7 Steps to Improve Your Credit Score to 700+
A strange headline caught my eye on FoxBusiness.com several months ago:
Credit scores can be predicted by your online behavior, study claims
Since I knew a major news site would never use provocative or misleading headings just to get me to click on a story, I figured I'd earn a bit more. It turns out the information comes from a solitary study using a single German e-commerce website, so clearly there’s more research to be done before we get too carried away. Still, there were a few interesting findings, should they hold up under further review.
Consumers voluntarily hand over mass amounts of information when they visit websites and much of that data can be used to predict future financial behavior, says study author Manju Puri, a finance professor at Duke University’s Fuqua School of Business.
Alright, that makes sense so far...
Consumers shopping from a mobile phone are three times more likely to default than those ordering from a desktop computer...
BUT...
Individuals who have iPhones are less likely to default than those who own Android devices...
Here’s my favorite:
And those customers who have their names in email addresses are 30 percent less likely to fail to pay off the money they borrow, the findings show.
Setting aside the horrible phrasing of lines like “30 percent less likely to fail to pay off the money they borrow” (can they not refuse to neglect to write in ways less unclear?), none of these suggestions are as shocking as they may seem.
If you’re shopping on your phone, there’s a good chance you don’t have a laptop or desktop computer – options much more convenient for browsing retail sites and filling out payment information. It’s not much of a stretch to think this correlates with income, which in turn impacts the ability to pay.
This doesn't mean that any of you who shop on your phone are automatically going to default on your credit card payments. It's just statistics - and statistics suggest there's a correlation.
The iPhone vs. Android disparity suggests the same thing; iPhones cost more, so those same annoying statistics kick in. I’ll leave it to you to speculate about people who use their real name in their email addresses and what makes them more reliable, but surely it’s not that much of a stretch, yes?
But I’m not going to suggest that the way to improve your credit score to 700+ is to buy an iPhone or even a nice laptop. In many situations, the reverse might be true. If you want to move from an average credit score or even a poor credit score to a great credit score, I have good news. While there are no magic solutions or quick fixes, it’s also not impossible to improve your credit score to 700+. It’s not even all that complicated and might not take as long as you think.
Improving Your Credit Score (To 700+ or Beyond)
Let’s look at SEVEN steps you can begin today to improve your credit score to 700+
1. Check Your Score and Your Credit Report
I know, it sounds like a rather obvious place to start, doesn’t it? But you can’t focus on raising your score until you know exactly what it is. Educate yourself on credit score basics, then start at the logical beginning! Fortunately, it’s easy to check your credit score for free. There’s really no excuse not to.
Don’t stop there, however. As long as you’re at it, get a free copy of your full credit report as well.
Why Do This?
Because even though they’re two very different ways for lenders to assess your credit history and make an informed decision about extending you credit now, it’s largely the information on your credit report that determines your credit score. Recognizing the sorts of things that show up there can help you make better decisions going forward.
Prevent Incorrect Information
There’s also the chance you’ll discover incomplete or incorrect information that can impact your results. It’s rare for anyone to intentionally distort your credit history, but it’s composed of information being submitted by dozens of different entities to credit reporting agencies who deal with millions of individual’s credit information. One swapped middle initial or mistyped Social Security Number can mean bogus information in the mix. That sort of thing will make it very difficult to improve your credit score to 700+!
I’m assuming, of course, that if your target is 700+, you currently have fair credit – not great, but not all that bad. If your credit rating puts you in the ‘poor’ category, don’t despair. You can still reach your goal... it may simply take a bit longer. If that’s you, you might want to start with tips for improving a poor credit score and build from there.
It’s still growth. It’s still an improvement. You should still be proud of yourself for doing it, from wherever you may be starting.
2. Pay Your Bills On Time
Some of you were hoping for something a bit more complicated and insider-information-ish, weren’t you? In some ways, it would almost seem easier if starting the process to improve your credit score to 700+ were somehow less obvious or involved some sort of gaming the system.
