Do you need to know how to get a 720 credit score in 6 months?
Credit scores range from 350 to 850. 350 is disastrous, and 850 is nigh-unobtainable.
A 720 credit score is almost universally considered a good credit score—it’s good enough to qualify for great rates on any mortgage.
You just need to figure out how to get there.
Whether starting from 600 or 650, improving your credit score to 720 within six months is possible. It all depends on why your credit score is low. And it’s a highly subjective question. After all, if you’re starting from 715, it won’t take any work at all.
Let’s look at how to improve your credit score—fast.
What Does a Credit Score Really Mean?
Before we get into the tips and tricks, let’s discuss a credit score. It isn’t just magic that controls our daily lives. According to FICO, a credit score is made up of the following:
- Payment history (35%)
- Amounts owed (30%)
- Length of credit history (15%)
- New credit (10%)
- Credit mix (10%)
Payment history and amounts owed comprise the lion’s share of your credit score. Every once in a while, the mix is changed a little. Creditors have started weighing your credit score more heavily on frequent activity in the last few years.
What does this mean to you?
If your credit score is 600 because your payment history is terrible, you can’t fix that in six months. But you could still radically improve your score by paying your debts now.
Likewise, if your credit score is 600 because you owe a ton of money on credit cards, adding a new personal loan to your credit mix will not help.
Because It’s Even More Complicated Than That…
There isn’t one credit score. If your FICO is 720, the lender may not see that. Home lenders and auto lenders use different blends of FICO, as do credit card companies. Home lenders use a more conservative, older version of FICO.
Your FICO for home lending will almost always be a little lower than your regular FICO. But don’t despair. Credit standards for mortgages aren’t that restrictive. As long as you can get to 680, you should be able to qualify for most mortgages. 720 gets you a better rate.
You need to create realistic goals for yourself. Realistically, increasing a credit score by about 100 points over six months is possible. It’s not unheard of to do this. But it’s impossible to increase your score by 200 or 300 points. You will need more time.
And time isn’t always a bad thing. It gives you more time to improve your credit and also more time to save a down payment.
Month 1: Get Familiar With Your Credit
It’s time to start taking control of your credit. Frequently, people don’t have bad credit because they’re irresponsible. They just haven’t been micro-managing their credit accounts.
- Pull your credit reports from the three major bureaus: Experian, Equifax, and Transunion.
- Sign up for a credit monitoring account through Experian or CreditKarma.
- Lock your credit report. It’s free to do and will prevent opening new accounts. Even requesting a credit card will add another inquiry to your account. Inquiries for new credit can hurt your score.
- Review your reports and correct errors. There is a “dispute” button right in most credit reporting apps. Correct if you know you paid something on time, but it shows up as late.
- Contact any creditors you defaulted with. Ask for a “pay for delete.” You can pay them cash for what you owe. In exchange, they’ll delete the record.
You will likely discover that your credit score goes up immediately once you start correcting mistakes and resolving defaults, even if not by a lot. At this stage, you should avoid opening new lines of credit or adding to your credit balances.
If you don’t have any credit, this is the time to open a credit card. You should open a credit card that doesn’t have any annual fees. Don’t start using it; just put a single transaction on it every month.
Don’t open any credit later. New credit is generally bad because it shows that you’re actively pursuing credit—something people usually do when they don’t have the cash for things they want. Six months is enough to “age” an account at least a little and start building up your payment history.
Month 2: Start Paying Down Your Debt
Create a plan to pay down your debt. Your debt is important because of your credit score and debt-to-income ratio. A low credit score and a high debt-to-income ratio can disqualify you from a mortgage.
- Consider settling debts. You can contact a lender and “settle” a debt for a fraction of the total due with a one-time payment.
- Start paying off your higher-interest debts first. Debts compound and accumulate. Pay that 30% credit card before the 6% personal loan.
- Don’t worry about student loans or auto loans. If you aren’t close to paying them off (within the next six months), you shouldn’t feel pressured to pay them off.
- Don’t take out any consumer financing. That’s Affirm, Klarna, etc. These services tend to look very bad on your report because each transaction is its loan.
- Put your credit cards on auto-pay. Make sure that you’re never late by making all your payments automatic.
It’s not easy to pay down debt. But if you’re in this situation, you’ve likely already saved your down payment and are simply trying to prepare better to purchase a home. Plus, a good credit score can make it so that you need a lower down payment to qualify.
