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Possible Reasons Why Your Credit Score Isn’t Improving

Clix February 19, 2021


Credit score is a determining factor that lenders check to establish your creditworthiness. If you are planning to apply for a loan, then having a credit score of more than 700 can boost your chances of getting your loan approved with the best loan terms. The best trick to improve your credit score is to pay your bills and existing loan EMIs on time. But if you already know that and if your credit score is still the same, then it might become hard for you to understand what’s wrong.

If you find yourself stuck with that low credit score and it doesn’t seem to improve no matter how hard you try, you must understand that several factors work to calculate your credit score. Some of the most important ones are:

    • Repayments on your credit accounts
    • Credit utilization ratio
    • Hard enquiries on your credit report
    • Duration of your credit history
    • A mixture of secured and unsecured loans

If you have tried your best but nothing seems to work, then here are some possible reasons why your score might not be improving.

High Credit Utilization Ratio

Around 30% of your credit score is determined based on how you utilize your credit or what percentage of your available credit limit you have used up. To check yours, divide your total credit limit with the amount you have used. For instance, if your credit limit is ₹ 1 lakh and you have used ₹ 30,000, your credit utilization is 30%, which is acceptable. But if your credit utilization ratio is more than 30%, that might be the reason why your credit score is stagnant.

Now that you know that your credit utilization ratio is extremely high, pay off some of that amount and you will soon see an improvement in your credit score.

Seriously Negative Entry in Your Credit Report

Despite being regular with your bills and having an acceptable credit utilization ratio, if your credit score still doesn’t move, then check if there is something seriously negative in your credit report. Such an entry, like a bankruptcy or foreclosure, takes several years to leave your credit report. Its impact may reduce over the years, but there is hardly anything you can do about it. To ensure that your score doesn’t reduce further, keep paying your bills on time and stay within your credit limit.

Errors in the Credit Report

It’s important to check each and every entry in your credit report carefully and look for any errors that might be keeping your score down. Errors can be as minor as a spelling mistake in your name or as big as mistaken identity. Even a single minor error may have a negative impact on your credit score. So, check your credit report thoroughly and dispute any errors you find.

To dispute an error, you have to contact your credit reporting agency and bring the error to their notice. If the error is authentic, the credit bureau will verify it remove it from your report within a few weeks.

Lack of Diversity in the Credit History

The diversity of your credit mix is an important factor that determines your credit score. You can bring such diversity with the following types of credit:

    • Instalment accounts, like home loans, car loans, personal loans, business loans, etc.
    • Revolving accounts, like credit cards, lines of credit, etc.

Even if you have closed your old accounts or you no longer use them, they still bring diversity to your credit history. If you only have one type of credit account in your report, it is not considered to be diversified and your credit score does not go up as a result.

Too Many Hard Inquiries

Whether you visit a bank to make an inquiry about a loan offer or use a credit app on your smartphone to look for credit, the lender would look into your credit report to evaluate your credibility. Such an evaluation gets listed on your credit report as a hard inquiry. Too many hard inquiries in your report within a short period can have a negative impact on your credit score.

Each hard inquiry can reduce your score by 5-10 points, which means the more you shop around, the lower your score gets. So, hold off your loan inquiries for a while, especially if you are trying to improve your credit score.

You Closed an Account Recently

Maintaining a long credit history of responsible financial management has a positive impact on your credit score. The length of your accounts does play a significant role. For instance, if you are 40 years old and you still maintain a credit card you got in your college with a small credit limit, the age of this account is seen positively, even if you no longer use that card.

Your credit utilization ratio also gets higher when you close an old account, as you lose its credit limit. So, instead of closing that account, keep it in a drawer and let its credit limit stay with you to improve your credit score.(this is advisable only if you are not incurring any fees on the said card)

Ways to Improve Credit Score

Now that you have identified the reason why your credit score isn’t improving, here are a few tips you can use to move it up. You might be using some of them already. But find the ones you are not doing and make them a part of your mission:


    • Identifying errors in the credit report and disputing them
    • Managing finances
    • Keeping a balance between income and expenses
    • Paying off credit card balances
    • Avoiding making any unnecessary loan inquiries
    • Retaining old accounts and cards

Looking forward to improving your credit score? Check your credit score here and see where you stand. Keep checking every few weeks to see if your efforts are making any difference. It’s a free tool that you can use to check your Experian credit score within minutes.


Clix Capital is a trusted NBFC that you can use to avail a personal loan, home loan, business loan, loan against property, or any other kind of finance. With an easy application process, simple eligibility conditions, and minimal documentation requirements, we provide finance easily to all. Just apply for a loan product of your choosing and wait for our customer representative to get in touch with you.


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