Credit Score Not Improving? 5 Mistakes You Might Be Making

For most of us, a credit score feels like a silent judge sitting in the background of our financial lives. It doesn’t appear on our bank statements, and we don’t check it as often as our account balance, yet it has a powerful influence on the financial opportunities available to us. Whether it is getting approved for a home loan, negotiating a lower interest rate on a personal loan, or even being eligible for a premium credit card, your credit score plays an invisible but decisive role.

What makes it tricky is that improving a credit score is rarely as straightforward as just paying bills on time. Many people, despite being financially disciplined, find that their score refuses to move upward. They may wonder, “I’m doing everything right, so why is my score stuck?”

In this article, we highlight five subtle but critical mistakes that may be holding you back. Recognizing and correcting them can make all the difference in moving your score toward the healthy 750+ zone.

Mistake 1: High Credit Utilization

One of the most common yet overlooked reasons for a stagnant credit score is credit utilization. The ratio of the credit you use to the credit you have available. Even if you pay your bills on time, maxing out your card limits can give lenders the impression that you are over-reliant on credit.

For instance, if your card limit is ₹1,00,000 and you regularly spend ₹70,000 to ₹80,000 a month, your utilization ratio is 70–80%. This is considered high and risky. Credit scoring models typically reward those who keep this ratio below 30%. In fact, keeping it closer to 10% signals responsible credit management.

How to Fix It:

• Aim to spread your expenses across multiple cards rather than using just one.
• Make part-payments before the billing cycle closes to bring down utilization.
• Request a higher limit on your card (and resist the temptation to overspend).

By simply keeping your credit usage in check, you create an immediate positive impact on your score.

Mistake 2: Late or Missed Payments

Payment history makes up about 35% of your overall score, and lenders value consistency above all. Missing a due date by even 30 days can cause your score to drop significantly and stay affected for months.

Sometimes the mistake is subtle, not outright skipping payments, but paying a few days late because of oversight. With multiple EMIs, credit cards, and digital wallets to track, it’s easy to miss deadlines. Unfortunately, credit bureaus don’t differentiate between “just a few days late” and “completely forgotten.” Both count against you.

How to Fix It:

• Automate payments by linking bills and EMIs to standing instructions or auto-debit.
• Use calendar reminders for manual payments.
• If you anticipate a genuine delay, inform your lender early. Some lenders may allow grace periods or alternative arrangements.

Avoiding late payments is the single most important habit for improving your score, because nothing else matters if your repayment history looks unreliable.

Mistake 3: Applying for Too Much Credit at Once

It’s natural to want access to more credit, whether through new credit cards, personal loans, or buy-now-pay-later facilities. However, every application triggers a “hard inquiry” on your credit report. A single inquiry has only a minor effect, but several within a short span signal to lenders that you may be under financial pressure or actively seeking excessive credit.

This pattern, often called 'credit shopping', is a subtle mistake that can stall your credit score growth. For example, applying for three new cards in two months can shave off points, even if you’re ultimately approved and manage those accounts well. Credit bureaus view such behaviour as riskier than a customer who applies sparingly and strategically.

How to Fix It:

• Space out credit applications; apply only when necessary.
• Use bank or bureau eligibility tools before applying, reducing the chance of rejections.
• Focus on building a healthy repayment record with existing accounts before seeking more credit.

In credit management, patience pays off. Applying responsibly helps your score rise steadily rather than dipping from clustered inquiries.

Mistake 4: Closing Old Accounts

It seems logical to close old or unused accounts to simplify your finances. But in reality, this is one of the most counterproductive steps you can take. Two reasons make this harmful:

• Credit Age: Your score values long-standing credit relationships. Closing a 10-year-old card shortens your average account age, reducing your score’s stability factor.
• Credit Utilization: By shutting an unused card, you also lower your total available credit. If your spending remains the same, your utilization ratio automatically increases, which can hurt your score.

Best Practice: Keep old accounts open, even if you rarely use them. A small recurring transaction (like a subscription) ensures the account remains active and contributes positively to your history.

Mistake 5: Ignoring Credit Report Errors

Sometimes, the obstacle to improving your score isn’t your behaviour at all, it’s inaccurate reporting. Credit report errors are more common than many realize, ranging from misreported late payments to accounts that don’t belong to you.

An outdated loan still showing as 'active' or a duplicate account entry can weigh down your score unfairly. Identity mix-ups and clerical errors, while unintentional, still signal risk to lenders. Unfortunately, unless you actively review your credit reports, you may never know these errors exist.

How to Fix It:

• Obtain your free annual credit reports from bureaus
• Review every entry carefully, dates, balances, payment statuses.
• Dispute inaccuracies immediately with the bureau. They are required to investigate and correct valid errors within 30 days.

Monitoring and correcting errors not only improves your score but also ensures you aren’t blindsided by rejections on account of false negatives.