But just like losing weight or getting good grades in school, the most obvious stuff is often the most important. The number one way to raise your credit score is to make payments on-time – utility payments, credit card payments, house payments, car payments... all the payments.
Obviously, there are months in which this is easier said than done. Often, though, our tardiness isn’t because we simply don’t have the money – it’s because we get careless, or forgetful, or don’t follow our own budget.
These are fixable problems.
3. Pay Down Debt (Methodically and Stubbornly)
If you simply do not make enough each month to pay your bills, you have a more immediate problem than trying to improve your credit score to 700+. You know your situation and if you step back and make an effort to be honest with yourself, you know whether the biggest issue is your income or your self-discipline.
Create a Budget
If you don’t have a monthly budget, start one. It may take a few tries to put together a truly accurate picture of your reliable income and where your money actually goes each month. (The number one reason most of us avoid making a budget isn’t that we can’t or because we don’t need one; it’s because we don’t want to really know where we’re spending our money. Denial is a bad, bad man!)
Assuming you’re not in truly dire straits, look at ways you could begin to pay down one or more debts more effectively. If you’re making minimum payments on one or more credit cards, you may avoid being categorized as delinquent, but you’ll also never ever pay down the card that way. You’ll certainly not improve your credit score to 700+ this way.
The Snowball Method
Dave Ramsey recommends what he calls the “Snowball Method.” It’s not the only way to approach debt, but lots of people sure seem to have found it effective. Here’s the basic idea:
First Step
List your debts from smallest to largest (total amount; ignore interest rates and such for now).
Second Step
Identify the smallest debt you owe, no matter who it’s for.
Third Step
The next time you sit down to pay bills, make the minimum allowed payment on everything except that smallest debt. Pay as much as you can reasonably pay on that one.
Fourth Step
Repeat until the smallest debt is paid off. Then go to the next smallest debt and continue until all of your problems are solved.
OK, maybe ALL of your problems won’t be solved, but you will be well on your way to improve your credit score to 700+. And that ain’t nothing.
4. Lock Up Old Credit Cards (But Don’t Cancel Them)
For those of you hoping for something that can help you feel sneaky or like you’re beating the system, this one is about as close as we’re likely to come. As you pay down (or pay off) credit cards, consider keeping them in a safe or locked in your desk or somewhere else safe. The idea is to keep them accessible if you decide you genuinely need them, but difficult to simply grab when you’re tempted to impulse buy or make other spending decisions you’ll regret.
If you don’t believe you can resist that temptation, then by all means cancel any credit cards you don’t actually need. But one of the factors in determining your credit score is the proportion of credit you have AVAILABLE at any given time with the amount of credit you’re actually USING.
That means, for example, that owing $2,480 on a credit card has a very different impact depending on whether or not that card has a credit limit of $2,500 or $5,000. In the former dynamic, your credit is maxed and it’s a negative hit on your credit rating. In the latter, you have some room to work and your credit is – if not greatly helped, at least not damaged. Owing that same $2,500 on a card with a $10,000 limit actually helps your credit score substantially.
We can argue about whether or not this is how it SHOULD work, but if your goal is to improve your credit score to 700+, all that matters for now is that this is how it DOES work. And it’s not just with credit cards – any revolving credit or “flexible debt” to which you have access is calculated into that same debt-to-credit ratio equation.
5. Bill Consolidation / Interest Reduction
If you’re living paycheck-to-paycheck, keeping your head mostly above water but not by much, you might consider a bill consolidation or interest reduction loan.
Assuming you’re not in truly dire straits, look at ways you could begin to pay down one or more debts more effectively. If you’re making minimum payments on one or more credit cards, you may avoid being categorized as delinquent, but you’ll also never ever pay down the card that way. You’ll certainly not improve your credit score to 700+ this way.
