Can you have a 700 credit score with collections? This is one of the most frequently asked questions in the credits industry and if you still don’t know the answer to the question then you are on the right page. Continue reading to find out everything you need to know in this regard.
Can You Have a 700 Credit Score with Collections
Theoretically, it is very much possible to get a 700 credit score with a collection report on your credit report. It is however not very common with traditional scoring models. You should know that a derogatory mark such as a collection account on your credit report can make it really hard to get a good credit score like 700 or even over.
Can Paying Off Collections Improve Your Score
Newer credit scoring models as you should know do not include collection accounts that have a zero balance, thus meaning that even when you pay off your balance, you should get to see your credit score increase. That being said, older models in the industry still factor in collection accounts even in the event that they have been paid off. Some lenders in question still make use of the older scoring models, most especially mortgage lenders, so it is very important to be aware as either could be used.
How to Improve Your Credits Score After Collections
In the event that you have just recently had a collection account on your credit report, there are many things that you can do to improve your credit score. A 700 credit score may just not be very difficult to reach if it is that you have paid off your collection account and that you are using one of the newer credit scoring models. If you however, want to play a more active role in regards to boosting your credit score, there are a couple of strategies that you can employ to get the results you want to see.
Here are a couple of things that you can keep in mind when you are rebuilding your credit after a collection account;
Prevent a New Collection Account
In order to ensure that your credit recovers quickly, you should do whatever you can to prevent any new collections from being created for debts that you have accumulated. This will simply mean that you need to be very careful as to not to have any late payments in your payment history.
Late payments in question have the potential to harm your credit, but not handling the required payments also can lead the lender in question or the credit card issuer to sell the remaining balance to debt collectors. A secondary collection account on the other hand will not just stall your efforts to improve your score but it will also lead to bad credit that is even much harder to fix.
Lower the Utilization of Your Credit Card
One of the most reliable and effective ways to give your credit score a major boost is to lower the utilization ratio of your credit. And if it is that you are approaching your credit limit on all your credit cards, then you likely do not have much available credit as well as a very high utilization ratio. Paying down the balance of your credit cards up until you have 70% of your total credit limit in available credit will significantly improve the score of your credit.
Stop Applying For New Credit
After you have finally paid off your collections, you should do well to take a break from applying for any new credit. All applications for new credit, whether that it is for credit cards or loans, will create a new hard inquiry on your report. And you should know that too many hard inquiries within a short period of time can result in bad credit, so it is a good idea to take some time off so that your credit in question has time to recover.
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