So, you’ve decided it’s time to increase your credit score to 700, but you don’t know the exact time frame you could do it. We’re diving headfirst into the credit score universe to answer the burning question: “How long does it take to get a 700 credit score?”
In this article, we will break it all down for you, giving you the lowdown on what it takes, how long it might take, and the steps you can take to get there faster.
Table of Contents
What is a Credit Score Made Up Of?
Your credit score is a report card for your financial habits, comprising key ingredients. Here are its components:
- Payment History (35% of score): It is your track record for paying bills on time. You’ll get a gold star if you’re consistently punctual with payments. Late payments or, heaven forbid, defaults can get your score down.
- Credit Utilization (30% of score): It is a complicated term for how much of your available credit you’re using. If you’re maxing out your credit cards, it’s a red flag.
- Length of Credit History (15% of score): The longer you’ve had credit accounts (Mastercard or savings account) open and in good standing, the better. It shows you’ve got some experience handling credit responsibly.
- Credit Mix (10% of score): A mix of different types of credit, like credit cards, loans, and a mortgage, can boost your score.
- New Credit Inquiries (10% of score): Every time you apply for credit, it’s a minor ding on your credit report. Too many inquiries in a short period can make you look desperate for credit, which could be better.
What Credit Score Do You Start With?
At the point when you’re simply beginning with credit, you regularly start with no credit score by any means. It implies you still need to lay out your financial record precisely. When you open your most memorable credit account, for example, a Mastercard or a small loan, the credit bureaus will begin monitoring your credit history. It is when your credit score starts increasing, assuming you make on-time payments.
What is Your Credit Score When You Have No Credit?
While you’re beginning and have a zero credit score, it means having a clean payment history in the credit world. FICO ratings are a report card for your financial responsibilities. If you don’t have any loans or credit cards, there’s nothing for the credit bureaus to put together a score to.
But don’t worry! Having no credit score is way better compared to having bad credit. To build your credit, you’ll have to begin somewhere. A typical way is by getting a credit card, a credit builder loan, or becoming an authorized user on someone else’s credit card. These can assist you with laying out a credit history and, at last, get you at least a fair credit score.
How Bad Is a 500 Credit Score?
With a credit score of 500, you’re in the “poor” credit range. It implies you’ll need help getting low-interest loans or cheaper credit cards. Furthermore, if you figure out how to get a 500 credit score loan, you’ll likely face some trying application steps, including alternative checks from direct lenders. Fortunately, you can build your credit score further after some time. Begin by covering your bills on time, paying off your debts, and being responsible for your credit history.
How Long Does It Take to Build Credit from 500 to 700?
The exact timeline can vary from person to person, but typically, it might take you around 1 – 1.3 years to make that jump from 500 to 700. Remember, there’s no overnight miracle to boost your credit score, but by being responsible for your personal finance and staying disciplined, you can get your credit score from 500 to 700.
How to Rebuild Credit from 500?
Don’t know how to reach a good credit score and enjoy low-interest loans? You can turn things around and rebuild that credit. Here’s what you need to do to improve your bad credit score:
Know Your Credit Report
First, get a copy of your credit report. You can get one free from those three major credit bureaus (Experian, Equifax, and TransUnion). Look for any errors or discrepancies and dispute them if you find any.
Pay Your Bills On Time
It is the golden rule of credit repair. Make sure you pay your bills, such as credit cards, loans, and utilities, on time, every time. Set up reminders if you have to so you don’t forget.
Reduce Your Debt
High credit card balances can make your score go down. Try to pay down your credit card debt as much as you can. Aim for a credit utilization ratio (credit used vs. credit available) of around 30% or lower.
Don’t Close Old Accounts
It might be tempting to close old credit cards you’re not using but don’t. The length of your credit history matters. Opening those old accounts can help you get at least a 700 credit score.
Get a Secured Credit Card
You might need help getting a regular credit card if your credit is hurting. In that case, consider secured credit cards. You’ll need to deposit, but it can be an excellent way to start rebuilding your credit.
