Ever wonder why your credit score isn’t going up?
Money experts recommend checking your credit report and score at least once a year. This way, you know where you stand credit-wise, and when you’re ready to apply for a loan, there aren’t any surprises. But if you check it this year, and notice that your score hasn’t changed from last year, you might be confused. Several factors play a role in credit scoring, and there are good reasons why your score isn’t improving.
YOU DON’T USE CREDIT
Having a credit card isn’t enough to build a high credit score. You have to use credit to improve your credit, or else creditors will view your account as inactive and stop updating your credit report. Even if you prefer not to use credit, make small charges every few months and then pay off these charges. This keeps your credit account active.
YOU DON’T HAVE A GOOD MIXTURE
The type of credit you have makes up 10% of your credit score. For that matter, you need a mix of credit accounts. This might include a credit card, a personal loan, an installment loan or a mortgage. This doesn’t suggest applying for any and every type of credit, but if you can have a mix of three #different types of credit, this can give your credit score a boost.
YOUR CREDIT HISTORY IS TOO YOUNG
Even if you pay your bills on time every month, it takes years to build a strong credit history. The length of your credit history makes up 15% of your total. So, be patient. The more you use credit, and the more positive activity added to your credit report, the higher your score.
YOU PAY BILLS LATE
Submitting a payment more than 30 days past due will result in a negative remark on your credit report, and it only takes one negative remark to drop your score. Even if you only have two 30-day late payments a year, this can keep your total points stagnant. For a better score, always pay on time – on or before the due date.
YOU’RE USING TOO MUCH OF YOUR CREDIT LINE
A maxed-out credit card can drop your total points. This is because the amount you owe makes up 30% of your credit score. If you have a credit card, your balance should not exceed 30% of your credit line. #People with the highest credit scores only use 1% to 10% of their credit line, according to Credit Karma.
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