Does your credit score seem stubbornly stuck-in-the-mud? Does it feel like you’re slowly sinking in credit score quicksand? Here are some reasons your credit score might not be improving…
Rather than thinking of your credit score as something lenders use to decide whether or not to offer you credit, try to see it as a representation of how attractive you are to lenders. Why does this difference matter? Behaviour is the key! Behaving in a way that shows you’re a good investment will improve your score, not the other way around.
We’ve listed some factors that affect your credit score to help you understand why your credit score isn’t improving.
Why your credit score is not increasing:
You have missed payments, defaults or CCJs on your credit report
Missed payments matter more
No matter how frequently you pay off your credit card, utility or phone bills on time — if you miss even one payment you’re likely to find yourself asking: “why is my credit score not going up?”.
You might be working hard to improve your credit score with all sorts of tips, tricks and tools — tools like Loqbox. The positive impact of these will be totally undone when it comes to your credit report if you miss any payments on existing balances. This means you need to keep an eye on your regular payments or all your hard work will be wasted!
The good news is that as time passes the missed payments, defaults and CCJs on your report become less important. But be mindful that they stay on file for six years.
You’re using more of your available credit than usual
More credit, fewer points
Perhaps you’ve just paid for some holiday flights with your credit card, or used it for a few purchases you wouldn’t normally because you left your debit card at home.
Paying for things with credit means you’re using more of the credit currently available to you. This increases what’s called your “credit utilisation” and changes to this will affect your credit score. If your utilisation goes up a lot month-to-month, your score will probably go down.
Try to keep your credit utilisation fairly consistent, ideally at around 10%. So if your credit card has a maximum balance of £2,500, try to use around £250 each month.
The average age of your accounts isn’t improving
Lenders like it long-term
Good relationships usually (but not always!) stand the test of time. When looking at the accounts in your name, lenders like to see long histories that show your creditor and you have a good relationship. In other words: you pay on time, and aren’t always jumping ship to look for a better deal elsewhere.
This is because in order to make money off you, lenders need you to stick around and keep making payments. So if you keep changing mobile providers, broadband providers, switching banks (for those tasty switching bonuses!) and generally getting about, lenders might not see you as a good opportunity for profit, and therefore lending.
Remember: your credit score is just a representation of how attractive you are to lenders. So if they might be nervous about your faithfulness, your score will show it!
New credit applications and agreements can negatively affect your score
New phone contract, who dis?
There are all sorts of things that can affect your credit score. For instance, things that you might not have realised are treated as “credit accounts”, are. If you were expecting to see a score increase, but instead it stayed flat - or even dropped - then you might have entered into a credit agreement without realising.
Stuff like phone contracts, broadband contracts or the more obvious things like personal loans all affect your score. Services like these - where you are offered a line of credit (like phone contracts, broadband, and credit cards) - require things called “hard credit checks”. And these show up on your credit report.
A credit report full of hard checks in quick succession will make lenders nervous, so your score will probably drop. Try to space them out over a few months when possible.
There are also some changes coming for “Buy Now Pay Later” schemes like Klarna that will mean they now affect your score. So think before you use it, whether you’re buying new trainers or a new phone contract.
Your credit habits haven’t changed significantly
Change starts with you
Credit scores are based on your report, which contains all the information that the CRAs hold on you. This means that if you keep using the same credit accounts to make the same payments month in and month out, the information they hold on you…isn’t really changing. Your score is unlikely to drop, but it’s also not going to rise.
So while you might be playing by the rules and paying off your credit card each month, your consistency could be the reason you’re asking yourself “why isn't my credit score improving with a credit card?”.
You’re only using a single type of credit
Balance your blend
This is a bit of a tricky one, but the types of credit that you use have an impact on your credit score. Simply put, the reason your credit score isn’t improving with a credit card might be because you’re only using a credit card! If you only use a credit card, or you only use car finance, then this lack of diversity can stop your score growing further.
The key to a good credit blend is RESPONSIBLE use of multiple types of credit. So if you use your credit card, make sure you’re paying it off. And if you decide to use car finance, choose a car where you can comfortably afford the monthly payments!
Do both of these, and you’ll look like a more attractive lending prospect, which means your score will go up.
The credit reporting process can be slow to update
Patience is a virtue
Sometimes your credit score won’t change because of the time it takes for updates to be reflected in your report.
Lenders will usually send information to the CRAs each month. And public services (like the electoral roll) can take longer. But WHEN they do this during the month is relevant.
Because reporting can take a little time, doing something positive like settling a debt balance, especially if done after your lender’s reporting date, might not improve your score for a couple of months.
There are errors on your credit report
We all make mistakes, even the CRAs
A credit report is only as accurate as the information that goes into it. That means that if one of your creditors makes a mistake when reporting your account information, it could knock your score down.
Maybe you’ve paid off the full balance of a loan, and they’re still trying to take payments. Or maybe they’ve just got the wrong address for you. Small discrepancies are enough to make lenders a bit shifty, which could hurt your credit score.
Luckily there are ways to report inaccurate information in your credit report, but it means getting the full report in the first place. You can read more about rectifying your credit report here.
There’s no quick fix, and no single solution
Credit scores, and the credit reports they’re based on, are complicated things with lots of moving parts. Improving your credit score takes time, and a change in your long term behaviour.
By behaving in a way that makes it obvious that you are a responsible borrower and a good investment, you’ll improve how lenders look at you. That’s what makes your score go up! Just don’t expect it to change overnight…