How to improve your credit score

Rule 1: Make. Every. Payment.

Late payments can stay on your record for up to 7 years. But, if you always make at least the minimum payments on your debts on time, you’ll have an A+ payment history. 

Rule 2: Diversification is key

Responsibly managing different types of credit can help demonstrate your creditworthiness. Having a mix of revolving credit accounts (like a credit card) and non-revolving credit accounts (which are one-time, lump sum loans, like a student loan) on your credit history will help in the long run. 

Rule 3: For your ratio, less is more

Your credit utilization ratio, that is. This number represents how much of your available credit you’re using. For example, if you have a $1,000 balance on a credit card with a limit of $10,000, then your credit utilization ratio for that account is 10%.

The lower your utilization, the better it is for your score—for excellent credit, keep it under 10% by paying down revolving balances. Requesting (and being approved for) a credit limit increase is one way to quickly improve your utilization score, but it may count as a “hard” credit inquiry. 

Rule 5: Age matters

The average age of your credit accounts makes up about 15% of your score. So even if you don’t use that old credit card often, closing it may negatively impact your credit score. Use old cards for small purchases here and there (and be sure to pay off the balances on time) to keep them from getting closed. 

Rule 6: Reduce outstanding debt

Even though you need to take on some debt to build your credit history in the first place, decreasing your outstanding debt is one of the surefire ways to build your credit score—especially if it’s on a revolving account, like a credit card. A solid debt payoff plan can help you achieve this.