When you have a significant purchase in mind and are working hard to improve your credit score, it's natural for you to wonder when the lenders report your credit activities to the credit bureaus. How long does it take the lenders to submit your records? When do the bureaus update these records? How long till your activities reflect on your credit report? This could turn out to be a vital piece of information that could help you strategize your financial moves to reach your goal. Read on to know more.
The very first thing to understand is that credit score comes from credit reports. Yes, credit reports are the only place where you can find the scores. You get the report once a year from special bureaus like Equifax, Experian, and TransUnion. Just apply to them, and you should be getting the report within a few weeks.
However, do remember that these get updated weekly and even several times daily. This is why it is essential to know how long it takes for a credit report to be updated.
This is one confusing question that bothers everyone. And most annoyingly, this question does not have an answer. There is no such rule or law that insists upon a particular date for the lenders to submit their records to the credit bureaus. However, there are patterns that one could observe to understand the trend of a lender’s reporting habits.
Typically, the card-issuing companies report to the credit bureaus on your statement closing date. The credit bureaus can take up to a week to update this information. The three main bureaus - Equifax, Experian, and TransUnion, follow different timelines. They update your information at different times, speeds, and frequencies.
On the other hand, there isn't a hard-and-fast rule that your financial activities would be reported to the bureaus positively at the end of your billing cycle. It's mostly at the discretion of your card-issuing company. The company could report your information daily, weekly, monthly, or even quarterly. However, the popular trend is that the lenders report it at least once a month.
The credit bureaus do not insist that all lenders submit the information within a particular date every month. Each lender adheres to its schedule. Hence, your credit score is in constant flux. It can change at any moment - within days, or even within hours — as and when various lenders supply information about your credit activity.
It would be interesting for you to know that Experian, one of the most significant credit bureaus, takes care of more than 220 million credit reports. That’s a lot, right?! Now, once the score or transaction is reported, updates to the credit report happen quite fast.
However, this update is not in real-time. This is because Experian has processes in place dedicated to making sense of the information, correcting errors, following up, etc. It is essential to know how often your credit scores and credit reports change.
Equifax, another major credit bureau, takes care of 210 million credit reports a year. When new financial information is received, the report is updated within three days. Well, now you know how long it takes for a credit report to be updated.
In case you are striving to boost your credit scores and improve your credit health before making a large purchase, you would need to ensure that a positive credit history is reported.
But here’s the catch: All lenders do not report your activity to the credit bureaus. Even if they do, they don't need to report to all the credit bureaus. Credit reporting is entirely a voluntary practice. Credit card companies do it so that they can gauge the consumers’ creditworthiness, and they don’t necessarily reveal which credit bureaus they report to. Therefore, it is ideal for you to keep your credit score in good standing at all times.
When the credit bureaus receive your information, they typically amend your credit report right away. They recalculate your credit score immediately. If you've been maintaining a favorable status quo, then one untimely payment won't make much difference in your credit score. However, in case you miss a payment or cause a delay for more than 30 days, you will find a considerable drop in your credit score.
If you’re concerned about how the reporting of your credit balance may affect your credit score, you should keep tabs on your spending as per your statement closing date. You should try to keep a low balance because when it comes to your credit scores, your credit utilization rate is of paramount importance.
To keep a low credit utilization rate, you must pay your balances early and in full. Most card-issuing companies typically report your credit balance to the credit bureaus at the end of your billing cycle. If you pay a part, or preferably all, of your outstanding balance before the issuing companies report your credit balance, your credit utilization rate for the concerned cards will remain low.
Since you do not know when exactly your information will be reported to the bureaus, you could consider paying off your balance more than once in a billing cycle. This will ensure that your average rate of credit utilization is continuously low.
If you notice that it's getting difficult for you to pay your credit card bills on time, you must stop making purchases with your credit cards. The new purchases made may increase your credit utilization ratio, which in turn will reduce your credit score. You could also consider increasing your credit limit. A higher credit limit automatically brings down your credit utilization rate, provided that your expenditure or credit balance remains constant.
Since you will never really know when exactly your information is being reported or updated, it is better to play a safe game and maintain a positive credit history. Managing your credit utilization rate can be a simple way to help improve and maintain your credit.
Moreover, keeping an eye on your credit score and keenly observing the pattern in which it fluctuates could help you understand the reporting trend of your creditor. Use mymoneykarma's credit score tracker to keep tabs on your credit score.