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

To get favorable loans in the best interests and tenure, a good credit or CIBIL score is a prerequisite. If your credit score has fallen or needs to be built, you can improve it to reach the target. While your credit score may fluctuate slightly every month, significant improvements take time. Elevating a credit score from 500 to 700 requires dedicated effort and better financial practices. Some lenders may consider a credit score of 500 average or sound, but it may limit access to favorable loan and credit card offers. Achieving a score of 700 signals reduced lending risk, leading to better rates and offers. How can this be achieved? Let's understand it with the backdrop of all the essential concepts.

What Is A Credit Score?

A credit score reflects a person's creditworthiness, determined by their repayment history across various loan types and institutions. Four credit information companies in India, including CIBIL, Experian, Equifax, and Highmark, are licensed by the Reserve Bank of India. The CIBIL credit score, ranging from 300 to 900, is the most popular in India. The FICO scoring model calculates the score using factors like your payment history, credit exposure, credit type and duration, and other credit behavior aspects. Creditworthiness and CIBIL scores rely on these factors, with the credit utilization ratio (CUR) also playing a vital role.

Meaning Of Different CIBIL Scores:

A credit score stands between 300 and 900, with 900 being the highest. 300 and 579 indicate poor credit scores, while 580 to 669 is fair. A score from 670 to 739 is deemed good, 740 to 799 is very good, and 800 to 900 is exceptional. Effective debt and credit management is crucial to improve your CIBIL credit score from 500 to 700. With a credit score of 700, you will likely receive better loan rates and credit card offers due to reduced lending risk. The time it takes to improve your score from 500 to 700 will depend on various factors.

Time Usually Taken To Improve Credit Scores:

Improving your credit score from 500 to 700 depends on your payment history and financial discipline. Responsible individuals may achieve this in a few months, while others with late payments may take longer. Building creditworthiness by using a credit card responsibly, repaying debts on time, and staying below 30% of the credit limit can expedite the process. However, this improvement has no fixed timeline, making consistent and timely repayments crucial for success.

How To Improve CIBIL Score?

Timely Repayment:

Ensuring on-time repayment of loan and credit card EMIs can quickly boost your credit score by up to 200 points. Paying off the entire balance sooner can accelerate score growth. Opt for auto-pay to stay prompt with payments.

Credit Utilization:

Financial experts recommend utilizing no more than 30% of your credit limit. For instance, if your limit is Rs. 50,000, aim to use a maximum of Rs. 15,000 (30% of the limit).

Increase Credit Limit:

If your credit utilization is increasing, you can request your credit card company to increase your limit to maintain a healthy 30% credit utilization ratio.

Check For Errors:

Regularly review your credit report for errors, such as misreported payments or fraudulent accounts, which could negatively impact your score.

Remove Negative Entries:

If you spot any errors or negative entries, contact CIBIL to rectify them. Raise a dispute on the official website if needed.

Limit Multiple Applications:

Avoid applying for unnecessary loans or credit cards to prevent hard credit checks, which can lower your credit score.

Maintain Older Credit Cards:

Keep your older credit card account open, even if not in use, to demonstrate responsible borrowing behavior and sensible spending to potential lenders.

Prioritize and manage spending by separating essential purchases from those that can be delayed. Track all expenses, eliminating unnecessary ones to improve credit utilization and save money. These healthy financial practices will yield long-term rewards.

While there isn’t a one-size-fits-all solution for achieving a high credit score, some strategic actions can significantly improve it. Here’s a roadmap to reach that desirable 700 mark.

1. Address Existing Debt: The fastest way to increase credit score

This is your top priority: Catch up on any past-due payments and consistently make your payments on time going forward.

Focus on paying down credit card balances. Aim to keep your credit utilization ratio (the amount of credit you are using to your limit) below 30%. Prioritize off cards with the highest interest rates first.

2. Become a Payment Master: How to increase credit score quickly

On-time payments are crucial. Set-up automatic payments or reminders to avoid missing deadlines.

3. Manage Credit Utilization Wisely: How quickly can you raise your credit score

Keeping your overall credit utilization ratio low is essential. Consider requesting credit limit increases to create more breathing room without actually increasing your spending.

4. Maintain a Long Credit History: How to quickly raise credit score

Don’t close unused old accounts. The longer your credit history, the better your score will generally be.

5. Apply for New Credit Strategically: How long does it take to get 700 credit score

Applying for multiple loans or credit cards in a short period can negatively impact your score. Space out credit applications whenever possible.

Important Considerations:

Reaching a 700 credit score takes time and consistent effort. You may see significant improvement within a few months, but depending on your credit history, reaching 700 might take longer.

Regularly monitor your credit report for errors and dispute them promptly if you find any.

Consider becoming an authorized user on a credit card held by someone with a good credit history. You can also explore secured credit cards, which can help build a positive credit history.

Our Tip to Boost Your Score Faster: Tame the Debt!

Want to see a quicker jump in your credit score? Focus on paying down existing debt. Prioritize past-due payments and aim to keep your credit card balances low (utilization below 30%). Tackle high-interest cards first. This is the fastest way to increase your credit score. Remember, consistent effort is key. By managing your debt effectively, you will be on your way to unlocking your financial future.

Bottomline:

Addressing financial problems promptly and making on-time payments is crucial for building strong credit. Financial recovery may take time, but a proactive approach is key. Regularly monitor your credit score to track progress and address any potential issues. As you better understand credit scores, maintaining good credit habits becomes easier and more sustainable in the long run. To begin with, apply for a loan at IIFL Finance, opt for auto debit settings and keep the credit score check at regular intervals to strengthen your creditworthiness.

FAQs

Q1. How fast can I get my credit score to 700?

There’s no guaranteed timeframe, but improvement is possible! It depends on your starting point. Generally, significant improvement can happen within a few months with dedicated effort (like paying down debt). Reaching 700 itself might take longer (12-24 months), depending on your credit history. Consistency is key!

Q2. How much CIBIL score will increase per month?

Unfortunately, there's no magic formula to predict exact monthly CIBIL score increases. Your score improvement depends on several factors, including your starting score and actions you take, such as debt repayment and credit utilization. Focus on positive actions to steadily improve your score over time.

Q3. What can I get approved for with a credit score of 500?

A 500 CIBIL score limits loan options. To build a credit history, you might get approved for secured credit cards. Some lenders may offer personal loans but expect higher interest rates. For mortgages, consider government-backed programs like FHA loans (with a larger down payment). Focus on improving your score for better loan options in the future.

Q4. How can I raise my credit score by 200 points in 30 days?

Increasing your score by 200 points in 30 days is ambitious. While some improvement is possible, that jump is unlikely. Focus on high-impact strategies like paying down high-interest debt and catching up on missed payments. This shows responsible credit behavior, but significant score improvement takes consistent effort over time.

Q5. Can your credit score go up 50 points in a month?

It’s possible but not guaranteed a 50-point increase in a month can occur. Factors like addressing past-due payments and lowering credit utilization can lead to a jump. However, consistent effort over several months is more likely to secure a lasting 50-point improvement.