Improving your credit score opens up many possibilities and speeds up your path to financial freedom. A credit score gives you access to various perks that allow you to save thousands of dollars throughout your lifetime.
However, not everyone has a high credit score or even knows how to monitor a credit score. In this article, you will learn some simple methods that will make it possible to improve your credit score so that you no longer have a credit score under 700.
Table of Contents
What is a “good” credit score?
Each credit model uses different credit ranges to determine good credit. Lenders use these ranges to determine whether you have good credit or not.
For reference, here are the most common ranges used to determine your credit standing:
- Poor: 300 to 579
- Fair: 580 to 669
- Good: 670 to 739
- Very good: 740 to 799
- Exceptional: 800 to 850
Any credit score between 670 and 739 is defined as a good credit score.
Why your credit score matters
Your credit score becomes relevant when you try to secure funding or look into financing options. If you want to buy a house or car, your lender will look at your credit score to assess the risks of lending money to you.
Lenders deem borrowers with high credit scores as being reliable whereas people with low credit scores are viewed as riskier borrowers. Therefore, they will charge lower interest rates to people with high scores and even let them borrow money beyond what they’re requesting.
However, a lender will charge higher interest rates to people who have poor credit scores. A poor credit score is associated with higher risks, hence the higher interest rate and access to less capital. As you can see, it’s imperative to improve your credit score.
If you have a credit score under 700, fear not. You can qualify for a Credit Builder Plus loan with MoneyLion even if you have poor credit.
How to improve your credit score in 11 steps
You can apply multiple strategies to increase your credit score. Every action you take will push you closer to increasing your score all around. Once you no longer have a credit score under 700, you’ll get access to more desirable interest rates in addition to many other perks.
1. Take a look at your credit reports
Monitoring your credit score will make sure you know what your current score is and understand the ways in which it can improve. By reviewing your score, you can detect any errors and dispute any mistakes on your account. Identify the issues that are negatively impacting your credit score the most and address those first.
2. Organize your bills
We incur many bills throughout our lives, and it can be hard to keep track of them all. Rather than trying to remember each bill, organize your bills in a way that helps you understand when each bill needs to be paid off.
That way, you won’t get caught by surprise. Plus, it will help you budget accordingly! If you feel like you need help paying rent or affording your other expenses, organizing your bills is a great place to start.
3. Pay your bills on time
Although organizing your bills won’t directly impact your credit score, paying them on time will help. Missing payments will put a dent in your credit score. Even if you can’t pay off the entire bill, make sure you pay off your minimum payment every month.
If you’re strapped for cash and have a paycheck coming up, you can use Instacash to help you pay your bills until your next payday comes around. You can borrow up to $250 through Instacash at 0% APR. You can get started with Instacash today!
4. Reduce your credit card balance
Reducing your credit card balance will cut down your debt, but it will also cut down your credit utilization. This is great because both your credit limit and your debt have strong impacts on your credit score.
If you have a $1,000 credit limit and $200 in credit card debt, your credit utilization ratio is 20%. A credit utilization ratio below 30% will boost your credit score. As you start lowering your credit card balances, make sure you avoid applying for new credit lines because that would be counterintuitive.
5. Monitoring your credit with alerts
If you don’t track it, you can’t grow it. This axiom is true regardless of whether you have an excellent credit score or a credit score under 700. Monitoring your credit and receiving alerts about upcoming payments will help you boost your credit score.
You can monitor your credit score on the MoneyLion Credit Builder Plus dashboard and get notified about approaching payments. A MoneyLion Credit Builder Plus membership also comes with the Financial Heartbeat feature which helps you keep track of your financial fitness without getting stressed.
The MoneyLion Credit Builder Plus membership is available for only $19.99/mo. However, you can earn back your membership fee through the Lion’s Share Cashback Program. If you make 20+ purchases and log into MoneyLion 20+ days per month, MoneyLion will refund the membership fee.
