September 30th, 2011

Break Out of Your Credit Score Rut

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Break Out

One of the most frequently asked questions we receive from our users here at Credit Karma is, “Why hasn’t my credit score changed?” Truthfully, improving your credit health can be hard work. Sure, you’ve been paying your bills on time, but sometimes it takes more.

To take your credit score to the next level, you need to reevaluate your overall credit characteristics. Here are key areas to help you dig yourself out of a credit score rut.

Credit card utilization

Your credit card utilization is a crucial part of your credit score calculation and signifies how you use the credit available to you. To determine this rate, add up all of your credit card balances and divide by your credit limits.

The higher your credit card utilization, the more risk you pose to creditors. It’s recommended that your credit card utilization rate never exceed 30-35%. If you find yourself stuck at a certain credit score, and you’re using more than 35% of your available credit, consider reducing your spending or increasing your credit limits.

Short or thin file

A credit score is determined by the data in your credit file. The more information in your credit report, the more possibilities there are for your score to change. If you have a short credit history, or are completely new to the wonderful world of credit, it may be difficult to improve your credit health.

To start building a good credit history, consider applying for a secured credit card. These cards are designed to help consumers build credit and typically offer guaranteed approval. They require a safety deposit as collateral if you were to ever default on your payments. In turn, this safety deposit becomes your credit limit. Once you’ve established a good credit history, you can request to convert your secured credit card into an unsecured card, or apply for a new one.

Uncorrected mistakes and inaccuracies

As a consumer, you should be generally aware of when you pay your bills and the status of your accounts. On the other hand, how this information is interpreted by the credit bureaus is a completely different matter. Small mistakes in how your credit information is reported by the bureaus can have a large impact if they go unnoticed.

If your credit report is riddled with errors, it may be holding you back from obtaining a better credit score. Getting your free credit report from each of the three credit bureaus at annualcreditreport.com and checking them for errors each year is an easy way to ensure you’re on the right path to credit score bliss.

What does it all mean?

Improving your credit health can be tough, but taking the first steps toward understanding your score and the ways you can improve it can help free you from your credit score rut.

If you feel that you’re already doing all that you can to improve you score, know that these things don’t happen overnight. As long as you continue to build good credit history, your score should continue to reflect that progress. Rome wasn’t built in a day, and neither was a perfect credit score.

For more on credit scores, check out this video!

Give credit where credit is due,

Danielle Belfatto, Karma Contributor

Disclaimer: All information posted to this site was accurate at the time of its initial publication. Efforts have been made to keep the content up to date and accurate. However, Credit Karma does not make any guarantees about the accuracy or completeness of the information provided. For complete details of any products mentioned, visit bank or issuer website.

3 Comments

  1. The ways to improve your credit score are certainly helpful to many debtors who are in quest for increasing their score. Another way to improve your score is to keep yourself updated with your credit report. We are entitled of a free credit report from the 3 main bureaus, so make use of that. Read it thoroughly and check if there are inaccurate information noted on your report. And if you found one, inform the bureau right away and request for a changed or removal of that erroneous data.

    Darius D. Rickard at 1:19 am on October 28, 2011

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