10 Reasons Your Credit Score Isn’t Improving

Credit repair takes determination and willpower, but what happens when those qualities aren’t paying off? It’s frustrating when credit improvement efforts fail to yield results, and you may be wondering what you’re doing wrong. In many cases, it’s more complicated than right or wrong. Read on to learn why your credit score isn’t improving. What you discover will help you on the path to stability.

1. Your credit reports haven’t been updated

   Once a change has been made to your account, it can take your creditor 30 days to update their internal records, another 30 days to report it to the credit bureaus, and another 30 days to see updates on your credit report. Change takes time, and unfortunately, much of it depends on your creditors’ business practices and how often they report to the bureaus. If an account remains unchanged after 90 days, contact your creditor directly. They may have outdated information or you may need to ask them to send new information to the bureaus.
   

2. Your budget is theoretical

   You downloaded our free template and created an iron-clad budget, but that’s where your efforts ended. Transitioning into a new budget can be a challenge, especially if you fail to execute your plans. For example, suppose you wanted to reduce your credit card debt by $500 per month in 2016, but your efforts to cut back on utility costs and entertainment have fallen short. Interest continues to accrue on your balance, and creditworthiness drifts further into the distance. Reassess these goals and start slow. Even small steps count.

3. You are focusing on a single credit report

   The credit bureaus are separate entities with their own business practices and scoring models. In addition, the majority of lenders form a relationship with a single bureau, reporting to them exclusively. While this may streamline their business practices, it could cause inconsistencies across your TransUnion, Experian and Equifax reports. Order free annual copies of all three to highlight errors and missing information. What you discover could boost your score quickly.

4. You need more diversity

   Suppose you have five credit card accounts, but no mortgage or auto loans. While you may pay all your bills on time, credit scoring models still perceive your accounts as unbalanced. Lenders prefer diversity when extending new loans to customers; the ability to handle multiple types of debt at one time. Review your active accounts to spot the missing puzzle piece. Filling this gap could create an equilibrium your score is lacking.

5. You need to use an old account

   Remember that credit card you opened in 2002? Sure, it doesn’t have many benefits like your frequent flyer Visa, but it’s still valuable. Payment history and credit length account for half of your credit score. While your old credit card may not yield travelling miles, you can’t afford to let it sit unused. Breathe life into your score by using your oldest accounts consistently.

6. You haven’t examined the “other” ratio

   You understand the importance of credit utilization and how it relates to scoring, but you forgot to consider Debt-to-Income Ratio. Although this number doesn’t play a direct role in credit scoring, it does impact your ability to attain new loans. As your DTIR rises past 50 percent, lenders begin to see your spending as risky and are less likely to work with you. A maxed out DTIR usually means you are overspending as well, a factor that will lead to significant credit damage.

7. You’re falling back into old patterns
   

   New Year’s resolutions are usually history by February, so it’s no surprise if your credit repair efforts have backslid in the first quarter. Overspending is a common culprit of credit damage, and it’s up to you to make positive changes. Aim to cut 10 percent this month. Achieving small goals will help you gain the confidence to tackle larger initiatives.

8. You rely on credit for small expenses

   Have you ever used a credit card to buy a pack of gum or a gallon of milk? If so, I may have found your credit repair problem. While affording these items isn’t the issue, your manner of credit use is a risky one. Unless you have assigned groceries to a specific credit account, it’s more likely that you use your Visa for everything, which means you are less likely to track spending and pay your balances in full. Refer to our budget template mentioned in #2. Yours could use a refresher course.

9. You aren’t saving any money

   Savings play an indirect role in credit scores. While the bureaus don’t care how much you have in savings, they do care about your ability to pay bills on time and maintain a healthy credit utilization ratio. Failure to save for emergencies means relying on credit when times are tough. Don’t let your balances creep into unmanageable territory. Anticipate the unexpected.

10. You need a new perspective

    Credit repair isn’t an intuitive process. In fact, it can take years to fully understand the complicated aspects of financial stability and how they relate to creditworthiness. Visit our blog regularly to improve your education and talk to our professionals about your goals for the New Year. They can provide a fresh look at your credit scores and ways to change for the better.

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