Tips That Could Help Improve Your Credit Score
Lower Your Credit Utilization Ratio
Paying down outstanding credit card debt is a strong, active measure that may help improve yourÂ credit score. In total, your credit utilization ratio (how much of your available credit youâ€™re using) typically makes up about one-third of your credit score.Â
New Credit Cards MightÂ Help
New credit cards have one major benefit: They can lower credit utilization by adding unused credit. But even if that new credit remains unused, new credit cards carry three potential problems. First, they shorten the average age of your credit history, which factors into your credit score (longer is generally better). And second, too much new open credit can impact your score. Finally, if you use all of the new credit line, your utilization will increase.
Bottom line? If you need another card (for a lower interest rate, for example, or for a second line of credit), you should get one that meets your needs. But never seek new credit just for the sake of a better score.
Pay Off Old Debts
Paying off delinquent debts may help improve your credit score. An account marked “paid in full” may appear better than a delinquent account still in “collections.” Note that a settled account, while allowing you to get out of a debt for less than what you owe, may still appear on your credit report.