How Long Does it Take To Get A 700 Credit Score From 500?

If you are wondering how long it takes to get a 700 credit score from 500, then this might be the most important article you are ever going to read…

And here’s why;

Did you know that the key to achieving your financial goals, like getting that business loan or buying that car, is to get your credit score from 500 to 700?

Stick with me till the end because at the end I’ll also show you how to make it much quicker than usual.

“So, how do you do that?”

How long does it take to get a 700 credit score from 500?

First off, you need to know that every situation is unique, and several factors affect your credit score.

Usually, building your credit score from 500 to 700 will require work and patience since it can take about 12 to 24 months…

However, if you apply what I will teach you in this article, you can do it quicker…

With over two and a half decades of experience as a financial coach and banking expert, I’ll help you unlock the many opportunities that a higher credit score can give.

A high credit score can open up opportunities such as getting better interest rates, getting your small business loans approved, or securing a credit card with awesome rewards.

On the other hand, if you’re starting with bad credit, getting to 700 or a good credit score will depend on how hard you are willing to work to build your credit. Ensure that you pay off collections and pay your debts on time. If you own a credit card, keep your debt to a minimum.

How To Improve Your Credit Score From 500 to 700 (And do It Faster)

How long does it take to get a credit score from 500 to 700

It’s hard to build credit, but it’s easy to end up with bad credit.

It can take about 12 to 24 months to build your credit from 500 to 700.

Achieving that 700 or good credit will depend on how hard you’re willing to work to improve your credit.

It will also depend on why your score is low and the steps you take to enhance your credit.

Credit-scoring companies use different models to calculate credit scores.

According to the Consumer Financial Protection Bureau or CFPB, FICO and VantageScore are two of the most used.

Here are a few factors that impact your credit score:

Payment record
Debt
Credit utilization
Types of credit
Credit age
Credit applications
Co-signed loans
Business credit cards
Credit limit increase requests

However, there’s no definite time when your credit score will increase.

The time it takes to improve from 500 to 700 credit score can range from months to years.

It will take a shorter time for those people who are responsible for their payments and longer for people who need more discipline since credit scores are usually based on your spending pattern and payment history.

Is 500 a bad credit score?

A credit score will determine your qualification for various financial products such as loans and credit cards and the interest rate you’ll need to pay.

Unfortunately, a 500 credit score belongs to the bad score range.

To give you a much better idea, here’s a quick guide on credit score ranges:

Credit Score Range

Lenders and creditors favor individuals who have a good credit score.

Why?

That’s because a good credit score tells them the person is responsible and trustworthy.

The credit scores are usually computed using a model which gives scores on a scale of 300 to 850.

Here’s a quick guide on credit score ranges and what they usually mean:

Poor Credit (300-579)

A credit score that falls into this range is considered poor or very poor.

Scores in this range will find qualifying for loans or credit difficult.

And even if they do qualify, they are most likely to get higher interest rates and stricter terms.

Fair Credit (580-669)

Credit scores in the 580-669 range are ranked as fair credit.

Similar to poor credit, interest rates will be higher than usual with this type of credit.

Good Credit (670-739)

Fortunately for people with 670-739, you fall into a good place!

This credit score is considered good and will qualify you for various credit products.

Good credit usually gets competitive interest rates, too.

Very Good Credit (740-799)

Once you’ve achieved your goal of rebuilding credit from 500 to 700, you’re now classified as good to very good credit.

And with very good credit, you’re now qualified for the best interest rates and awesome terms on loans and credit.

Excellent Credit (800-850)

The highest range of credit is getting 800-850.

Excellent credit will qualify you for the most promising terms and the lowest interest rates on credit products.

Factors That Can Result In a Bad Credit Rating

A bad credit score can make you ineligible for loans and other credit products.

It all comes down to how you manage your financial needs.

Don’t worry! I can help you fix that!

But first, you’ll need to understand what caused your bad credit score.

Here are three common causes of bad credit rating:

Payment History

Missing deadlines for payments will result in a bad credit score.

Your score will decrease the longer the deadline is past due.

Also, current late payments will have more impact than past ones.

Multiple Loan Applications

Applying for multiple loans or credit can also decline your credit.

When applying for a loan or credit, lenders and banks will review your credit.

This process is called hard inquiry.

Lenders will review your credit during a hard inquiry to check if you’re financially responsible.

However, this process will temporarily lower your credit score but regain it again through time and positive reports.

Applying for new credit means that you’ll need to go through many credit inquiries on your report.

And if you’re always applying for new credit cards or loans, you’ll go through plenty of credit inquiries on your report.

Credit Utilization Ratio

A high credit utilization ratio can result in a bad credit score.

The credit utilization ratio is the percentage of credit you use against the overall available credit.

It’s best advised not to exceed 30% of your available credit limit to help enhance your credit.

Can I Get A Business Loan With A 500 Credit Score?

Some lenders will still approve loans from business owners even though they have bad credit, such as a 500 credit score.

Loans like these focus on the power of the business rather than looking at the credit score.

However, expect to have high-interest rates and stricter terms.

How To Improve Your Credit Score From 500 to 700 (And Do It Faster)

A 500 credit score falls into the bad credit range.

That means the person might have struggled with paying on time, claimed bankruptcy, or applied for multiple credits.

Improving your credit score will take time and lots of work.

But with the right method, you can enhance your score from 500 to 700 within 18 months.

It will take time to happen, but there are many ways to get that 200 points.

Patience and discipline will be needed.

Here are tips on how to improve your credit score from 500 to 700:

Monitoring Credit Report

Reviewing your credit report is also a great way to improve your score since credit report errors can actually harm your score.

Especially errors in account information like accounts that are not yours or current accounts but are being reported as past due.

Get a free copy of your credit report annually from Experian, Equifax, and TransUnion, the three big credit bureaus.

Get a free report in AnnualCreditReport and review it.

Check for indications of fraud or mistakes and report them if you find anything.

Lower your utilization

Another key factor in rebuilding credit is keeping your credit utilization low.

A utilization ratio below 30% makes you more appealing to lenders, suggesting you’re responsible and not maxing out your credit cards.

Make On-Time Bill Payments

As we’ve tackled earlier, late payments are a big no-no if you want to improve your credit.

Make it a habit to pay all your bills on time and in full.

If you’re looking at your FICO score, payment history is the most influential factor when calculating this score.

Unable to pay debts and bills on time can cause your score to drop heavily and impact your finances for about 7-10 years.

If you’re having trouble paying your debts on time, here are tips that can help you:

How do I pay bills on time?

Set up an Auto-Pay
Create Calendar Reminders
Stick with a budget that works for you
Ask lenders to adjust due dates
Consult Debt Management Plans

Pay Down Debt

Paying down your debts can help boost your credit score.

This will also help in the long run since you’re less likely to miss payment deadlines or max out your credit cards.

If you’re having a hard time keeping up with your debts, there are now nonprofit credit counseling agencies that you can consult.

These credit counselors can provide a concrete debt management plan to help reduce interest and lower payments.

Get a Credit Builder Loan

When you opt for a credit builder loan, it opens an account in your name where lenders will deposit your approved amount and report your payments to the credit bureaus.

A credit builder loan is a type of installment plan that has fixed monthly payments.

As you pay these bills on time, they will be reported to credit bureaus, helping you improve your credit score since payment history is crucial in calculating a credit score.

Don’t Open Unnecessary Credit

Opening a new line of credit will appear on your credit report.

Don’t always apply for new credit.

Using the credit you’ve already established shows that you’re committed and responsible in managing your finances, which will help enhance your credit score.