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How to Go From a 600 to a 700 Credit Score

Sean Cooper

Sep 26, 2022 9 min read

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How to Go From a 600 to a 700 Credit Score

Are you looking to boost your credit score from 600 to 700? Then let’s take a look at how to get there, and explore the benefits of having a 700+ credit score.

Why Do I Need a Score Above 700?

Before we talk about how to raise your credit score to 700, it’s important to talk about why you want a credit score that’s above 700. With that in mind, here are some of the key benefits of having a high score:

More Favourable Lending Terms

The first reason why you want a credit score above 700 is because it can help you qualify for a lender’s most favourable lending terms.

When you have a credit score below 700, you typically have fewer lending options and may not qualify for the most favourable ones. For example, some lenders require the main borrower of a loan to have a credit score above 700. If your credit score is below 700, you may not qualify and therefore may have to choose a loan with a higher interest rate and/or not as good terms and conditions.

Lower Interest Rates

The second reason why you want a credit score above 700 is that it can help you qualify for lower interest rates on loans.

When lenders are offering their best loan terms, the lenders tend to be looking for the most creditworthy clients. If your credit score is above 700, you tend to qualify. However, if your credit score is below 700, you may not. Having a higher credit score can make all the difference in you qualifying for a better interest rate, which can add up to hundreds or thousands saved over the life of your loan.

Making on time payments

Fewer Lender Fees

When your credit score is above 700, you tend to not need to pay any extra lending fees. That’s because you have a proven track record of paying back money that you borrow on time.

That isn’t the case when your credit score is below 700. If your score is closer to 600, that’s when you’ll likely need to pay lender fees, which can add up to hundreds or thousands of dollars. By having a better credit score, you can avoid those extra costs.

A Lower Down Payment

If you’re hoping to put down as little money as possible on a home or car, a credit score above 700 can help. You may be able to get away with the minimum down payment if your credit score is above 700. However, when your credit score gets closer to 600, that’s when you may no longer qualify for traditional financing and may need to go with an alternative or private lender. Alternative and private lenders tend to require between 20% and 35% down, which can really delay your plan of buying a property if you were hoping to only put 5% down.

Renting an Apartment

In places where there are few places to rent and lots of tenants looking, landlords can be really picky about tenant applications. If you have a credit score above 700, it generally means that you’re responsible with your finances and good with money, making you an ideal candidate in the eyes of a prospective landlord.

However, if your credit score is below that, that’s when landlords may opt for another applicant who has a better credit score. 

More Job Opportunities

A credit score above 700 can also mean more and better job opportunities. Some jobs require you to take a credit check when you apply. This is usually for jobs to do with finance. A credit score above 700 may be the cut off for these types of jobs, meaning a credit score above 700 can be the difference between landing your dream job and getting rejected. That’s all the more reason to strive for a higher credit score.

Credit card payments

How to Raise Your Credit Score to 700

Now that you know why you want to have a credit score above 700, here are some ways to raise it.

Make On-Time Payments

Making your payments on time on your new and existing credit accounts is the single best way to increase your credit score. This includes credit card bills and other credit accounts you have open.

If your credit score is lower because you have missed several credit card bills in the past, it’s essential that you do your best to make all your payments on time going forward.

Making your credit card bill payments on time shows lenders and the major credit bureaus, Equifax Canada and TransUnion, that you’re a responsible borrower and can be trusted to manage credit well in the future.

Reduce Your Credit Utilization Rate

For any revolving credit accounts, you want to aim to reduce your credit utilization rate. Credit utilization is just a fancy way of saying how much you are using of the total credit you have available to you across all your credit accounts. 

Reducing your credit utilization rate can boost your credit score because you’re using less of your available credit. That means that if you were to run into any credit issues, you would be better prepared to handle them as you would have more available credit to be able to cover any emergency expenses.

When you’re close to being “maxed out,” you want to aim to pay down your credit card balances. Not only will you save on interest, but it will also help boost your credit score to above 700 and beyond.

If you’re spending responsibly and your credit limit simply isn’t high enough for your everyday spending, it’s a good idea to consider requesting a credit increase.

Avoid Taking On More Debt

Taking on new debt can make sense in certain circumstances. For example, if you are taking out a consolidation loan to pay off high interest credit card accounts and you have a plan to pay it off, it can make sense.

However, it’s generally not a good idea to take on more debt when you’re already struggling to pay off existing debts.

