Why isn’t my credit score going up? Here’s the top 7 reasons

Feel like your credit score is stuck? If you’re feverishly tracking your payments or putting your credit lines under a microscope and you still aren’t seeing your credit score improve, you might start feeling frustrated. You might begin to wonder if you’re doing something wrong—and if you are, what?

If your credit score is stagnant, you’re far from alone. That means we can tell you where to look to start fixing a stand-still credit score and get your finances on the track you want them to be on.

Here, we’ll take a look at seven reasons your score is going nowhere fast. Plus, we’ll share how you can address each of those elements.

1. Missed or late payments

Your payment history is the single biggest factor in determining your credit score. Research shows that how a person has managed credit obligations in the past is a strong predictor of how they will handle credit in the future. So credit rating agencies (and their customers who are banks, lenders, and credit card companies) are naturally keen to know your repayment patterns to protect themselves against losses.

A single missed or late payment can have a significant negative impact on your credit score and be visible for as long as six years. More importantly, like a friend’s trust, it’s far easier to damage your payment history than it is to improve it. In other words, you can be perfect for months, but you’ll get punished for one slip-up.

If you want to build your credit rating, you need to make consistent and timely payments. Being financially responsible doesn’t come naturally to everybody. Fortunately, that’s alright. With the Pave app, you can track upcoming bills to protect your credit score from additional late payments. Check it out today!

2. High Credit Utilisation

Credit utilisation refers to the percentage amount of your available credit that you are using at one time. So, if you have a £2,000 credit limit and a balance of £1,000, your credit utilisation ratio would be 50%.

When credit reference agencies see that you have a high credit utilisation, it can suggest that you’re under financial stress. As a result, this can cause your credit score to stagnate or, in some cases, take a hit. On the flip side, if your credit utilisation is low, lenders and agencies can see that you’re not overly reliant on credit and you’re using your credit cards responsibly.

The general recommendation is to try to keep your credit utilisation below 25%. So if you have the £2,000 credit limit we mentioned above, you should aim to use no more than £500 before making payments on your balance.

3. Applying for Too Much Credit in a Short Time

When you apply for credit, lenders or credit card companies perform hard credit checks. Each “hard search” can temporarily lower your credit score by a few points. When you apply for just a single account, that drop is nothing to worry about, as you’ll typically recover from the effects within a few months. However, the drop from too many applications in a short time period can add up, creating a more significant drop in your score.

Additionally, lenders may see your multiple applications as a signal of financial stress or as the need for new funds. They might also worry that you could become overextended and unable to meet your credit obligations by opening those new lines of credit.

The easiest way to avoid hard search penalties is by spacing out credit applications by a few months. Alternatively, if you’re shopping around for the best rates, make your applications within a 14-day window, as many credit reference agencies will treat these as a single inquiry and therefore diminish the impact it has on your credit score.

4. Not Having a Diverse Credit Mix

Lots of people only have one source of credit, such as a credit card. While that makes managing credit less complicated, it can also limit the opportunities you have to improve your credit score.

Lenders like to see applicants with a diverse mix of credit. It demonstrates to them that you can handle multiple lines of credit simultaneously, such as a credit card, a personal loan, a car loan, and so on. In short, it shows you can juggle multiple financial obligations effectively.

So, if you feel like your credit score isn’t going up despite you managing your payments on time, it might be because lenders and credit agencies want a more comprehensive view of your creditworthiness. Applicants with a diverse mix of credit are seen as a lower risk for defaults because they have a proven track record of financial stability and credit management.

5. Lack of a Credit History

Your credit report is a snapshot of how you’ve managed loans or credit cards in the past. However, if you have little or no credit history, you might be considered “credit invisible.” Essentially, what this means is that credit agencies don’t have enough data to evaluate your creditworthiness and, therefore, can’t increase your score.

If you find yourself in this situation, there are a few things you can do, such as:

• Open a small credit line like a credit card, a store credit card, or a personal line of credit.
• Use credit-building products like credit-building credit cards or loans.
• Use the Pave app to build your payment and credit history
• Become an authorised user on the credit card of someone with good credit.

Remember, building credit takes time. Therefore, it pays to be proactive and start thinking about your credit score before you need it.

Are you a student? Check out our Student & Grad Hub for more resources for getting started building your credit.

6. Incorrect Information on Credit Reports

In some circumstances, your credit score’s stubbornness may not be your fault. If you have inaccurate information on your credit report, it can end up hurting your credit score. Items like incorrect addresses or personal details, unrecognised accounts, and even outdated information or data management errors can have real consequences for your finances.

According to surveys, as many as 29% of adults have found inaccurate information on their credit reports, underlining the importance of regularly checking your credit report for mistakes.

If you do find errors, you should do the following:

• Contact the main credit reference agencies (Experian, Equifax, TransUnion)
• File a dispute and explain the error
• Where possible, provide supporting documentation

Correcting these errors can help improve your credit score over time.

7. Financial Associations with Others

If you have a joint account or mortgage with someone, it can have an impact on your credit score. For example, if the individual you’re financially associated with has poor credit, it can also drag your report down.

If you do find your credit score being affected by this kind of financial association, consider evaluating that association and take steps to remove the links that might be hindering your credit growth. While it might be a sensitive topic, it’s important for your financial health, and can be a helpful reminder for the other person as well.

The Bottom Line

Credit scores often feel like unfair judgements, but they’re ultimately logical calculations. That means that if your score is going up or down, it’s almost always for a reason—even if that reason is that there’s an error.

Understanding the factors that influence your credit score is critical for being able to improve it. To learn more about your credit score and how you can improve it, check out Pave’s other education resources, or download the app to start building your score today!