If you have a history of late payments and a poor credit score, the good news is you can turn your credit around.

Key takeaways

  • If you have a FICO credit score above 700, you are well within the range required for good credit.
  • If you want to get your credit score above 700, start by making on-time payments and paying off your outstanding debts.
  • If you need more help improving your credit score, check your credit report regularly and use the credit monitoring services offered by your credit issuer.

Credit scores are calculated based on information in your credit report. FICO and VantageScore are two of the main credit scoring companies and both provide scores ranging from 300 to 850. FICO claims it is the score used by 90 percent of top lenders, so we’ll focus on that scoring model for this article; however, under both models a 700 score puts you firmly in the good or “prime” range. A FICO score of 740 to 799 is very good and 800 to 850 is exceptional.

Currently, the average FICO credit score is 717. That’s excellent news, since consumers with credit scores over 700 are securely within the FICO range required for a good credit. Consumers with credit scores over 700 have a history of on-time payments and low credit card utilization in most cases — both of which can make their lives more financially secure.

If you have a history of late payments on your record and more credit card debt than you were hoping to carry, your credit score might be lower than 700. Don’t worry. A credit score is simply a snapshot of your credit at a particular point in time, and it’s possible to improve your credit score with a few adjustments to your spending, saving and bill-paying.

Here’s how to get your credit score above 700 as quickly as possible.

Understand why your score is below 700

Before you can start getting your credit score above 700, it’s important to understand why your credit score is below 700. Here are some of the most common reasons why people have low credit scores:

  • Missed credit card payments
  • High credit card balances
  • Declined credit card applications
  • Debts sent to collections

In addition to these major factors, there may also be less obvious factors that are keeping you from achieving a 700+ credit score.

People who are new to credit, for example, may have a lower credit score than people who have been using credit responsibly for several years. People who take out multiple types of credit, including credit cards, car loans and mortgages, often have higher credit scores than people who just use credit cards — especially if they make on-time payments on all of their financial obligations and keep their credit utilization low. That does not mean, though, that you can’t have a strong credit score — 700 or even 800 — without credit cards; it’s just one responsible way to get there.

Lastly, some people see their credit scores reduced due to identity theft or other forms of credit card fraud — and, in some cases, have no idea the fraud has occurred until they pull their credit report and see unfamiliar lines of credit taken out under their name.

Make a plan to improve your credit profile

Building your credit isn’t difficult once you understand what goes into your credit profile and how you can improve it. Here’s how you can make a plan that can help you improve your credit history and boost your credit score.

Make on-time payments

Consistently making your payments on time is the best way to improve your credit score. Your payment history determines 35 percent of your FICO score. According to Experian, payments that are a few days late rarely appear on your credit report — but payments that are late by 30 days or more will likely appear on your credit report.

If you’re having problems making payments, contact your creditor to find what your options are. Your creditor may be able to establish a payment plan that doesn’t hurt your credit score.

As you continue to make on-time payments, your credit score will improve. While late payments stay on your credit report for seven years, the late payments will have less impact on your credit score as time passes.

Reduce your debt

The next best way to improve your credit score is by paying off your debt. There are many different ways to tackle credit card debt, and plenty of resources for people who want tips and tricks. The snowball method, for example, works by paying off your debts in order from smallest outstanding balance to largest. The avalanche method works by paying off your debts in order from highest interest rate to lowest interest rate.

Be aware
Paying off a debt can sometimes cause a small temporary drop in your credit score. Don’t panic! The drop likely comes from the change in your credit mix – say you pay off a car loan and no longer have an installment loan in your mix – or perhaps a change in the average age of your credit history. Keep making responsible moves with your credit and your score will rebound quickly.

Many people also successfully use balance transfer credit cards to pay off old balances. The best balance transfer cards come with a 0 percent introductory APR offer of at least 12 months on transferred balances, giving you a year or more to pay down your old debt without paying interest.

If you have a debt that’s gone to collections, it’s time to work with the collecting agency to settle your debt. The sooner you deal with this issue, the better — and the sooner your credit score may start to improve.

Lower your credit utilization ratio

Your credit utilization ratio, which tracks the amount of debt you’re carrying compared to the amount of credit you have available, makes up about 30 percent of your FICO credit score. While different FICO scoring models track this factor slightly differently, it’s still a good idea to keep your credit utilization ratio as low as possible.

An ideal credit utilization ratio is 30 percent or lower. This means that your total balances should never exceed 30 percent of your available credit. If you have $10,000 in available credit, for example, try to keep your balance below $3,000. Putting big purchases on your credit card may increase your credit utilization ratio temporarily, so try to pay them off as quickly as possible — and remember that you don’t have to wait until the end of a billing cycle to make a credit card payment!

Open a new credit card

Believe it or not, one way to improve your credit score is by opening a new line of credit. Not only will opening new credit decrease your credit utilization ratio by increasing your available credit — assuming you don’t turn your new line of credit into new debt, of course — but applying for a new credit card is one of the best ways for people with a limited credit history to start building positive relationships with lenders.

Each credit application you complete has the potential to drop your credit score by a few points, but responsibly using the card when you’re approved generally outweighs the temporary hit to your credit. Use services like CardMatch to see which cards might be best for you or browse lists of top credit cards for fair credit or bad credit. Avoid applying for credit cards that aren’t a good fit for your financial situation or credit score range, so you reduce the risk of being denied and increase the chances of being approved.

Check your credit report

If you haven’t already checked your credit report, request copies from the credit reporting agencies — Equifax, Experian and TransUnion. By law, you’re entitled to one free credit report per week from each agency through AnnualCreditReport.com.

It’s smart to regularly check your credit reports for errors and updates. If you find inaccurate or missing information on your credit report, you can dispute the error with the credit reporting agency. Experian, Equifax and TransUnion have made it easy to file a dispute online, and most disputes are resolved within 30 days.

How long will it take to reach a 700 credit score?

The amount of time it may take to get your credit score above 700 depends on your personal situation. However, many people see an immediate improvement to their credit score simply by making on-time payments and reducing their utilization ratio.

If you want to improve your credit score quickly, make a payment on one of your outstanding balances. If you want to get your credit score even higher, don’t use more than 30 percent of your limit on a credit card each month and then pay your bill on time and in full.

Many credit card issuers offer credit monitoring services that not only track your credit score but also provide insight into how your recent actions may have affected your credit score — giving you the opportunity to use that information to build good credit as quickly as possible.

The bottom line

The average U.S. FICO credit score is above 700, which is a good sign for the state of American credit. If your credit score is below 700, there are a few easy actions you can take to improve your score, including making on-time payments and paying down credit card debt to lower your utilization ratio. In some cases, you may want to open a new line of credit to boost a limited credit history. It’s also important to check your credit reports regularly and use credit monitoring services to track your credit score as it goes up and down.