Raising a credit score from a bad 500 range up to a good 700 range may take time and effort and therefore is sometimes regarded as a herculean task. However, if one has the patience to work at it for several years, then good progress can be noted. This article provides insight into possible times when one can aspire to raise the number of credit points from 500 to 700.
Where to Start
The first thing, you should get your credit reports from the three leading credit references, Equifax, Experian, and TransUnion. Go through them properly and challenge any misinterpretations that they have made that are affecting your scores. This can be useful in giving a quick lift when the program is still young.
Next would be to deal with any outstanding debts or unpaid bills. To precede collecting any payments, pay off any outstanding amounts if possible and then call to request the removal of the late payment. If an account is extremely old, can try to negotiate a pay-for-delete where the negative item is deleted in exchange for the balance amount. First, it is necessary to receive any agreements concerning amendments in written form.
Once again, the cleanup of often trivial errors and cleared-out debts will be a huge factor, but the main focus will be on the positive trends moving forward. The most effective way to rebuild credit scores quickly is to have a sufficient amount of beneficial credit history which should be maintained by the person.
12 to 18 Months
A reasonable expectation to be able to grow to 700 is within the next 12 to 18 months. But exactly how long depends heavily on your specific situation, including: But exactly how long depends heavily on your specific situation, including:
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For negative items already included how many and what type?
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How much credit account history you have
- Ability to increase the capacities for new credit accounts
For instance, there could be a borrower with only a few months of delinquencies, which could imply that the credit score could easily cross the 700 mark in the first year of correcting these problems. However, if the applicant has multiple collection accounts or even bankruptcies, then probably closer to 18 months or more may be needed.
Much also depends on your skills to apply for new credit lines and be able to maintain the credit accounts after getting a credit card. If one or two of these are a newly opened credit card, a new credit card that has not been active for a month or two, an auto loan, or another installment loan, if you are making regular, on-time payments to it, this can help shorten the road from 500 to 700 significantly.
While low or stable credit utilization or no new missed payments will cause the progress bar to move forward, high credit utilization or new missed payments will slow it down. Thus, opening new accounts is not without certain levels of risk if not well managed as we have seen above. But in most cases, the ability to show positive behavior concerning finances will be able to compensate for that risk.
As mentioned above, some vital factors can help in improving the credit score.
As you work toward raising your credit score, there are a few key actions to take: As you work toward raising your credit score, there are a few key actions to take:
All bills must be paid as soon as possible – Whenever possible, make direct payments or register for automatic payment or reminders that are due on the dates. Credit delinquencies remain on the credit report almost for 7 years.
Credit utilization — This should be below 30%, indicating that more than this will hurt the score.
Maintain old accounts with balances — Contrary to this, the best course of action is to keep the accounts open if they are no longer charging annual fees since having a longer positive history and a higher total available credit helps your scores more.
Reduce credit applications — An application can decrease your score by several points at first. To fill out an application, it is advised to do so only when necessary and make requests for space every half a year.
Track your credit reports — You should review all three credit reports at least three times in the year to ensure that you correct any mistakes and also to look for any signs of fraud or credit mistakes at an early enough stage.
Be patient — Another issue that few people understand is the fact that fixing bad credit takes time, especially if one is rebuilding it. Continued commitment to practicing responsible behaviors will yield positive results as you remain persistent.
Other Routes To The Target of 700
Though it is the standard approach of applying for new credit accounts to rebuild the scores you lost, it also leaves you with no option other than waiting for the bankers to approve or decline your applications. If you have difficulty getting approved for unsecured credit cards and loans at first, here are a couple of potential options: If you have difficulty getting approved for unsecured credit cards and loans at first, here are a couple of potential options:
Secured credit cards — These are usually obtainable through a credit card company, as they need the cardholder to deposit an amount of cash that is equal to the credit limit on the card. Thus, you are still able to prove on-time payments regularly but at the same time avoid rejection.
Get an account added as an authorized user — You can request to become a user on any existing credit card account of someone with a good credit rating. The favorable history is going to appear on your credit scores.
Other examples of timely payments include Prepaid billing payments – making service payments that companies report to the credit bureaus such as paying for mobile phones through a provider. As a rule, most of the prepaid carriers provide the possibility to use this feature.
Earning An Excellent Credit Rating
It can take up to a year and a half or even less, approximately up to 12-18 months for many consumers to move from a 500 credit score level which is very poor up to a 700 and above level if they strictly follow their responsible financial behaviors. It will therefore take longer to achieve if you have to overcome issues such as bankruptcies or foreclosures. But if you are to fix all the mistaken transactions and avoid opening numerous new accounts, keep the balances low, and pay all the payments on time, then the process will be faster.
When you get past the 700 mark that most credit gurus teach as the benchmark of a ‘good’ credit score, just keep on practicing the same and keep adding to it. This is particularly true since a FICO Score of 740 or more is usually required to secure the most favorable loan terms. However, a score of 700 is considered to be a good score in most cases to allow one to secure or get prime or preferred financial rates.
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