It could take several years to build your credit from 400 to 700. The exact timing depends on which types of negative marks are dragging down your score and the steps you take to improve your credit going forward.
You can use WalletHub’s free credit score simulator to find out how specific actions will affect your score and how long it will take to reach your credit score goal.
Average Recovery Time for Negative Marks on Your Credit Report
| Action | Average Recovery Time |
| Applying for new credit | 3 months |
| Closing an account | 3 months |
| Maxing out a credit card | 3 months |
| Missing a payment, default | 1-2 years |
| Bankruptcy | 7-10 years |
Source: VantageScore
Derogatory marks, such as collections or bankruptcies, significantly lower your credit score. However, the negative impact declines as time goes on. You can expedite your credit score’s recovery, too.
How to Improve Your Credit Score From 400 to 700
To raise your score as soon as possible, you must inundate your credit reports with positive information. The two most important factors affecting your credit score are payment history and credit utilization. Below, we highlight some of the steps you can take to improve both.
Pay All of Your Bills on Time
You have to consistently pay all of your bills on time in order to build a good or excellent credit score. Even one late payment on your credit report can cause your score to fall by up to 100 points, or even more in some cases.
Late payments can indicate to lenders you are not reliable when it comes to managing your financial obligations, which can make it more difficult for you to obtain credit in the future. If you are having trouble making payments, you should contact your creditors as soon as possible to discuss your options.
Reduce Your Debt
The more debt you have, the worse it generally is for your credit score. You can employ a variety of strategies to help reduce your debt, including simple budgeting and using a balance transfer credit card or debt consolidation loan to lower the cost of what you owe.
In addition, you could attempt to negotiate with creditors to lower your interest rates or monthly payments, or seek professional guidance from a non-profit service. Effective debt management can help you improve your credit score and maintain financial stability in the long term.
Use a Secured Card Responsibly
You can use a secured credit card to build a history of on-time payments. Secured cards usually require a deposit, the amount of which also serves as your credit limit, making them easy for people with a 400 credit score to get approved for. You can compare the best secured cards for free here at WalletHub.
Bring Your Utilization Below 30%
Credit utilization measures how much of your credit limit you’re using, based on your monthly statement balance. It’s calculated for each line of credit you have as well as for all of them together. Keeping your utilization below 30% is good for your credit score, and a ratio of 1-10% is ideal. High credit utilization can signal that you are relying too heavily on credit and may not be able to manage your debts effectively.
You can use WalletHub’s free credit score simulator to find out how specific actions may affect your credit. You can also get personalized credit-improvement tips from our analysis tool.
This answer was first published on 04/04/23. For the most current information about a financial product, you should always check and confirm accuracy with the offering financial institution. Editorial and user-generated content is not provided, reviewed or endorsed by any company.
As an expert in personal finance and credit management, I have extensive knowledge in the dynamics of credit scores and the intricate details of credit improvement strategies. My expertise is backed by a deep understanding of the financial industry and continuous engagement with the latest developments in credit scoring methodologies.
The information provided in the article underscores the critical importance of credit scores and offers valuable insights into the factors influencing credit score recovery. It aligns with my expertise, and I can further elaborate on the concepts discussed.
The average recovery times for various negative marks on a credit report, such as applying for new credit, closing an account, maxing out a credit card, missing a payment or defaulting, and bankruptcy, are accurately presented. These timelines are essential considerations for anyone aiming to enhance their creditworthiness.
The article rightly emphasizes the impact of derogatory marks, like collections or bankruptcies, on credit scores, and it highlights the diminishing negative impact over time. This aligns with established credit scoring principles, where recent negative events have a more substantial impact than older ones.
To expedite credit score recovery, the article recommends inundating credit reports with positive information. It correctly identifies payment history and credit utilization as the two most influential factors affecting credit scores. This aligns with industry standards and reinforces the importance of responsible financial management.
The suggested actions to improve credit scores, such as paying bills on time, reducing debt, and using a secured credit card responsibly, are solid strategies rooted in credit management principles. These recommendations are in line with best practices for building and rebuilding credit.
The mention of WalletHub's free credit score simulator as a tool to understand how specific actions may affect one's credit score is a valuable resource. Such simulators provide individuals with insights into the potential outcomes of their financial decisions, empowering them to make informed choices.
In conclusion, the information presented in the article is well-founded and aligns with established principles of credit management. The actionable steps provided are practical and can significantly contribute to improving credit scores. For those looking to navigate the complex landscape of credit improvement, following these guidelines is a sound approach.
