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Why Your Credit Score is Not Improving

Credit scores can impact getting a car loan, a home loan, renting an apartment, and even getting employed. That is why it is important to understand how to improve your credit score, especially when it seems like it is staying the same or even decreasing. Let’s look at the 6 common reasons why your credit score is not improving and how you can change that!

1. Not paying bills on time

Paying your bills on time is the most important part of your credit score. If you miss even one payment, your score can drop by a lot. 

This is because paying bills on time shows others that you are responsible with your money. You are not going to be lent any money or get a job if you cannot pay your bills on time. 

To improve this, set up automatic payments! This easy solution helps you not miss a payment. You can turn on notifications and choose the day you want to pay your bills (it is always good to set that day to be a couple days before it is due). Regularly check this to make sure that it goes through. You can even add it to your calendar to make sure you don’t forget. 

Once you start paying your bills on time, you will see a big increase in your score.

2. Utilizing more than 30% of your available credit 

If you are using too much of the credit you have available, your score will drop. Using a lot of your credit shows others that you spend a lot of money. But if you use a smaller amount, it shows that you are a responsible spender and are not spending more money than you should. It is especially noticeable that you are a spender if you use a lot of credit and then are late paying it back.

To improve this, calculate 30% of your available credit. For example, if you have an available credit line of $3,000, then 30% is $1,000. That amount is your new maximum spending limit. 

3. Short Credit Length

If you have not had your credit open for long, then your score will not be able to improve much in this area. This is because others want to see your credit history over several years, not just over several months.

It is important to know that even if you stop using a credit card, keep that credit account open. This open account, even when not used, can contribute to getting a good score in this category. 

Credit length takes a while to show up as “good” on your credit report. This means years of waiting and using your credit responsibly in the meantime. But don’t worry, if you are doing good in the other categories, you can still have a high credit score. 

4. Too many applications to new credit cards or loans 

If you are applying for new credit cards or applying for loans, you will see a temporary drop in your credit score. If you are doing it a lot, you will see a greater drop. Try to only apply to loans and credit cards when you are serious about getting one. 

Also, try not to apply to a lot of different ones. When doing your research, compare APR, interest rates, terms, and benefits. When looking at credit cards, find one that has the benefits you want—reward points, low interest rate, etc. And when looking for a loan, carefully compare loan terms, interest rates, and the security of the lender. 

5. There’s no mix of credit

If you only have one credit card and no loans, then that is not a very impressive mix of credit for lenders. They want to see that you can be responsible with different kinds of loans; credit cards, car, home, personal, etc. 

If you don’t need or want a car or home loan, consider getting a Credit Builder Loan. UCCU will lend you a fixed amount of money and you are required to make a small monthly payment with that money into a special savings account. This is a great and safe way to build or rebuild your credit. Learn more here!

6. Mistakes made on report 

The last thing you should check is mistakes that may have appeared on your credit report. Mistakes can include any fraud that may have happened with your credit account, as well as accounts that show missing payments but were actually made on time. It can show duplicate accounts, wrong amount of balances, and other errors. 

Credit scores are very important for many reasons. That is why it should be checked on and consistently improved. Now that you know why your credit score may not be improving, you can make a plan to start building it!
If you need help making a plan and goal, check out the Credit Score Toolbox—a free service for members.