Paying Every Bill? Here Are 3 Reasons Your Credit Score May Still Lag

Paying Every Bill? Here Are 3 Reasons Your Credit Score May Still Lag

Martin Dasko

Sat, August 29, 2026 at 8:00 PM GMT+3 4 min read

The harsh reality is that your credit score can impact your ability to get approved for a home or car loan in the future. One of the best things that you can do for your financial situation is to boost your credit score so that you can save money in the future.

According to a 2026 U.S. News survey, about 59% of Americans don't know that FICO scores are what lenders use to determine creditworthiness.

Below, we will explore how people end up with bad credit even when they have an impeccable payment history on bills and other obligations. We will also include some tips on boosting your credit score.

Why Your Credit Score Can Still Be Low

Here are three main reasons why someone with a perfect payment history can have a poor credit score.

1. Payment History Is Only 35% of Your Credit Score

Steven Menotti, a former senior personal banker and CEO of Menotti Enterprise, noted that most people mistakenly believe their credit score measures how well they pay their bills.

Meanwhile, Hillary Seiler, a personal finance expert, senior credit counselor, and founder of Financial Footwork, pointed out that your payment history accounts for 35% of your credit score. While this is a good chunk of it, even those perfect payments can't raise your score as much as you might think.

The experts emphasized that factors most people never track account for the other 65% of your credit score. If you don't handle the other components well, your score won't improve just because you're making payments on time.

2. Your Credit Utilization Ratio Is High

Credit utilization, the amount of credit you use, accounts for 30% of your FICO credit score. Menotti elaborated, "A person who is maxed out on two credit cards each month takes a serious hit on their score, even if they've never been late on a bill in their life."

While you may never miss a payment on your credit card, if you're at 90% of your credit limit, your credit score can be stuck in the 500s because the credit scoring model considers you high risk since you're always maxing out the amount of credit available to you.

3. You Closed a Credit Card

By closing an old credit card, you can shorten your credit history, and it drops your available credit. While you may be tempted to drop a credit card once you've paid off your balance, you could be hurting your credit score in the process. Even though payment history accounts for only 15% of your credit score, closing that card could've hurt your short-term credit score and keep it down.

How To Improve Your Credit Score

There are two things you can do right now to improve your credit score if you're not satisfied with it.

Reduce Your Credit Utilization Ratio

Seiler emphasized the importance of reducing your credit utilization ratio. She noted that the golden rule in credit is to use less than 30% of your credit limit at any given time. If you use more than this amount, the algorithm views you as higher risk and/or not fully responsible for managing your money.

The obvious issue is that even if you pay your bills on time every month, you can still have a lower credit score. This is why you should do your best to never carry a balance that's more than 30% of your available credit. In her experience, if you use more than 30% of your credit limit, this can hold your credit score down by over 100 points.

Menotti also mentioned that you should reduce the balance on each individual card. He elaborated, "FICO scores each card individually, meaning that if one card is maxed out, your score will be affected even if your other cards are at zero."

Open a Secured Credit Card

"Those who opened a secured card in addition to their accounts began to rebuild their score in 60 to 90 days," noted Menotti. "The secured card not only provided them with an additional credit type, but also reduced their overall utilization ratio."

In his experience, these two moves alone helped people get 80 points or more in less than six months. If you also continue making prompt payments on top of these moves, then you'll see your credit score improve.

This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.

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