The 2nd biggest part your credit score is your Debt to Credit Ratio. This makes up 30% of your credit score and can be the hardest to improve. The reason your debt to credit ratio can be so hard to improve because it involves paying down your debts, which takes money. If we all had extra money to spare, we wouldn’t have bad credit to begin with.
There are two ways to improve your debt to credit ratio. You can pay down your debt or increase your credit limits. Increasing credit limits will work best with creditors that you have a good track record with and you have paid on time for a long time. Asking for an credit limit increase will usually put a inquiry on your credit report. So make sure you ask for all your increases at the same time, so they don’t hurt your credit score while asking for another one.
Of course reducing your debt is important. A good strategy for paying down debt is using the snowball method. This is where you set apart a certain amount each month to pay off your debt. You apply it to your credit account with the highest interest rate first. Once that is paid off you continue using the money you were paying on your first credit account and add it to your 2nd account. You do this until all your credit accounts are paid off.
The credit card companies would like you think you should have a balance to show you are using your credit cards. This is not true. The best thing you can do is have everything paid off with zero balance. This will give you the best debt to credit ratio and help your credit score the most.