7 Easy Steps to Raise Your Credit Score from 600 to 700
If you have a credit score in the low 600s, you can still get some mortgage and other types of loans. However, most lenders will consider you high risk, and you will pay much higher interest rates. On a mortgage loan specifically, this can increase the cost of your loan by thousands of dollars per year, not to mention tens or even hundreds of thousands over the decades. So, if you want to get a mortgage loan soon, you will be much better off to raise your FICO score to at least 700. Once you have a 700-credit score, most mortgage lenders will consider you a good risk and you will pay less in interest.
Remember that your credit score is determined by:
If you want to raise your score from 600 to 700 quickly, follow our simple 7 steps:
Step 1 – Leave Accounts Open
Keep any credit accounts you have open. Do not close any. This is really important if you have a short credit history. MyFico.com reports that 15% of your FICO score is based upon the length of your credit history. The longer that history is, the better.
If you are older, you might have an old credit card from college or your early work years that you no longer use. You should NOT close that account. Try to use it at least once or twice per month. And pay it off monthly. If you close one of those early credit cards, you are shortening your credit history, which hurts your score.
Step 2 – Pay Bills on Time
Pay every bill you have by the due date. If you have made late payments, it is not the end of the world, but cease doing so now. Paying your accounts on time will not erase your negative history, but it will raise your score over the months. Credit reports usually list your two-year payment history on your credit accounts, so keep those payments on time! If you don't pay your bills on time you will be forced to settle on a refinance mortgage with bad credit and the rates will likely be higher.
Step 3 – Do Not Max Out
You do need to use your credit to raise your score, but maxing out cards and paying minimum balances is not good. A high balance can drop your score by 20 points or more. Many experts recommend keeping under 30% balances on your cards, and some recommend 10%.
Tip: If you pay off a card, it will automatically raise your score. For example, if you have $30,000 of revolving credit on your cards and you have a $9000 balance, paying that card off at once will raise your score by over 20 points.
Step 4 – Open New Accounts Sparingly
When you open new cards, your score drops because your credit history is shortened. Also, hard credit inquiries will drop your score temporarily.
Step 5 – Pay Off Debts
Pay off debts. Do not transfer balances regularly. The smaller the balances you have, the higher your score will be.
Step 6 – Check Your Report
You always want to check your credit report at least once per year. Check carefully for any mistakes as they can drop your score. If you see any mistakes, you should contact each credit agency by mail. The FTC recommends that you also send each credit bureau a certified letter to ensure it is received.
You need to provide proof that the item is incorrect.
Step 7 – Reestablish Credit
If your past credit history is checkered, do not despair! You can actually increase your credit score substantially in a year. Just make a commitment to reduce your debts and to pay your credit cards and other bills on time. Over a year, your score will rise quickly. Also, as noted earlier, paying off a large balance at once will pop your score up by 20 points or even more in some cases.
Raising your credit score from 600 to 700 is definitely possible and you can do it quickly. Just follow our simple 7 steps and low interest loans can be yours!