Month 3: Avoid Any New Debts
Now, you should consistently pay down your debts and avoid new debts. You should check your credit reports regularly to ensure any new errors pop up.
At this point, you shouldn’t be trying to improve your credit through “tricks.” Just keep paying down your debt, and you should steadily see your credit score improving.
Month 4: Check Your Progress
Continue paying down debts and checking your credit reports monthly. Don’t cancel cards as you pay them off. Instead, keep a small recurring subscription on each to keep them active and then pay off the balance in full at the end of every month.
Your ultimate goal is to get your credit balances under 30% of your available credit line. When you are over 30%, your credit score feels the crunch. When you’re under 30%, you should see your credit score markedly improve.
Importantly, you should not seek to close any loans. If you have installment loans like auto and student loans, don’t pay them off. It will hurt you by reducing your mix of credit.
Month 5: Start Shopping for a Mortgage
You should be in good enough shape to start shopping for a mortgage. You can get pre-qualified with a few different lenders. This will help you understand what kind of interest rates and loan products you qualify for.
Your credit score will get hit once when you shop for a loan. Usually, it will go down 5 to 10 points because of the hard credit pull. Shop with multiple lenders within a month; it will only count as a single hit. So, you do want to be coordinated about this.
You may find that your interest rate is already the best you’ll get; if that’s the case, you just need to maintain your good credit hygiene.
Month 6: Get Your Pre-Approval
You should now be able to get pre-approved for a mortgage. You want to find the best interest rate and loan product you can qualify for at this stage. Slowly paying off your debt, paying things on time, and avoiding default should make it so that your credit score has vastly improved.
By month 6:
- You should have all your high-interest debts paid off.
- You should be below 30% credit utilization.
- You should not have any new credit accounts.
- You should not have any new late payments.
Get quotes from at least three different lenders. Compare not just the interest rates but the fees, terms, and conditions of each loan. The credit score pulled now will likely remain your credit score throughout the mortgage process. Lenders don’t pull credit again within 60 days unless you request a rescore.
What is a Credit Rescore?
A credit rescore is a new credit report pulled to change your credit score. Lenders will sometimes do this if you have actionable items you can dispute, such as errors on your report.
You can also ask for a rescore if you have changed your credit habits and want to show improvement. For example, you may have paid off a credit card and want to show that you are now using less available credit.
To get a rescore, you must ask your lender for one. They will then pull a new report and update your score. Remember that this process can take a few days, so don’t do it last minute in the mortgage process.
Do You Need a 720 Credit Score?
A 720 credit score is not required to get a mortgage, but it will get you the best interest rates. A credit score of 720 or higher is considered “excellent.” Even with a lower score, you can still qualify for an FHA loan with a minimum credit score of 580. You may pay a higher interest rate if your score is below 720, but you can still get a loan.
What If You Don’t Make It?
If you don’t reach a 720 credit score by month 6, that’s OK. You can still get a pre-approved mortgage and shop for the best interest rate. Stay on top of your credit habits and pay your debts on time. While looking for the right house, your credit score may improve.
It’s important to remember that your credit score is just one factor in the mortgage process. Lenders will also examine your employment history, income, and debt-to-income ratio. As long as you have a good overall picture, you should be able to get a mortgage, even with a lower credit score.
As you improve your credit situation over the next six months, think about your financial situation, too, if you can, try to save up for a larger down payment. A 20% or more down payment will help you avoid private mortgage insurance (PMI) and get a lower interest rate.
Forming better credit and financial habits will help you throughout your life, especially now that you’re purchasing a home. And the last thing you should do once you purchase a home is start spending money on credit again.
Everyone’s credit situation is different, so it will depend on what your starting point is. If you have a lot of debt, paying it off at once could boost your credit score significantly. The easiest and fastest way to improve a credit score is to correct errors, but the most effective way to improve a credit score is to pay debts.
Getting a 700 credit score in 6 months is possible, but it will depend on your starting point. If you start at 650, it won’t be that hard. Paying off debts will likely boost you up to 700. If you’re starting at 480, it may be impossible.
Yes, credit scores can improve in 6 months. If you pay off your debts, your credit score could improve when your new balances are updated. But you will not go from 500 to 700 overnight. It takes time.
You can build credit relatively quickly, but it will take a few months. The fastest way to build credit is to use a credit card responsibly and make sure you make all your payments on time. You should also try to keep your balances low, which will help improve your credit utilization ratio.