6. Mix up your credit
Credit mix is an overlooked element that accounts for 10% of your credit score. If you take on multiple types of credit, you’ll demonstrate the ability to juggle several loans at once.
Lenders will take this as a positive sign and give you lower interest rates. They may even grant you access to more capital.
You shouldn’t open up lines of credit or get into debt just for the sake of maintaining a credit mix. However, if you happen to have multiple types of credit, your credit score will increase.
7. Get a secured credit card
If you have difficulty keeping your credit utilization ratio, you can apply for a secured credit card. The credit limit on a secured credit card is tied to collateral, making it easier to start with a higher credit limit.
Some people with poor credit scores may get shut out from an unsecured credit card, thus making the secured credit card their only choice. A credit card used responsibly is one of the best ways to build up your credit score.
Once you no longer have a credit score under 700, you can easily get an unsecured credit card. Some people can receive an unsecured credit card even sooner.
8. Utilize a credit builder loan
If you are wondering how to raise your credit score fast, a credit builder loan can help. The proceeds from a credit builder loan stay in your bank account. If you want a loan to help finance a house, car, or other expense, then a credit builder loan is not for you.
The primary purpose of this loan is for you to build your credit by making monthly payments consistently and on time. Building your credit through a credit builder loan will help you score lower interest rates on a mortgage or auto loan in the future.
Credit Builder loans do not require hard credit checks, making them easy to obtain. Paying off the loan each month will strengthen your payment history which is the most significant credit score factor.
A MoneyLion Credit Builder Loan can help you improve your credit score over time. A Credit Builder Plus membership includes access to Instacash and various financial tools that will help you stay on top of your money. You can open a MoneyLion Credit Builder Plus membership here.
9. Keep old accounts open
Even if you stopped using an old credit card, keeping that line of credit open will help boost your credit score. Older accounts indicate the beginning of your credit history, and the longer your credit history, the better your credit score.
Not only does keeping an account open help your score, but closing an account will hurt your credit score. Rather than close idle or old accounts, keep them open and just don’t use them.
You don’t have to use old accounts to reap their benefits. You can use your new credit card and receive the credit score boost associated with your older card’s credit history.
10. Take advantage of Experian Boost
Experian Boost helps you see instant changes to your credit score when you make on-time monthly payments. Experian Boost allows you to report rent payments to credit bureaus and notify the bureaus when you pay bills on time.
11. Improve your debt-to-income ratio
Your debt-to-income ratio measures your ability to stay on track with your debt payments. Lenders calculate your debt-to-income ratio by taking your monthly debts and dividing them by your monthly gross income.
You can improve your debt-to-income ratio by increasing your income or lowering your monthly debt payments. For example, paying off existing debts is one of the best ways to improve your debt-to-income ratio.
Afford life now and pay back later!
Boosting your credit score can take a long time, but it’s worth the investment. Every purchase you make and dollar of debt you accrue will add up quickly over time. However, what happens if you need to pay for something now and you want to avoid raking up your credit card balance?
With MoneyLion’s new buy-now-pay-later service called Overtime, you can make a 0% APR installment loan in 4 affordable payments –up to $600. Avoid diving into a world of debt and damaging your credit score from expensive interest rates. When you pay with Overtime, there’s no interest or monthly fees! Now is the best time to get on the Overtime waitlist so you can be one of the first to know when Overtime launches!
Frequently Asked Questions
What percentage of the population has a credit score over 800?
Approximately 20% of the population has a credit score over 800. If you have a low credit score, MoneyLion’s Credit Builder program is here to help.
How long does it take to get a 700 credit score?
While this depends on various factors, the only way to get your credit score above 700 is to make it a priority and start right away. A MoneyLion Credit Builder Plus loan can help you increase your score by up to 60 points within 60 days!
Does paying rent increase credit score
Reporting rent payments will increase your credit score. Lenders like to see that you are capable of paying off your expenses promptly.