How to improve your credit score

Tip 3: Limit your use of available credit.

Your credit utilization ratio 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%.

Generally, keeping your utilization rate low is better for your score. Using no more than 30% of your available credit is recommended—and if you're striving for an excellent score, aim for 10% utilization or lower. Requesting and being approved for a credit limit increase is one way to quickly improve your utilization score. Keep in mind, some card issuers will conduct a full credit check when you request a limit increase. This would count as a hard inquiry, which could temporarily lower your credit score.

Tip 5: Age matters.

The average age of your credit accounts makes up about 15% of your score. So even if you don't use your very first credit card very often, closing your oldest account may negatively impact your credit score. The longer you keep each of your credit accounts open and in good standing, the higher the average age of your accounts. Keep in mind that some card issuers may close inactive accounts after a period of time ranging from a few months to a year or more. If you have a credit card that you rarely use, using it to pay a monthly bill (and paying it off right away) is a good way to help keep that account open and in good standing.

Tip 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.