Why your Credit Score is Not Improving?
The credit scores are a result of complicated formulas that make it difficult for a layman to understand why your score is the way it is. On top of that, there are many credit score formulas and it is not possible to keep track of all formulas. The most important factor is that everyone’s credit history is different. Hence, no expert can give opinions about your credit score without looking at your credit report.
Payment history has the greatest impact on credit scores but timely payments alone are not enough. After payment history another important fact is outstanding loans amount or any other debts. The credit card balance utilization should be kept as low as possible. There is a limit to your credit card spending. The closer you are to that limit, the higher is your credit utilization. High utilization will keep your credit scores down.
Even if you are paying debts on time and credit utilization is low, there might be something in your credit history that is keeping your credit score down. Some exceptionally negative events such as bankruptcy or foreclosure in your credit history may take many years to eliminate its effect on your credit score.
There are a lot of factors other than on-time payments and credit utilization that determine your credit score. The longer you are an active credit card user; the better is your score. The credit card should show payments of instalments and not just a single purchase. Also, the purchases made on credit should not be of a similar nature. The purchases should be of different products and from different stores.
Any small error in your credit report could also result in a lower score. The error could be as small as a spelling mistake in your name or even a wrongful late payment notice. These factors also have an impact on your credit score and should be rectified as soon as possible.
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