A 700 credit score is what most people strive for as it is universally accepted as a “good” score. With a limited credit history (or some missteps along the way) getting there can be difficult. Here are seven ways to meet and surpass the coveted 700 score in 2022.
Can’t get a credit card? Open a secured card instead
With a less than stellar credit score or no credit history, getting approved for a card can be a feat. If you can’t build a credit history, what are you supposed to do?
A secured credit card is the answer. Simply put down a deposit that becomes your line of credit. It’s easy to get approved for a secured card, even if you have no history of credit (or a bad score.) After a year of on-time payments, your credit score will improve and you’ll likely qualify for a normal credit card.
Never make a late payment
Paying every bill on time. Payment history accounts for a whopping 35 percent of your credit score, making it the single most important credit factor. One missed or late payment will stay on your credit report for up to seven years. Ouch.
In order to build payment history, your payments must be reported to the credit bureaus. Bills like mortgage payments, credit cards and installment loans are reported to these bureaus. Cell phone payments, utility bills and others aren’t reported unless you’re so behind you’re sent to collections.
Prioritize credit card debt over loans
Tackling credit card debt raises your score a lot more than paying down things like student loans or mortgages. That’s because your credit utilization ratio is determined purely by your lines of credit. Plus, credit cards tend to have higher interest rates than other types of debt, so it’s actually better for you to focus on the cards before trying to pay your car off.
Don’t close old accounts
Your average length of credit determines 15 percent of your score. Your score benefits from keeping old credit cards open since your history is longer. One thing to note, though: if you have credit card accounts open that charge outrageous fees, it might not be worth the credit score benefits to keep those open.
Keep your balances in check
Credit cards have higher interest rates than other debt, so make sure you’re paying the balances down each month. Your credit utilization ratio, which is the percentage of open credit you’re using, drops when you pay down those debts. Credit utilization accounts for 30 percent of your score, so this is a very important factor.
Be choosy when applying for new cards
While access to more revolving credit does boost your score, opening a new account lowers your average credit age. You’re also hit with a hard inquiry to your credit report every time you open a new account. Although the damage from this inquiry is small and temporary, it still impacts your overall score.
You probably qualify for a credit limit increase
If you’re doing a good job keeping up with your payments, request a limit increase with your card issuer. A limit increase bumps your score up since the amount of open credit you have increases. Your credit utilization will drop, and your score will increase.
Make sure to keep your spending under control once you get approved for the increase.
Need more advice? Check out what people with excellent credit are doing differently.