Break Out of Your ... - Credit and Personal Finance Blog | Credit Karma

September 30th, 2011

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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 score can be hard work. Sure, you?ve been paying your bills on time, but sometimes it takes more to boost your credit score.

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 score.

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 score 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.

Give credit where credit is due,

Danielle Belfatto, Karma Contributor

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Source: http://blog.creditkarma.com/credit-karma/break-out-of-your-credit-score-rut/

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