Have a credit score that got dinged by student loan debt? If you’re ready to rebuild your credit and improve that number, a credit score of 700 is a good benchmark to reach.
That’s because credit scores exist on a scale, with a score of 300 being the lowest and worst and 850 being the absolute highest and best. You’re considered to have “very bad” credit if your score is between 300 and 599 and poor to fair credit if you’re somewhere between 600 and 699.
A 700 credit score gets you in the “good” range, and this is where you want to be if you want to enjoy the benefits of maintaining a healthy score.
Why seek a 700 credit score, anyway?
Before we explore how you can raise your score, it’s worth understanding why you should make the effort. A credit score isn’t just an arbitrary number — it’s determined by specific factors, and there are real consequences to having a number on the lower end of the scale.
Creditors, financial institutions (like banks), landlords, and even employers will take a peek at your score as a measure of how creditworthy you are. That means they judge your ability to be financially responsible and the likelihood that you’ll pay your bills and repay your debts based on this number.
If these entities see a low score when you apply for a loan, get a line of credit, or submit an application for a lease, there could be a financial penalty.
Landlords may request a bigger security deposit or ask for first and last months’ rents up front. And lenders will put a higher interest rate on your loan, making it more expensive for you to repay the money you initially borrowed.
They can also deny your request, be it for a loan or a rental unit, entirely based on your credit score.
Why? Because a lower credit score indicates that you present a higher risk. Whether or not that’s fair (or even true), evaluating your score is how most financial institutions determine how much of a risk they take in working with you.
The higher your score, the more creditworthy, less risky, and more financially responsible you appear to lenders, landlords, and companies who can lend you lines of credit. This is why seeking a credit score of 700 or higher is worth the effort.
What it means to have a good credit score
Because a credit score of 700 or higher is considered “good,” you’ll start enjoying the benefits of a healthy score when you hit this number. These could include:
- Better interest rates on loans
- Better APRs and higher credit limits on credit cards
- Access to more options for financing (if you’re making a big purchase or starting a business, for example)
- Better chance of securing rentals, especially in hot real estate markets, with no additional fees or requirements
How to get my credit score above 700
You get it: A 700 credit score is a good thing to have. If your score is less than ideal, don’t panic. You do have control over your score.
You can take action and, over time, work to improve and raise your score. Here’s how.
Make payments in full and on time
A large portion of your credit score is determined by your payment history. Making all your payments — from bills to student loans to home and auto payments — on time and in full will raise your score over time.
Your credit score will suffer if you consistently make late payments or if you fail to make those payments at all. Set reminders in your calendar or register for automatic payments if you struggle to remember due dates. Work with your student loan servicer to change your due dates if a different payment deadline would help you consistently pay on time and in full.
Don’t use up all your credit all the time
Another big factor in determining your credit score is your credit utilization ratio.
For example, let’s say you have a credit card with a limit of $1,000. If you charge $800 to your card each month, your credit utilization ratio is 80%.
But you should aim to keep that ratio at 30% or lower if you want to improve and increase your score. Even if you pay off that $800 on time and in full each month, you credit score could suffer because your utilization ratio is so high.
Sometimes you need to charge a higher balance on your card, and that’s okay if you pay it off when the bill is due (and pay it all off). But to build up to a 700 credit score, don’t make it a habit. Keep your utilization ratio as low as you can.
Avoid frequently opening and closing accounts
Opening lots of new accounts at one time can cause your score to plummet. Only open new lines of credit if you actually need to use them, and consider exploring other options first (like using debit cards instead of credit cards or paying for a purchase in full instead of financing).
The same should be said for closing accounts, too. Eliminating accounts hurts your score because it affects the average age of your entire credit history. The older your credit history, the better for your score.
Do try to keep the oldest accounts on your credit history open as long as you can, but don’t hang on to lines of credit that cost you money. Credit cards with high annual fees that don’t provide you a major benefit aren’t something you need to maintain.
If you do need to close accounts, try and spread out those closures. Avoid closing multiple accounts within a short timeframe.
It’s okay to have a mix of types of credit and loans, too. In fact, showing you can manage a variety of different lines of credit can even help your score — so your student loans won’t necessarily drag your credit score down.
Check for errors on your credit report
One of the easiest things you can do to get a 700 credit score is to make sure there are no errors or mistakes dragging down your current score. You can get a copy of your credit report from AnnualCreditReport.com for free once per year.
Once you request and receive your report, look it over and make sure all the information is correct. If you find a mistake, learn how to dispute the error on your report here.
Stick with it and stay consistent!
Your credit score won’t skyrocket into the 700s or 800s overnight. It takes some time, so be patient, especially if your score was very bad or poor.
A lot of what determines your score is seeing consistent action over time. If you don’t see movement right away, don’t be discouraged. Keep making payments in full and on time, manage your credit wisely, and don’t use up every bit of credit available to you.
If you stick with it, you should see your credit score hit 700.
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