When you have a credit score of 700 you can officially say you have a good credit score. However, getting there may take some time if your creditworthiness is limited or your credit report has flaws. This guide will show you how to get into the 700 credit rating realm.
7 steps to getting a 700 credit score
If you haven’t hit the 700s yet, you may still have good credit. A good credit is usually a little higher than 670-680. However, if you get your score above 700, it is an important milestone. Follow these seven steps to get there.
1. Pay everything on time
Yes, paying your bills on time is a painfully obvious first step. But it should be repeated in any guide to improving your credit score as it is by far the most important thing.
Your payment history makes up 35% of your creditworthiness, making it the most important one Credit factor. A missed or late payment will stay on your credit report for seven years, although your score will usually begin to heal after two years.
In order to build up the payment history, your payments must be reported to the credit bureaus. Credit card, installment loan and mortgage payments are usually reported to the offices. But other bills, like electricity and cell phone payments, generally go unreported unless you are so late that the account is sent to collection agencies.
2. Get a secured card if you cannot get credit
If you have an average credit score well off 700, the first step may not be helpful as you may not have credit available. It is often difficult to qualify for a loan when you have or have poor credit history no credit rating. As a result, you cannot build a credit history, which can leave you feeling stuck.
A secured credit card is a good solution. You leave a deposit that becomes part of your credit line. There is little risk to the bank so getting approval is easy even if you have poor credit. Typically, after about a year of on-time payments, your credit score will improve and you will be able to qualify for a regular credit card.
3. Withdraw your credit card balance
If you want to decide which debts to pay off first, start with credit card debt. Not only do you save money because credit cards typically have higher interest rates than other debts, but you also improve your credit score.
That’s because you Credit utilization rate, the percentage of outstanding credit you use, decreases as you pay off lines of credit. Credit utilization is the second most important credit factor that makes up 30% of your score.
Repaying car loans and student loans is good for your finances. However, reducing your loan balance does not reduce your credit utilization. That means you won’t get the same credit-boosting effects that you would get by lowering your credit card balance.
If you are unable to pay all of your balance, try to keep your credit usage below 30% of your credit limit.
4. Request an increase in credit limit
If you have an existing credit card and made payments on time, ask the issuer to increase your limit. Increasing the limit can improve your score as it increases the amount of your outstanding credit. This will reduce your credit utilization.
Of course, increasing the limit will only reduce your occupancy if you don’t increase your credit. So make a commitment to keep your expenses in check before asking for more credit.
5. Keep old accounts open
Your average Loan duration defines 15% of your score, so your score benefits from keeping old credit cards open even if you only use them occasionally. Indeed, People with credit scores over 800 Tell us that keeping your oldest credit card open is one of your top tips for building great credit.
Keeping credit card accounts open, which charge exorbitant fees, may not be worth the credit benefits. But when the fees are low, leave your credit accounts open. You can use them once a month for a small purchase that you usually make and then use cards that have better deals Credit card rewards for larger purchases.
6. Apply for new loans selectively
If you are aiming for a credit score of 700, you should be careful when applying for a new loan. While having access to more revolving credit will help your score, each time you open a new account you will lower your average credit age. Applying for a new account also leads to a hard request to your credit report dinging your score temporarily.
7. Monitor your credit reports
Approximately 1 in 5 credit reports contain errors, so it’s important to monitor your credit reports to make sure yours aren’t there. Free credit monitoring services that alert you to changes in your score are a good place to start. However, it is a must to look at your actual credit reports which are the source of the information that will determine your score.
You are entitled to a free credit report each year from any of the three credit bureaus up AnnualCreditReport.com. Make sure you recognize all accounts and that the payment status and balances are correct. In the event of errors, you can dispute the information directly with the credit bureaus.
Robin Hartill is a certified financial planner and senior writer at The Penny Hoarder. She writes Dear Penny, a personal financial advisor. Send your tricky money questions to [email protected]
This article originally appeared on www.thepennyhoarder.com