How to Go from Bad Credit to a 700+ Credit Score

Having a bad credit score can be very detrimental to anyone who is looking to obtain a loan or trying to get certain jobs. Given that only last year 53% of Americans were turned down because of their bad credit, people nowadays are on the run for improving their scores so they could enjoy the benefits that come with a good rating.

So, how to go from bad credit to a 700+ credit score? Below you’ll find a few tips that will help improve your situation.

What Is Considered “Bad Credit”?

The FICO Score 8 scale goes from 300 to 850. Good credit is the one that exceeds the 700 mark. So, those who have credit over 700 are usually not worried when it comes to obtaining benefits. So what is bad credit, then?

Bad credit score is a score that goes below 670. When you go under 670 with your score, that’s when you can say that your score is bad and you need to improve it.

To be more specific, though, a credit score between 580 and 669 is considered fair, whereas a score between 300 and 579 is considered poor.

Causes of Bad Credit

Whether you have bad credit or good credit, or even if you’re just about to establish your credit, you may be wondering what causes bad credit scores in the first place. After all, it’s best to know what to avoid, or at least know what caused your bad rating so you know how to approach the situation. The most common causes of bad credit scores include:

Late Payments

If you don’t pay your bills or loans on time, then your credit score will start to decrease. The credit history accounts for 35% of your credit score. This is why everyone needs to make timely payments, so they don’t ruin their credit score.

Bankruptcy

Filing bankruptcy is one of the worst things ever if you’re scared of bad credit scores because it’s one of the factors that will give a huge blow to the rating.

Defaulting a Loan

Defaulting a loan can also decrease your score since it shows the finance company that you are a risk. It will affect your score and make you untrustworthy in the eyes of other creditors.

A Charge-Off

Just like defaulting on a loan, a charge-off happens when creditors see that you’re not willing to pay off your balances. Since it shows that you’re not serious when it comes to making payments and that you’re very risky, it will take your score down.

Collection Accounts

If a creditor can’t secure payments from borrowers, what they may do is use third parties in order to make sure the collection process takes place. Usually, creditors hire or sell the delinquent debt to a debt collection agency before or after their account is being charged.

So, when the delinquent accounts are sent to collections, the credit report is going to receive this information.

How to Improve a Bad Credit Score to 700+?

Even if you made some mistakes and your credit score is bad right now, that doesn’t mean it will stay the same forever. You can do something to improve your situation. Of course, don’t expect this to happen overnight. Improving your credit may take some time, but at least it’s not impossible. The more dedicated you are to improving your score and the sooner you take action, the faster you’ll be able to make the improvements you want. Here are some steps that may help you boost your credit score:

Check the Free Credit Score

The first thing you should try is to check your credit score for free. Doing so may reveal the things that are now affecting it and what the causes for the decrease may be. Usually, your credit score is affected by the amount of time you’ve been using the credit, the payment history, the amount of credit available and how much you’re using, the mix of credit types currently in use, as well as your hard inquiries.

While at it, you should check for any potential errors in your credit report. If any accounts were opened fraudulently in your name, or if there’s any personal information that is incorrect, you should make sure the situation gets fixed.

Pay Off Your Debt

If you have debt, then you should know that your owed amounts account for 30% of your credit score, so you should make sure you always make payments for it. Every month, you should make sure you pay off the credit card bill in full.

Now, there may be a scenario when you cannot make a full payment. When this happens, you should plan to take a break using your cards and pay down the credit card debt instead. The first thing you should do is add some extra money to the card with the highest interest. This will ensure you save a good amount of cash in interest.

You can also try the balance transfer credit card when you need more time to pay your balances.

Whatever you end up doing, you need to make sure you pay off your debt, or else your score will have to suffer. Paying off your debt will always make sure your credit is improved if consistency is there.

Pay Your Bills on Time

Not only do you have to pay your debt, but you also have to pay your bills. The thing to bear in mind with bills is that they have to be paid on time if you want your credit score to improve. After all, bills account for 35% of your score, so you cannot overlook this aspect.

Every month, you have to remember to make the necessary payments for your bills. But if you find it too difficult to remember the date every month, you can set up an autopay for recurring bills, so you make sure you’re never late. You need to ensure that you always have money in your account during that time, though.

Stay Away from Hard Inquiries

You want to improve your score, which means you should not apply for more credit while you’re at it. Doing so will only make matters worse. Avoid new hard inquiries by not applying for new credit. Usually, lenders will think you represent a higher risk since you keep trying to get credit from multiple sources, so it’s best to stay away from this situation.

Consolidate Debt

You might not be able to keep track of multiple debts at once, which is why you should consider consolidating if you’re in this situation. Doing this will ensure that all your debts are combined into a single one, and you will only make a single installment payment instead of multiple smaller ones. This will add less stress on you every month, and it will make it easier for you to repay your debt. As a result, your score can improve.

Conclusion

If you came here wondering how to go from bad credit to a 700+ credit score, now you know what you should do. You must be responsible with your debts and payments if you want to boost the credit rating. Follow our tips and you will be successful when it comes to your credit score.

Frank Gogol

I’m a firm believer that information is the key to financial freedom. On the Stilt Blog, I write about the complex topics — like finance, immigration, and technology — to help immigrants make the most of their lives in the U.S. Our content and brand have been featured in Forbes, TechCrunch, VentureBeat, and more.

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