10 Things to Do Now If Your Credit Score Is Under 700: In order to get approval for new credit cards or loans, it is necessary to have a good credit score. What then is a good credit score? Credit scores around 700 are usually considered “good” by FICO and VantageScore, who happen to be the two most popular credit rating services. But what if your credit score is way below 700. What can you do?
A 700 credit score is good, but here’s how you can increase it.
The following are what you should know about your credit score and what to do when your score is under 700. Read on:
1. Check Your Credit Score Regularly
To improve your credit score, make it a habit to check your credit score as it is a reliable way to pinpoint financial weaknesses so you can create a solid plan to curtail them. Also, it allows you to check for statement errors and any other lapses. To correct any inaccuracies, try to contact the lender or creditor and inform them of the error. If they agree a mistake has been made, then, they are totally responsible for updating the record with the credit bureaus. If that route does not work, you can file a dispute with any of the three credit bureaus where the inaccuracy appears. Disputes can be filed online at each bureau’s website or by mail.
While there are several ways you can check your credit score, one excellent option is to sign up for Chase Credit Journey. The service is free and is available to anyone. Once you have signed up, you will have the freedom to check your score online anytime and as frequently as you want. Also, you will not harm your score because this type of check is known as a “soft inquiry” the information is only for you.
Chase Credit Journey provides a bunch of additional features you would ordinarily not expect in a free service. These include identity monitoring services such as dark web surveillance, data breach monitoring and tracking of activities connected to your Social Security number (SSN). All these benefits add up to supply you with the complete tool kit you need to begin improving your credit score.
2. Make Payments on Time
In a bid to reach your ideal credit score range, making payments on time is very necessary. Several missing payments can impact negatively on your credit score. Setting up automatic payments takes away the need to forget to pay your recurring bills.
3. Avoid Closing Old Accounts
Although, the temptation is strong to close credit cards once they are paid off, but leaving them open can help build up your credit score. That is because the way you handle current lines of credit is of more interest to creditors than how you handled past credit lines. Recently closed accounts will still factor into your score, but open accounts will carry more weight. The age of your credit history amounts to about 15 percent of your total FICO score. When put together with your credit mix, it accounts for 21 percent of your score from VantageScore.
4. Add Missing Accounts or Utilities to Credit Report
Utility companies do not share information with consumer reporting agencies, but many thanks to the Credit Access and Inclusion Act, you can include utilities, phone and rent payment history to help boost your score. You can also use your utility payment history to establish or boost your credit score if you have not established a credit history or have a low credit score. Experian offers a free service called Experian Boost that allows you to report your utility bills as well as other payments you make, such as for streaming services. TransUnion offer similar service that allows you to report various non-credit accounts for a stipulated annual fee.
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5. Increase Your Credit Limit
Increasing your credit limit is not a viable solution for everyone, but if you already have good credit, doing this can boost your score to rise above 700. Your credit limit is also a contributing factor to the utilization ratio because it represents the amount of available credit. Again, an increased limit can help lower the ratio, improving overall credit.
6. Make Small Purchases With Your Credit Cards
Managing your credit cards responsibly can help rebuild available credit scores. Budgeting money and only making purchases you can pay off immediately will create positive gains. For example, instead of paying cash for your everyday expenses such as gas and groceries, pay with your credit card and then pay off your card balance right away. This will allow you to build your credit score without going against your credit limit.
7. Pay Off Your Maxed-Out Credit Cards
Having a large amount of debt negatively impacts your credit score. Maxed-out credit cards look bad on credit reports due to the adverse proportion of the debt to credit limit.
Pay for your cards with the highest interest rates first. The objective is to lower your utilization ratio, or total credit card balances divided by your credit limit. Paying down your debt lowers that ratio, and can be a lasting solution to getting your credit score to go above 700.
8. Don’t Open Too Many New Accounts at Once
Newly opened credit determines 10 percent of your FICO credit score and about 5 percent of your VantageScore credit score. Opening multiple credit accounts quickly adds greater risk, particularly for those with a short term credit history. Also, rejected applications might show up on the report, which can lead to a credit score decline.
9. Be Aware of the Rate-Shopping Window
When you need to open a new line of credit whether it be for a new car, student loan or mortgage of your window for rate shopping. When you apply for a loan, the lender will check your credit in what is known as a “hard inquiry.” This type of inquiry can cause a dip in your credit score. However, similar inquiries made in a short time will have minimal impact on your credit score. So if you plan to apply with multiple lenders, try to do so within a narrow window. In FICO’s latest scoring model, that window is 45 days. For VantageScore, the window is 14 days.
10. Remain Consistent
You are on the right path to improving your credit score if you already have good credit. Building your credit score takes perseverance, especially if you have past discrepancies, missed payments and bankruptcies, but it will pay off over time. Continue to practice good financial habits periodically checking your credit report, keeping debts to a minimum, making payments on time and you will be able to maintain and even improve your 700 credit score.
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