Having a good credit score affords you the chance to get lower interest rates and better terms on credit cards and loan products. Not everyone is fortunate enough to have a perfect score, but you should see an increase in your score through understanding and considering some of the tips below.

Knowing what’s impacting your credit score is the first step in understanding how to increase your credit score.

The FICO credit score is used by 90% of the top lenders. The score breaks down your credit behavior and the weight of importance to your score in the following ways:

  • New credit inquiries (10%)
  • Credit mix (10%)
  • Age of credit accounts (15%)
  • Credit Usage (30%)
  • Payment history (35%)

To improve your credit score, follow these steps. It takes effort and some time to get the needed result. Below are three tips that have the most significant effect on your credit score.

Three methods to improve your credit score

1.    Manage your bills

bill payment

Payment history has the most significant impact on a credit score. it is crucial to make sure that you are making your credit payments timely to avoid any delays. The best way to manage your payments is to set your bills on auto-pay or some sort of reoccurring payment. Have an account dedicated to your bills, so you know how much to fund that account monthly. This stops any payments from being missed by accident. A single late payment can adversely affect your score and can stay on your credit file for up to seven years!

2.    Just because you have credit doesn’t mean you to use it all

man handing over his credit card

Credit utilization represents the amount of credit you are using against the total credit available to you. As a general rule of thumb, your credit utilization should not exceed 30% of your credit. If you are struggling to keep your utilization down below 30%, and if you have not had a lot of credit inquiries, then you may want to ask your lender to increase your credit limit. This, in turn, will reduce your overall utilization. The other strategy is to pay down your debt until your balance falls below the 30% utilization.

3.    Age of credit accounts

Lenders look at your credit behavior in the long term. The longer your credit history, the better it is for you. While new credit cards will increase your overall credit limit, they will reduce the average length of credit you have accumulated over time, as this is measured in averages. Closed credit cards can affect the length of your credit history; however, in the short-term closed credit cards can stay on your report for up to seven years (if negative) or up to 10 years (if positive).

Download our checklist on what to do before closing all credit cards.

This is why we recommend that you do not close unused credit cards (as long as they do not cost you money in fees). Closing old credit cards not only has the potential to increase your overall credit utilization ratio but decrease the length of your credit history.

Delta Tip: When you start building your credit, open a credit card with no fees. Make sure you use the card now and again to keep it open but pay the balance off in full. This is great for teenagers starting to build credit as it will help them with their credit in the long-run.