Regularly Check Your Credit Report

Like regular checkups at the doctor, it’s important to regularly check your credit report. When you regularly check your credit report, you can spot errors or even early signs of fraudulent activity.

An error could be a payment showing as late when it was on time or an account not showing as paid off and closed and instead delinquent. By regularly checking your credit report at least once a month, you can spot those errors and dispute them right away. It’s far better to dispute them ahead of time, as it could impact your ability to get financing in the future and raise your credit score by getting them removed.

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Dispute Inaccurate Results

The second part of the above is to dispute any inaccuracies on your credit report. When you find something that’s inaccurate, you don’t just want to sit on it. You want to take action. Taking action can help correct the inaccuracy and improve your credit score in one fell swoop.

Once you identify an inaccuracy, you want to approach the credit issuer and ask them to correct it. If the credit issuer corrects it, you’re in great shape. If the credit grantor isn’t being responsive or willing to help you, that’s when you’ll want to file a dispute with Equifax Canada or TransUnion to investigate it further.

Which Factors Affect Your Score?

Now that we have talked about all the various ways you can raise your credit score to 700, let’s look at all the major factors that affect your credit score.

Payment History

Payment history is how good you are at making your payments on time. It’s the most important factor when it comes to your credit score. Ideally, lenders like to see that you have a long and consistent track record of on-time payments. 

When you begin to miss payments, that’s when it starts to affect your credit score. If you’ve only missed a payment or two that were honest mistakes, it usually isn’t a big deal. However, when you regularly miss payments, that’s when it can be a much bigger deal.

Missing several payments tends to drag down your credit score. As payment history is the most important factor, the more payments you miss, the greater likelihood your credit score falls below 700.

If you’d like a credit score above 700, always aim to make your payments on time.

Credit card company

Amount Owed

The amount owed on outstanding debt is another big factor. Now we’re not talking about mortgages, car loans and student loans. Those are instalment loans with set repayment terms. We are talking about revolving credit accounts. Most commonly credit card accounts and lines of credit.

As a borrower, you should aim to keep your balances to a minimum with any revolving credit. That means keeping your balances to below 30% of your available credit. For example, if you have a credit card with a $5,000 limit, you should aim to always keep the balance below $1,500 (30%). When the balance starts to creep up above 30%, that’s when it can start to negatively impact your credit score, especially if it’s a recurring issue.

Credit History

Credit history, more specifically the length of credit history, is another factor that can impact your credit score. The credit bureaus will reward someone with a long, positive credit history for many years versus someone who is new to credit.

A common misconception about credit is that you should close credit accounts that you aren’t using. While that may make sense if it’s for a credit card with a hefty annual fee, if there are little to no fees to keep a credit account open, it often makes sense to keep it open, even if you aren’t using it that frequently anymore, as it helps make sure you have a full credit history.

Credit Mix

Ideally, you want to have a good mix of credit. Now this doesn’t mean signing up for every single credit card that you’re offered. This is more related to signing up for different types of credit.

Generally speaking, someone with credit cards, a car loan, line of credit and a mortgage, tends to have a more favourable credit score than someone with just a wallet full of credit cards. That’s because lenders want to see that you can handle a variety of credit products. That reflects a lot better than someone who has never had a credit product outside of a mortgage.

Credit reports

Credit Inquiries

The fifth factor that can impact your credit score is credit inquiries.

If you’re shopping for a mortgage, it’s understandable that you may have several credit inquiries. However, if you’re applying for a credit card, lenders don’t tend to expect you to apply for five credit cards in a short period of time. For credit products outside of mortgages, it’s best to selectively apply for credit products. This means limiting yourself to credit products that you truly intend to use. Otherwise, applying for too many credit products in a short span of time can pull down your credit score when you least want it to.

The Bottom Line

Although 100 points might not seem like a significant jump in the grand scheme of things, the difference between the financial products and interest rates available to you at 600 and 700 is quite vast.

By adopting these habits and tricks, and keeping track of your credit score for free through Borrowell, you should start to see your score moving in the right direction.

Sean Cooper
Sean Cooper
 | 
Author & Mortgage Professional
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Sean Cooper is the bestselling author of the book, Burn Your Mortgage. He bought his first house when he was only 27 in Toronto and paid off his mortgage in just 3 years by age 30. An in-demand Personal Finance Journalist, Money Coach and Speaker, his articles and blogs have been featured in publications such as the Toronto Star, Globe and Mail, Financial Post and MoneySense.

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