Credit repair is a challenging process, especially when change is slow. Suppose you worked with Lexington Law to remove an inaccurate collection account from your report. You pull your credit file a week later and are disappointed to see that it hasn’t disappeared.
Welcome to “credit lag.”
Known commonly in the industry, credit lag is the wait time between a credit change and its reflection on your credit report. For those who need a better score ASAP, limbo is frustrating. Why the delay? Who is to blame? Is there a way to speed things up? A few facts will help you understand these questions. In general, credit lag occurs because:
- Your creditor must report to the bureaus. The credit bureaus report information they receive from individual creditors. Let’s take a closer look at the example below:
In 2014, you visited a foot specialist to treat a broken ankle. Your insurance covered the cost except for a $20 co-pay, which you promptly addressed. Unbeknownst to you, a computer error listed your co-pay as outstanding and the account went into collections. You contacted the doctor’s office with proof of payment and they promised to resolve the issue.
The creditor is tasked with providing account updates to the credit bureaus, usually on a monthly basis. Similarly, a creditor must receive and process bill payments before reporting good behavior to the credit bureaus. The problem? There is no way of knowing how long the creditor’s process will take. It could be days or even weeks.
- The credit bureau must update your file. Once the credit bureau receives new information, they must update your file internally before change is visible on your report, adding an additional lag time of 30 to 60 days.
- In some cases, creditors do not report to all three bureaus. Creditors generally form relationships with one of the bureaus, meaning that not everyone has immediate access to updated information. While your TransUnion credit report may update current credit card information, your Experian report has some catching up to do. In the case of inaccurate information, however, the Fair Credit Reporting Act (FCRA) requires the creditor to notify all three bureaus of the change to your file.
Once you understand credit lag, it’s important to understand your role in the process. Encourage speedy updates by:
- Seeking education. Consumer protection laws are in place to ensure accuracy, but how do they apply to your situation? Educate yourself by reviewing our blog or speaking with our team.
- Asking questions. Creditor business practices aren’t common knowledge, but that doesn’t mean you should remain in the dark. Take initiative by asking your creditor when and how they report changes in your file. Information is a valuable tool.
- Starting early. The average person ignores their credit until they need it. Don’t be one of the many. Begin your work 60 to 90 days before applying for a new loan. Starting early ensures the best chance of securing the score you need.