It requires not only time but efforts and correct approach to construct a credit score of 700. A credit score is a number between 300 and 850 that is supposed to portray your creditworthiness or your ability to pay back loans. A credit score of 700 is good and will enable you to get the best rates offered by lenders on the credit that you apply for. It is possible to achieve this credit score over some time with some effort.
When you first start building credit, you often don’t have a credit score or have a very low one. If you begin taking out loans or credit cards and paying them off timely, they will begin to increase. It is estimated that it can take up to 6 months of credit history for an individual to secure their first FICO score from the major credit bureaus. It can then take another 6 months up to a few years depending on your particular credit situation and how well you take care of credit accounts to get to 700.
There are a few key factors that influence your credit score the most:
Credit history – Every bill that you incur, ensure that you pay it in full every time. That means getting a single wrong payment could drag your score down and it will be visible on your credit report for 7 years. Make payments automatic or send payment reminders if possible.
Credit utilization – keep the credit utilization below 30 percent of the overall credit limit on all your cards and loans. Thus, even if you are able to pay in full, the high ratio of the utilization means a higher risk.
Credit age and mix- having credit accounts such as credit cards, auto loans, mortgages, among others, are essential as the more the accounts remain open and in good standing, the better.
New credit – Don’t apply for new credit often as this is not good for the number of inquiries listed on your report. It can result in a small, temporary score drop in each application and is only recommended for very busy websites.
Follow these basic responsible credit habits starting today to build your score gradually over time:Follow these basic responsible credit habits starting today to build your score gradually over time:
- Open a credit card or secured card: Paying via a credit card is one of the most effective ways of developing a good credit history. Always remember to pay the statement balance every month to the last cent. If you can’t meet the requirements to get a normal card, get a secured card that will allow you to use your refundable security deposit.
- Become an authorized user: You can also find other immediate family members, or friends who have had a positive credit history for long and request to be made as an authorized user on their earliest credit card. This means that they will have a good record on your report.
- Check all three credit reports annually: Do correct any mistake as soon as possible if this will only result in lower scores. AnnualCreditReport. com is a website where you can get free reports.
- Keep your utilization very low: Using more than 30 percent of your credit limit will reduce your score each month to which card balances contribute to. If necessary, they should make extra payments to reduce or transfer balances between different credit cards.
- Mix in other credit types over time: I suggest that one should consider financing larger expenses which include furniture or appliances for purposes of adding installment loan history. Pay off any student loans or auto loans responsibly.
- Limit new credit applications: Do not apply for credit where you know that you will not be able to meet the repayment obligation or where you sign up for numerous credit offers that are available in the market. Having new accounts and hard inquiries will cause your score to decrease in the short term.
- Monitor your score monthly: Subscribe for free monitoring services to track your progress touching 700. This will encourage you to continue working hard and seeing your scores rise.
By practicing good credit hygiene, it is possible for majority of the individuals to attain a FICO score of 700 within 1-2 years. Some may get this credit score in 6 months while others can take about 5years depending with their credit status. It is just about cultivating prudently responsible long-term credit behaviors as the rule rather than the exception. It may take time but if one pays their bills on time, uses a small portion of their credit limit, and does not apply for credit often, credit score will gradually increase.
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