How to Get Your Credit Score to 700

A credit score is a numerical representation of an individual’s creditworthiness, indicating how likely a person is to repay borrowed money on time. It significantly influences financial decisions, such as approvals for loans, mortgages, and credit cards, and helps lenders determine interest rates. A score of 700 is generally considered favorable, indicating responsible credit management.

Understanding Credit Scores

Credit scores provide lenders with a quick assessment of an applicant’s financial reliability, helping institutions evaluate the risk of extending credit. By summarizing an individual’s credit history, lenders make informed decisions about loan eligibility and terms. FICO Score and VantageScore are two widely used systems. Both models predict repayment likelihood, drawing data from credit reports compiled by Experian, Equifax, and TransUnion.

Key Factors Influencing Your Score

Credit scoring models consider several components when calculating a score, each carrying a different weight.

Payment History

Payment history is often the most impactful factor, typically accounting for 35% to 40% of a FICO or VantageScore. This component tracks whether payments have been made on time across all credit accounts, including credit cards, loans, and mortgages. Late payments, defaults, and collection accounts can negatively affect this part of the score, demonstrating a higher risk of non-payment.

Credit Utilization

Credit utilization represents the amount of credit used compared to the total available credit, expressed as a percentage. For FICO Scores, this accounts for about 30% of the score, while for VantageScore, it can be 20% to 30%. A lower utilization ratio is generally viewed more positively by lenders, suggesting less reliance on borrowed funds.

Length of Credit History

This factor typically makes up around 15% of a FICO Score. It considers how long credit accounts have been open, the age of the oldest account, and the average age of all accounts. A longer history of responsible credit management can indicate financial stability over time.

Credit Mix

Credit mix, which typically accounts for 10% of a FICO Score, refers to the variety of credit types an individual manages. This includes both revolving credit, such as credit cards, and installment loans, like mortgages or auto loans. Demonstrating the ability to handle different forms of credit responsibly can be seen as a positive.

New Credit and Inquiries

New credit and recent credit inquiries influence scores, making up about 10% of a FICO Score. When an individual applies for new credit, a “hard inquiry” is recorded on their credit report. Numerous new credit applications within a short period can temporarily lower a score, as it may suggest an increased risk of taking on too much debt. Hard inquiries generally remain on a credit report for up to two years.

Strategies for Improvement

Improving a credit score involves consistent and deliberate actions.

Make Timely Payments

Focus on timely payments, given their substantial influence on credit scores. Establishing reminders, setting up automatic payments, or contacting creditors to adjust due dates can help ensure bills are paid before they become overdue.

Reduce Credit Utilization

Lower outstanding balances on revolving credit accounts, such as credit cards. Making more than the minimum payment, or multiple smaller payments throughout the billing cycle, can help keep the utilization ratio low. Requesting a credit limit increase can also lower the utilization ratio, provided that increased credit is not used to incur more debt.

Cultivate a Longer Credit History

Keep older credit accounts open, even if they are not actively used. Closing an old account can reduce the average age of credit and potentially increase the utilization ratio on remaining accounts.

Diversify Credit

Judiciously add different types of credit accounts, such as a small personal loan in addition to credit cards, as financial needs arise. This demonstrates the ability to manage various credit products responsibly.

Limit New Credit Applications

Avoid multiple hard inquiries in a short timeframe. Each hard inquiry can cause a temporary dip in a credit score. Apply for new credit only when genuinely needed and space out applications. Pre-qualification processes offered by some lenders can allow for rate shopping without triggering a hard inquiry.

Address Derogatory Marks

If inaccurate information appears on your credit report, dispute it with the credit bureaus and the original information provider. Most negative items, such as late payments or collection accounts, generally remain on a credit report for approximately seven years from the date of the original delinquency. Bankruptcies, depending on the type, can stay for up to ten years. While these items cannot be removed if accurate, their impact typically diminishes over time.

Monitoring and Maintaining Your Score

Monitoring credit information is a practical step for maintaining a healthy credit score. Individuals are entitled to a free copy of their credit report annually from each of the three major credit bureaus—Experian, Equifax, and TransUnion—through AnnualCreditReport.com. Regularly reviewing these reports allows for the identification and correction of any errors or discrepancies.

Credit scores can fluctuate, and improvements often take time to reflect. Scores are dynamic and update as new information is reported. Consistent positive financial behavior over several months or years typically leads to gradual score increases.

Many credit card companies and banks offer free access to credit scores and basic monitoring alerts. Credit monitoring services, some free and some subscription-based, can provide more frequent updates and alerts regarding changes to a credit report. These services help individuals stay informed about their credit profile.

A good credit score is built on consistent, responsible financial habits. This includes regularly paying all bills on time, keeping credit card balances low relative to credit limits, and managing different types of credit thoughtfully. Adhering to these practices consistently fosters long-term financial well-being and a strong credit standing.