Let’s say you’re about to lease a new apartment, apply for a loan, or take out a mortgage. These major steps require a credit score check to ensure you’re a borrower who pays bills on time and has a healthy debt-to-income ratio. You check your credit score expecting to see a rating between 740 and 810, only to find you’re down around 600.
This can happen in a matter of months if you’ve had some financial difficulty, or missed payments on a student loan. For a lot of young Americans, the Coronavirus Aid, Relief, and Economic Security (CARES) Act allowed them to suspend their federal student loan payments for a time — but when the term of the act was over, many became delinquent on their loans.
With a series of missed payments on your record, your score can drop faster than you’d think. This can cause landlords to reject your rental application, or banks to turn you down for a loan. But the good news is, you can also improve it in a matter of months.
Here are our top tips for getting your credit score back in the 700s.
Lenders use credit scores to determine the risk level when loaning money or allowing an individual to open a line of credit or credit card account. This includes loans such as mortgages — but landlords can also request a credit report from potential tenants to help them decide whether the tenant is likely to miss rental payments.
A low credit score can impact whether you’re accepted for loans. It can also mean that the interest rates for any new loans or credit cards you apply for will be higher than average. Scores can range from 300 to 850, with a score of over 740 seen as the most desirable.
You can request a credit report through your bank or an independent service. But this also comes with a catch — requesting a report too often can lower your score. Instead, check your credit once per year to avoid these penalties.
You can still monitor your score with what’s known as a “soft pull” credit check, which won’t affect your rating. The good news is that there are a number of online services and apps available that monitor your rating for free without impacting your score.