Consolidation Loan
Essentially, you’d be taking out a personal loan to pay off all of your existing debts. We’re not talking about recurring things like utilities or cable, but stuff like your credit cards, outstanding medical expenses, those legal fees from that one thing we don’t like to talk about, the money you still owe your brother-in-law who won’t stop finding ways to bring it up, and maybe the last six car payments until that tired old heap is YOURS.
Get a Personal Loan to Consolidate Debt
A consolidation loan does NOT make your debt go away. What it CAN do is make it more manageable. You pay off all those miscellaneous bills at all those different interest rates, and in exchange you now have one lower monthly payment to keep track of – hopefully at a much better interest rate than most of the stuff you just eliminated.
Consolidation by itself doesn’t improve your credit score to 700+, but paying off debts can. It also reduces the likelihood you’ll be late in the future, assuming you stick to your budget and make your payments on time every month. It can also improve your debt-to-credit ratio almost immediately (see above). Mostly, though, it can make you feel better and give you a little room to breathe in making financial decisions.
Good ones, I mean. You should be making good ones now that you have a little room, yes?
6. Avoid Trying to Game the System
Don’t apply for credit you don’t need in hopes it will raise your credit score. If you’re shopping around for a loan for valid reasons, that’s fine, but shop rates and terms and such BEFORE you start filling out paperwork and having lenders run checks. Below you can fill in the information required and we will connect you with a suitable lender. Don’t waste your time, and let us help you.
Remember: Credit reports don’t like unexpected behavior or unusual patterns. They like predictable, boring stuff – like having the same job, living in the same place, and making the same payments every month.
Try to be... boring. And for goodness’ sake, don’t PAY anyone promising quickie fixes for your credit rating! The only way to improve your credit score to 700+ is to actually improve your credit and make solid financial decisions over time.
7. Be Patient
Even if you’re not able to do very many proactive things to improve your credit score to 700+, know that your score will improve over time if you simply avoid doing anything reckless. Bad credit decisions stay on your credit report for about seven years in most cases. Credit scores may factor in many things, but recent behavior matters more than what you messed up fifteen years ago.
Good credit is about the long game. It takes time to really mess up your credit; it makes sense that it would take time to repair it. And that’s OK. It’s not always about where you are as much as it is which direction you’re heading, and how you’re getting there.
Why Should You Improve Your Credit Score to 700+ (Or Anything Else)?
Your 3-digit credit score is a simplified version of your credit history and presumed credit-worthiness. While there’s nothing magical about 700 specifically, it’s currently something of a hallmark between ‘fair’ credit (and all that falls below) and ‘good’ credit (and all that falls above). It is, in other words, a simplification of a simplification. Just what Americans love best!
Credit and ratings and reports and all that can certainly be a pain to think about, let alone manage month to month. That’s a large part of why Creditry and our family of related personal finance sites was formed – to simplify, clarify, and assist with the unnecessarily complicated world of trying to keep our money act together.
learn all you need to know about credit. visit the creditry shop, now.
It may not always be much fun to stick to a budget or tighten your belt or say no to someone you really love when you know they don’t really need something. But you’re not trying to improve your credit score to 700+ (or anything else) for bragging rights. You don’t win a water bottle or a t-shirt from the credit bureau or anything. It doesn’t even solve all of your problems, as much as I wish I could promise you it will.
Conclusion: The Power of Options
What a better credit score does, however, is give you options – especially over time. Options when you need to finance a vehicle. Options when it’s time to buy a house. Options when you choose to pay for a wedding, or someone’s education, or a family vacation, or that serious remodeling you’ve been putting off.
Better credit means more money available to you on better terms and at lower interest rates, and that means more things you can do and still afford to pay for them in controlled slices over time. Better credit means more lenders competing for your business.
And even when you’re not borrowing, not negotiating, not budgeting for anything in particular, better credit means less stress because you know that whatever life throws at you, you’ll have a way to cover it. It may not ever be easy, but it sure gets less and less difficult when you’ve taken control of your finances.