Become an Authorized User
If you have a friend or family member with good credit, ask if you can be added as an authorized user on one of their accounts. Just ensure they’re responsible with their credit, or it could backfire.
Try a Credit Builder Loan
A credit builder loan is like a financial boost for your credit score. It’s a small personal loan where you make low monthly payments, and once you’ve paid it off, your credit score gets a considerable upgrade. It’s a handy tool if you’re looking to build or improve your credit history.
How Fast Can an 18-Year-Old Build Credit?
In the first place, you must have a steady income source. Whether it’s seasonal work, a summer gig, or another approach to bringing in cash, it is critical to have a paycheck. It shows lenders that you can take care of your finances. If you don’t begin with a bad credit score, you can build it within 1 – 1.5 years.
Remember, the key is the responsible use of loans and credit cards. Avoid going off the deep end with your Mastercard and pile up unpaid debt you can’t pay off. Keep your balances low, pay on time, and be patient. Your credit score will thank you later when you need a vehicle, a secured card with better terms, or even a house.
What is the Fastest Way to Build Your Credit?
If you need a credit history, start with a secured credit card. These financial tools require you to put down a deposit as collateral, which makes them low-risk for lenders. Use it responsibly, pay your bills promptly, and improve your credit score.
Now, let’s talk about credit utilization. It means you shouldn’t max out your credit cards. Keep your credit utilization low, ideally below 30% of your credit limit. Lenders like to see that you’re not living on the edge financially.
How To Maintain a Good Credit Score?
Maintaining a good credit score isn’t rocket science, but it does take some discipline and responsible financial habits. So, here’s the lowdown on how to keep your credit score in tip-top shape without getting all fancy and formal:
Keep Track on Your Debts
Pay your credit card bills, loans, and any other debts on time, every time. Late payments can seriously damage your credit score.
Keep Your Credit Card Balances Low
Don’t max out your credit cards. Keep your secured card balances below 30% of your credit limit. High ratios can make you look like a risky borrower.
Mix Up Your Credit Types
A mix of credit types, such as credit cards, installment loans, and mortgages, can be good. It shows you can handle different kinds of debt responsibly.
Monitor Your Credit Report
Get your free credit report from each of the three major credit bureaus (Equifax, Experian, and TransUnion) once a year. Make sure there are no errors and that everything looks legit.
Set Up Payment Reminders
Life gets busy, and it’s easy to forget a due date. Use calendar reminders or automatic payments to make sure you never miss one.
Getting sent to collection agencies is a bad credit score dream. If you owe money, try to have an installment plan with your lenders (banks or credit unions) to avoid such a situation.
Remember, your credit report is your passport in the borrowing world. It can influence your ability to get loans and credit cards and rent an apartment. Take care of it, and it’ll take significant consideration of you when you want it most.
Take Action Now!
Getting a 700 credit score isn’t a race; it’s more similar to a marathon. We’ve covered every one of the significant elements that can impact the time it takes to get a good credit score.
Remember that persistence is vital when you’re on this FICO rating venture. Don’t get upset if it takes somewhat longer than you anticipated. Life happens, and credit ratings can be instead of a rollercoaster ride. But you’ll get there with responsible financial habits, a dash of determination, and a sprinkle of time.
Frequently Asked Questions (FAQs)
How long does it take for a new credit card to affect your credit score?
Getting a new credit card can impact your credit score within a few months, but it depends on how you use it. Pay on time keeps balances low, which should help gradually boost your score.
How long does it take to recover from a hard inquiry on your credit?
Recovering from a hard credit inquiry typically takes about 12-24 months to stop impacting your credit score as much. But it gradually becomes less significant over time.
How much can a credit score go up in a month?
Credit scores can increase slightly in a month, but there’s no set amount. It depends on your specific situation and what’s on your credit report. Making on-time payments and reducing card balances can boost it.