Why Isn’t My Credit Score Going Up

You may be asking yourself…Why isn’t my credit score going up?
I pay it off each month.

Let’s look at why.

You first have to understand how credit scores are calculated. FICO or Fair Isaac Corportation takes 5 areas into consideration when determining your score:

Credit Mix: 10%
New Credit: 10%
Credit History Length: 15%
Amount utilized: 30%
On-time Payments: 35%

The category that is giving us trouble is the Amount utilized. How is this calculated?

It looks at how much credit you have versus how much you are using. Let’s take a deeper look.

If you have a $5000 dollar limit but you only owe $2000 dollars on it, then you have a 40% utilization rate. The lower the rate, the better your credit score. This is why it can be useful to ask for credit limit increases, even if you aren’t planning on using it to it’s full limit.

The reason we aren’t gaining any ground with our credit score is because of the difference between the statement date and the date the credit card companies report your balance.

Typically the 3 major reporting bureaus, Equifax,
Transunion and Experian will all report on different days of the month that have nothing to do with your statement date. 🤷‍♂️

What this means is that you are getting penalized for carrying a balance. So how do we fix this? Experiment paying off your credit cards at a different time of the month and monitoring the results on a website like Creditkarma.com.

If you are interested in learning more about credit reports you can see my video on credit reports here: Credit Reports Video