Why your credit score refuses to move up

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You check your credit score, finally expecting it to improve, and there it sits again, below 500. It is frustrating, and the loads get rejected sometimes, or interest rates sound excruciatingly high. The truth is, low scores usually come from habits we don't pay enough heed to. Once you manage to spot them, the damage is highly doable to fix than it actually appears.

There are several reasons for scores staying under 500, but the majority are due to missed or delayed payments. While one or two missed EMIs or credit card bills can be harmful, repeated delays begin to cause long-term damage. Lenders view this as unreliable behaviour. Paying the minimum due amount after the deadline constitutes a delay. Setting reminders or auto-debit instructions can slowly rebuild trust and lift your score over time.

High credit utilisation is another silent score killer. If your credit card limit is Rs. 1,00,000 and you use more than Rs. 80,000 on a regular basis, it signals financial stress. Ideally, usage should stay below 30 percent of your total limit. Repeatedly maxing out cards month over month tells the lenders that you may be relying heavily on borrowed money, thereby keeping your score low.

The general assumption is that once the loan is settled or written off, it ceases to matter. Unfortunately, it remains fact that the settled accounts reflect poorly in your credit report. Unpaid dues, however small, continue to pull down your score. Clearing the old balances and updating your credit report can make a difference gradually.

Laying an application for every other loan or card results in a hard enquiry on your credit report. And when they occur too frequently, it implies desperation for credit. Multiple rejections further drive down the score. Such spacing keeps the negative impact at a minimum and gives breathing room for the score to recover.

Somewhat counterintuitively, having no active credit can also harm your score. If your report shows only old defaults and nothing current, lenders have nothing positive to go on to judge you. A small secured loan or a low-limit credit card, used carefully and paid on time, can slowly rebuild your profile. Consistency here matters more than speed.

A credit score below 500 is not permanent, even if it feels that way today. It improves when habits change and patience kicks in. One on-time payment, one cleared due, and one disciplined month at a time can gradually push that number upward and open doors again.