Why Is Your Credit Score Stuck?

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Unstick Your Credit Score and Go from Good to Great

Unstick Your Credit Score and Go from Good to Great

Warning! Your credit score could be stuck.

Good or bad, a credit score that isn’t improving (assuming you haven’t hit the 800+ credit elite) means that you’re not achieving your full credit potential. More importantly… it means you’re paying too much for things.

Your credit score determines the rates you pay on credit cards, mortgages, auto loans, and insurance. It can also affect the amount you pay for a cell phone, cable TV, and other utilities. It might even impact your ability to get a better job.

Maximizing your credit score is one of the fastest ways to save a lot of money.

What? You’re Not Even Watching!

People with high credit scores are in a very elite club.

You get things for less and people treat you better. I’ve worked in the financial service business for years. Believe me when I tell you high credit scores get elite service, low credit scores… well, not so much.

[Free Resource: Check your free credit report and score]

But, here’s the real secret: Getting a great credit score is not terribly complicated. The problem is most consumers (hopefully not you) aren’t even paying attention, until they need it.

Check your credit score regularly and make sure you’re making steady upward progress.

Credit Reporting Mistakes and Inaccuracies

Creditors report inaccuracies and make mistakes. They literally report on millions of consumers to the credit bureaus every month. Even a very small percentage of errors on this scale produces thousands of mistakes everyday on consumer credit reports.

[Free Resource: Check your free credit report and score]

Those little mistakes here and there cost you precious points on your credit score.

Simple things like incorrect dates and payments can make an account appear delinquent. Likewise, the timing of a creditors’ reporting and your payments might cause your credit utilization – or how much credit you use (balances) compared to how much credit is available to you (limits) – to look much higher than it really is.

This is why it’s so important to keep a close eye on your credit!

Small errors are often holding down your credit score without you even realizing it. You’re certain you’re doing everything right, but unknown to you, creditors may be reporting an entirely different credit behavior.

You probably already know that how you pay your bills and use your credit are the primary factors behind good credit. But, did you know there are other things that lenders often look at to credit-approve you? Things that credit bureaus frequently get wrong, like addresses and employers.

Incorrect or out-dated addresses and employers may raise unwarranted red flags. Does this person have multiple homes or is their income volatile from frequent job changes? Questions like these make lenders pause and reconsider.

Big take-away: How you manage your credit and how it’s reported could be very different. Don’t wait until you get turned down for credit to find those discrepancies. Check up on your creditors regularly with a full review of your credit report.

Credit Utilization, The Silent Killer

Whenever anyone says they can’t get their credit score to budge past “good” (i.e. 680-720), I ask two simple questions about credit utilization:

  1. Is the total balance on all your credit cards greater than 30 percent to 35 percent of your total available credit? (Simply add up all your balances and divide by all your credit limits.)
  2. Is the total balance on any one credit card greater than 10 percent to 15 percent of your available balance? (Again, divide the balance by your available credit.)

This isn’t to say you can’t have a decent credit score and use more of your available credit, but if you want to get it unstuck from its current level, push down your credit balances and push up your credit limits.

Short or Thin Credit History

At the end of the day, credit scores are just big, dumb mathematical formulas. You feed them lots of credit data and they try to predict what you’ll do in the future.

Stop, rewind… take a look at the emphasis in that last sentence. It says, “you feed them lots of credit data.”

So, the question becomes: what if you don’t feed them lots of credit data? You guess it – they often come to the wrong conclusion. More accurately, they calculate unpredictable credit scores. I’ve seen short credit histories and “thin” credit files produce everything from 700s to 500s, regardless of how well people paid or used their credit.

[Free Resource: Check your free credit report and score]

Lesson learned: Don’t leave your credit score to the dumb credit algorithm. Steadily build your credit history and track your credit score.

Regardless of your credit score, I guarantee you have one of these simple problems sticking your credit score, preventing you from getting into the credit elite.

What are some things that you’ve noticed sticking your credit on mediocre?

Unstick your credit score today at Quizzle.com. Quizzle has all the tools you need – including a free credit score and an affordable credit improvement tool – to bump your credit score from good or mediocre to great!

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  • http://www.blake.co.za/blog/ Jade

    Great post Bill!

  • http://yourmoneydrawer.com Bill Rice

    Jade,

    Glad you enjoyed it. A stuck credit score is no fun. These are just a couple of points that stuck my credit score longer than it should. Hopefully, it cleared the fog for a few folks.