4 Reasons Your Credit Score Isn’t Increasing

Updated: December 27, 2023 Author:

Quick Answer: Common reasons for a credit score not improving are a lack of diversity in your credit types, a short credit history, frequent inquiries, or bad habits like late payments. However, it could also be that you already have a good credit score, where a plateau is common.

    Credit scores can be frustrating because they’re not 100% predictable. While we can have a good idea around what makes them improve or worsen, the exact weightings and timings aren’t always universal –  it’s a bit like trying to guess a car insurance quote.

    It’s not uncommon that you feel as if you’re doing all the right things, but your credit score remains sluggish to respond. It’s important to not do anything rash or experimental, and instead stay patient with sound credit building practices.

    4 Common Reasons for a Stagnant Credit Score

    Short Credit History

    The length of your credit history is a key part of your credit score. If you’re new to credit score building, it may just be that credit agencies need a longer history before they can reward your recent credit efforts.

    Lack of Diverse Credit Types

    Credit mix is important when building credit. Many are misled into thinking their reliable and timely repayments of a mortgage and car loan should be rewarded. But, credit agencies like a diverse mix to show lenders that you can manage various types of credit. For example, try mixing revolving credit (i.e. credit cards) with instalment loans.

    Bad Practices 

    It’s important to avoid falling into the trap of being too active, or missing any payments. It may be that your positive efforts are being undone by some mistakes, such as a missed payment or a high credit utilisation ratio. Or, that your many credit types come at a cost of making too many hard inquiries in a short space of time.

    Good Credit Score Plateau

    It may be that your credit already reflects your risk profile. If your credit score is already good, continuous improvements become slower and harder to come by. With less room for growth and all the rudimentary advice (i.e. electoral register) already ticked off, a plateau is normal. Generally, the rate of progress slows down over time.

    Lesser-Known Reasons Why Your Credit score Isn’t Improving

    If none of the above reasons apply to you, it may be possible that you have unrealistic expectations around how quickly credit scores improve. Credit scores change periodically, such as once a month, as the agencies receive new information during this time. Patience is key, as significant changes may take several months.

    However, there is a small chance that there are errors on your credit report. Inaccuracies can arise in many forms, and it may be what is hindering your credit building efforts. To counter this, regularly check your credit report and dispute any inaccuracies that you spot.

    Another issue could be a low credit limit. You may feel as if your credit utilisation isn’t very high, but a very low credit limit could be causing a surprisingly high ratio. Plus, the ratio only needs to be above 30% before it starts becoming a problem.

    Finally, you could be slowing down your credit building growth by closing down old accounts. It may seem like harmless clean up, but this may be shortening your credit history and increasing your utilisation ratio, which is the very opposite of what you’re trying to achieve. On the other hand, if a short credit history isn’t a concern, closing down unused accounts can sometimes help, too, as they pose a needless added risk. 

    How to Speed up Credit Score Building

    Accelerating the credit building process is a balancing act. Without triggering too many hard inquiries or utilising too much credit, you want to open a variety of credit accounts. Increasing these credit limits, where possible, will effectively reduce your current utilisation ratio, which is a fast way to improve your credit profile outlook.

    Another trick is to become an authorised user on a family member’s credit card, thus giving you a broader credit profile. But, this only works if the main cardholder has a very solid credit score.

    Finally, go through this checklist of how to build a credit score fast. Recommendations include:

    • Register as a voter 
    • Pay off existing debts
    • Make a big debt payment
    • Limit credit applications
    • Close unused accounts

    What to Avoid

    As previously mentioned, building a credit score is a balancing act. So, the two key things to avoid are the extremes: doing the bare minimum and doing too much.

    Bare Minimum

    Paying off your debts on-time is a good thing, but only paying the bare minimum could be a wasted opportunity. When proactively trying to improve your credit score, try to avoid once-a-month minimum repayments, and instead pay down debts more frequently or in larger chunks (assuming there are no early repayment fees). You need to be active when building your credit profile.

    Doing Too Much

    If you’re in a rush to build a credit score, you may be doing too much. Too much activity in a short space of time could be a red flag to credit agencies, and it may be a sign you’re in financial trouble (even if you’re not). For example, applying needlessly for various payday loans just to have a richer credit history may be a mistake. 

    High-interest credit options could pose other risks too, such as being trapped in a cycle of expensive debt. You have to ask whether the improved credit score is worth the interest you pay on debts you may not need.

    Final Thoughts

    The first step of building credit is understanding why your credit score isn’t increasing in the first place. This could be down to a misunderstanding of what good credit habits are, or it could be that one bad habit is undoing all of your hard work. 

    There is also a point in which building your credit score becomes not worth it, perhaps because you’re taking on unnecessary and expensive debts. You may be doing all the right things, but have unrealistic expectations on how quickly credit scores change.