6 Reasons Your Credit Score Isn’t Increasing
You might not be seeing your credit score increase due to several logical factors. Nonetheless, one—and possibly affecting—reason may be your high credit balances and a limited credit history. Discover what you can do to improve your credit rating and get out of frozen status.
1. You’ve Missed Some Payments
Your record of timely or late payments to credit card issuers and other lenders is the No. 1 factor for determining your credit score. Your payment history accounts for about 35% of your credit score, which is used by 90% of top lenders.
While your creditor may not consider your payment late if it’s just one day overdue, a late penalty isn’t reported to your bureau unless it’s at least 30 days overdue. A late payment on your credit report has an impact on your score.
Typically, a late payment remains on your credit report for seven years. The effect on your credit gets less severe with time if you frequently obey your payment schedule after missing some.
2. Your Debt Balances Are High
The total amount of your existing debt is the most crucial component of your credit score.
The goal of a credit card is to add more positively to your credit score than adding negatively to your CRR. And credit card balances specifically impact what’s known as your credit utilization ratio, which is the amount of revolving credit you’re using divided by your credit limit.
Your credit card balances increase as you use them, along with your ratio of credit used. Therefore, keeping your credit utilization ratio as low as possible will help your FICO® Score or your VantageScore® score. If your total line of credit for all revolving credit accounts is $10,000, your total credit balances debt shouldn’t be above $3,000.
3. You Have a Limited Credit History
Your credit score might not be progressing as rapidly because you hope due to the fact that you have a limited amount of file. Data that is taken into account when calculating your credit score includes: the length of your credit history.
The average age of your accounts
The age of your oldest account
The amount of time since you last opened an account
Longer credit history is usually a good indication of a good credit score, while shorter credit history is a negative indicator. A limited credit history, therefore, might prevent you from rising your credit score.
Becoming an authorized user on a family member’s credit card may help you speed business along. When you are an authorized user, you enjoy the advantage of the primary cardholder’s credit history and can make purchases using their card (if the primary cardholder approves). If the primary cardholder stabilizes the payments they make and maintains a low balance, their credit score will improve.
You’ll need to be an authorized user to your issuer’s credit reporting company if you’re to utilize this particular approach.
4. You’ve Submitted Too Many Credit Applications
Whenever you’re seeking new credit and a lender checks your credit report, it triggers what’s known as a hard inquiry.
A couple of difficult queries as you’re regularly applying for loans or credit cards may have very little, if any, impact on your credit scores. However, an array of recent difficult queries that appear on your credit reports could make you a riskier borrower in the eyes of capital lenders and credit rating models. Several hard inquiries in a short time can cause your credit score to decrease.
To lift your credit score, try decreasing the number of hard inquiries you make. Hard inquiries will stay on your credit report for two years, but the impact on your credit score diminishes as time passes.
5. You Only Have One Type of Credit Account
Your credit mix, or the number of accounts that offer installment credit and revolving credit, represents 10% of your FICO® Score.
Installment credit is a loan you make in fixed payments over a set period of time. Once the loan is paid off, the account is closed. Installment loans include mortgages, car loans, personal loans, and student loans.
A revolving credit account, such as a credit card, typically requires a minimum monthly payment, but can be drawn from and paid off repeatedly. The minimum payment on a revolving account can fluctuate based on your balance.
Having multiple credit card accounts lets lenders and credit scoring models know that you are capable of managing multiple types of debt. Improving your credit mix may improve your credit rating, but you may refrain from taking on a new debt just to elevate this metric.
6. A Creditor Has Incorrectly Reported Account Information
It may impair your credit score if your creditor has misreported information about you on the reports. Certain mistakes companies have made on your report could include: a late payment that never existed, or a balance that was too high.
Closed accounts that appear on your credit reports as open accounts
Accounts that are incorrectly listed as having late or delinquent payments
The same debt listed at least twice
Credit limits for accounts that aren’t accurately reported
If you see information on your credit report that you consider incorrect, you can dispute the data by contacting the credit reporting company that produced the report. You can also make your way to the creditor that sent the information to the credit reporting company.
Monitoring your credit report can help you catch and correct errors that could be dragging down your credit score. Experian allows you to look at all three credit bureaus’ credit reports and your credit score based on Experian data at no cost. You can get access to your credit reports from all three bureaus at AnnualCreditReport.com.
Experian Boost can help you enhance your FICO® Score by using current payments to boost your creditworthiness. Experian Boost can be helpful for you if you have little or no credit history.