If you’ve had bad credit and you’re working towards increasing your credit score, you may be watching your cash like a hawk.
Ensuring your credit is in the best position can take work, but how frustrating is it when your credit score doesn’t seem to be budging?
Whether you’re improving your credit score for car loans UK, getting a mortgage, mobile phone contract or applying for a loan, a higher credit score is always better. So, if a stubborn credit score is getting you down, read on for the top 5 reasons why your credit score is not increasing.
1. You’re using more credit
Your credit report constantly monitors its factors to gives you a weekly or monthly credit score, depending on which provider you use. One factor which affects your credit score is the amount of credit you’re using at one time.
If you’ve recently spent more on a credit card or you’ve taken on new credit, your credit usage increases. You may find your score isn’t increasing if you’re taking on more credit. If you want to see your credit score flourish, you should avoid applying for any new loans and instead work towards paying off the existing debt you have.
2. Incorrect information on your credit file
The information on your credit file is very important and having details about yourself on there that’s incorrect or not up to date can be damaging to your credit file.
Lenders use the information your credit file to assess your creditworthiness and if your information isn’t accurate, it can see you are declined for loans. When you check your credit report, make sure all the information is up to date. If it’s not or you spot something that doesn’t look right, contact the agency who provided your credit report.
3. Missed payments stay on your file
Did you know missed payments stay on your credit file for up to six years? This is why you should be careful and considerate with the finance you take out. Being unable to repay your loans can have a detrimental effect on your financial future.
Your credit score may struggle to increase if you have a missed or late repayment on your credit file. Ensure you are meeting all payments you currently have set up and if you’re struggling to meet repayments, speak to the lender and see how they could help. Missing payments altogether is the worst thing you can do if you’re struggling.
4. Lots of new credit at once
Sometimes you may have bad credit due to low credit due to no previous history of borrowing. When building credit, you should do it little and often. Opening lots of new credit accounts and applying for credit cards, car loans, finance, can harm your credit score.
Credit providers tend to prefer applicants with low levels of debt, but with long standing credit accounts. Old, historical accounts that have been settled are better for your credit than new ones. So, if you do need to make a credit application while building your credit score, try to limit your applications and only take on one type of credit at a time.
5. You only have one type of credit
Your credit score takes into account the amount of credit you have but also what type of credit it is. The best credit scores are built on a mix of types and being able to handle them all responsibly. If your score isn’t moving up, it may be because you don’t have enough evidence of different types of credit. This could include different loans such as personal loans, car finance, mortgages and credit cards.
