Did You Know:
The time it takes to recover from a drop in your credit score from common credit-related activities?

VantageScore Solutions recently produced a consumer resource that discusses how and why credit scores change and how to improve them. In the coming months, VantageScore Solutions will feature excerpts of this new resource in our “Did You Know” column.

This month’s article describes some of the most common credit-related activities that can cause a drop in credit scores and the time it takes to recover to your original credit score. As with all estimations such as this, it’s important to know that everyone’s credit profile is different and thus their credit scores will be impacted differently.

Provided below is a graphical presentation of how some of the most common occurrences related to how consumers manage their credit accounts will impact scores. The information is meant to provide a general direction of how scores are impacted and may vary among individuals.


As you can see, credit scores are most impacted by these events right after they were first reported by lenders to your credit files at the three consumer reporting companies (CRCs): Equifax, Experian and TransUnion. That’s because the impact of negative items, such as a missed payment, are greater on their first occurrence. Continual delinquencies will further drive the score down.

Some consumers are surprised to learn that simply by obtaining new credit, their credit score can decrease slightly. This occurs because an inquiry* was reported by a lender and a new credit account was opened. If the lender then reports that payments for the new account are on-time and the balance is not excessive, the credit score begins to benefit from the positive information created as a result of the new credit account. As the graph above shows, a credit score quickly recovers in just three months and in the future the consumer will benefit from making on-time payments on a regular basis.

Another common credit action is maxing out on one’s credit card. The good news is that your VantageScore credit score recovers very quickly once you pay down the balance. On the other hand, missing a payment tends to have a more lasting impact, as the chart demonstrates.

Of course, proactively managing your credit means you avoid missed payments or any of the other negative actions. But if those kinds of events do occur, you need to become “current,” which means that you’ve caught up on all missed payments. Once you are current, the impact diminishes over time as the benefits of making payments on time cause your credit score to improve.

*Most credit score models accommodate the need for consumers to shop for the best interest rate for a single loan by inquiring with multiple lenders. The VantageScore model interprets all inquiries within a 14-day window as a single inquiry.

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