Let’s start with something interesting. According to CIBIL, the share of prime and higher-rated borrowers (those with a credit score above 731) has gone up from 51% in June 2022 to 55% in June 2024. What’s better? Self-monitoring among individual borrowers rose by over 50% in FY24!

People are clearly taking their credit health more seriously. But what if you’re doing all the “right” things and your score is still stuck? That’s frustrating. You pay on time, avoid big loans, and still… nothing moves. Here’s the thing – your score might be getting dragged down by hidden or misunderstood factors. Let’s break them down.

1. You’re Paying on Time, But Not Everything

Paying your credit card bill before the due date is great. But here’s the catch: credit scores don’t just look at if you pay on time. They also care how much you owe. If you’re only paying the minimum or leaving a balance month after month, it adds up.

Your utilisation ratio – how much credit you’ve used versus your total limit – can weigh you down. Aim to keep it low. Ideally below 30%. Just because you aren’t late doesn’t mean you’re in the clear.

2. You Closed an Old Credit Card

Sounds responsible, right? Fewer cards, fewer temptations. But closing an old credit card could backfire. Especially if it was your oldest account or had a big limit.

Your credit history length and available credit both impact your score. So when you shut a card, you could reduce your overall credit limit and increase your utilisation ratio on other cards. Bad combo.

3. You’re Using Only One Kind of Credit

Paying your credit card bills on time? Great. But if that’s the only kind of credit you’ve ever used, it might be slowing you down.

Credit scores also reward variety. A mix of credit – like a credit card plus an EMI or secured loans like a home loan – shows that you can handle different types of debt. It signals financial maturity.

If your entire history is just one product, your score may not reflect your true credit behaviour. Not saying you should take a loan for the sake of it.

4. You Don’t Have Enough Credit Activity

This one feels unfair. You’re careful. You barely borrow. Yet your score is low. Why? Because the credit system works on data. If there’s not enough recent credit activity – like EMIs, credit card usage or repayments – there’s not much for the algorithm to judge.

Consider using a secured credit card or a small consumer loan to build history. And yes, always check your free credit score regularly to track changes.

5. Errors on Your Report

You’d be surprised how many people find mistakes on their credit reports. A wrong account, a payment not marked, or, worse, fraudulent entries.

Check your report every few months. You can dispute errors online. Even a small mistake can shave off points from your score.

6. You’re Applying for Too Many Loans

We get it. You’re shopping for a better deal. But every time you apply for a loan or credit card, the lender runs a hard enquiry. Multiple applications in a short time = red flag.

It makes you look credit-hungry, which can lower your score. Space out your applications. Better yet, check your eligibility before you apply.

Why It Matters Even More Now

Here’s something else to consider: more and more Indians are entering the credit system. According to TransUnion CIBIL, credit penetration – the percentage of credit-active consumers in the adult population – has been steadily increasing across all age groups. Between Dec 2021 and Dec 2024:

For those aged 18–25, penetration rose from 9% to 15%.
For the 25–35 group, it jumped from 22% to 32%.
For the 35–45 group, it increased from 26% to 35%.

This means one thing: credit access is expanding fast. And as more people enter the system, your credit score becomes even more important. Whether it’s for a home loan, a car, or even a BNPL (Buy Now, Pay Later) scheme, your score determines not just approval but the rate and terms you get.

In a world where everyone’s borrowing, your credit health is your edge. Don’t ignore it.

Final Thoughts

Your credit score isn’t just a number – it’s a signal. It tells lenders if they can trust you to repay. But it also tells you where you stand. If your score is stuck, look beyond the obvious. It could be a combination of missed nuances or decisions you thought were helping.

And if you’re struggling with repayments, don’t panic. Settlement, when done with clarity and planning, is a responsible choice. But it should be followed by a solid strategy to rebuild.

Money problems happen. But your credit journey doesn’t have to end there.

Got questions or unsure where you stand? Start by reviewing your report. Just check your free credit score and take it from there. One step at a time.