How can an individual increase their credit score?

An individual can increase their credit score by reducing outstanding debt and avoiding unnecessary credit inquiries because these actions directly impact the factors that credit scoring models use to assess creditworthiness. Reducing outstanding debt is essential as it lowers the credit utilization ratio, which is a significant component of credit scoring. Credit utilization reflects the amount of credit being used relative to the total available credit, and keeping this ratio low demonstrates responsible credit management.

Additionally, avoiding unnecessary credit inquiries is crucial as each time an individual applies for new credit, a hard inquiry is conducted, which can temporarily lower the credit score. By limiting these inquiries, the individual protects their score from negative impacts and shows lenders that they are not seeking excessive credit. Together, these strategies reflect responsible credit behavior, which can lead to an increased credit score over time.