Getting a car loan doesn't have to be a nightmare, even with bad credit.

Why isn’t my credit score improving?

last updated January 27, 2015 by

A common question from consumers is why isn’t their credit improving when they are working so hard to raise their score? By eliminating debt, paying bills on time, and having low utilization of credit, it is possible to increase your credit score but it may not happen as quickly as you’d like.

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Let’s start by discussing why your credit is low in the first place. FICO, the creator of the most commonly used credit score, shared how certain actions affect credit score. Here is the list of some of the most common score busters.

  • 30-day late payment — 60-110 points.
  • Debt settlement — 45-125 points.
  • Foreclosure — 85-160 points.
  • Bankruptcy — 130-240 points.
  • Maxed-out card — 10-45 points.

The higher points generally apply to those with the highest scores (780-plus) and the lower end to those with the lowest costs (below 680). Keep in mind that a perfect FICO score is 850, and to get the best possible interest rates, depending on the lender, you’ll need a score of 730 to 760.

If you are doing everything right but nothing is changing, don’t get discouraged, it is making a difference. The best things you can do are, have various types of credit, revolving credit cards and car loans are great, but be sure to keep your utilization ratio low (not using all your available credit), a good rule is to keep your credit utilization before 30% of what you have available. Also, it is very important to pay your bills consistently and promptly.

And lastly, give it time. Like many other mistakes in life, it can only take days to ruin your credit but years to recover. As time goes on, your credit mistakes will have less influence and your credit will slowly increase. So keep up the good work, it will pay off.