of the month. As a result, because your credit file information may not be the same at all three CRCs at any given time, your score may appear to fluctuate or be different across the three CRCs.

With so many pieces of data that are reported and interpreted by credit scoring models, it’s natural for a score to go up and down simply due to the variability of the reporting. By contrast, missing a payment will have a more lasting impact on your score.

The lesson here is that unless you are about to apply for credit, you don’t need to worry about fluctuations in your credit score. And even if you’ve had troubles with debt management in the past, practicing better financial management should result in more positive information on your credit report, which will help improve your score.

[Related Article: Breaking Down Your FICO Credit Score]

This story is an Op/Ed contribution to Credit.com and does not represent the views of the company or its affiliates.

Image: tibchris, via Flickr

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