Can You Have a 700 Credit Score with Collections? 

Having a 700 credit score with collections on your account is highly unlikely. This is simply because having a collection appear on your credit report is very damaging to your credit score. Given that 700 is a pretty good rating, it doesn’t always pair up well with collections activity.

Managing your credit score is a fine art – however, there may be occasions when you end up in debt and are between a rock and a hard place trying to rebuild a healthy credit history. But what are the credit score classifications, how do credit agencies score you, and how can you improve your scoring when you’re out of collections? Let’s take a look and find out…

What are credit score classifications? 

To give you a clearer idea of what 700 is worth as a credit score, it’s important to understand where it lies in terms of the classic credit score classifications. 

Here are the most common credit score classifications from least favorable to most desirable:

Poor 

Generally speaking, any score from 300 to 579 is considered poor. Once you’re in this kind of area, it can be very difficult to be approved for new credit. And sadly, any loans or other products available to those with a poor credit score tend to come with very high-interest rates, making them less than ideal.

Fair

If you have a credit score anywhere from 580 to 669, then you have what is known as fair credit. That means you can access more options than someone with poor credit. However, as someone with fair credit, you will still have to face higher interest rates than most. It’s not the perfect place to be in, but it’s not the lowest rung.

Good

Anyone with a credit score from 670 to 739 is considered to have a good credit score. If you happen to have a 700, you’re doing perfectly fine.

Holding a “good” credit score changes everything and means you are more likely to get pre-approval offers from banks, credit card companies, lending companies, and more. And, it should mean that any products you do receive arrive at market-equivalent rates. Things are looking up!

Very Good

Now we’re talking! If you have a credit score anywhere from 740 to 799, then you’re definitely in a very good position! This kind of credit score opens up doors for you regarding competitive interest rates and better offers, making denial for loan requests very unlikely. 

Excellent

Anyone with a credit score from 800 upward is at the very top of the tree. And, with this kind of credit score, you will have access to the most competitive interest rates and best deals on the market. You’re the kind of customer that money lenders want to do business with.

How do credit agencies score me? 

Although your credit score may seem fairly arbitrary, it is carefully calculated based on a handful of different financial factors. Let’s take a look through them.

How much you owe

Part of your credit score is calculated based on how much money you currently owe. That’s why having too much debt shows lenders that you may not be reliable at paying money back. If you hold a high credit utilization ratio, you’re also likely to score low on the scale.

Your credit utilization ratio is the total amount of debt you have in credit card balances compared to the total credit limits that you have been approved for.

Your previous payments

Your payment history is the most important element of your credit history, especially when it comes to your credit score. Every time you pay a debt payment on time, you will help the integrity of your payment history, thus boosting your overall credit score. 

However, any late payments will be noted on your credit history and can prevent you from getting low-interest loans – if at all, in some cases.

Any new borrowing

Any new credit accounts and borrowing initiated will affect your credit score. Of course, soft inquiries and pre-approved loans are included in your credit report, but they will not be used when calculating your credit score. 

That is why it is ill-advised to make multiple hard inquiries and open new accounts in a short amount of time, as it can quickly lead to lower credit scores. 

The types of credit you apply for

Banks and loan companies like to see a good credit mix. For example, if you have a mortgage, car loan, credit card, and so on, it shows that you can handle different kinds of credit and manage your finances well. 

However, making multiple credit applications at once can hinder your credit score and should ideally be avoided. 

How long you’ve borrowed for

The length of your credit history and how long you’ve borrowed for makes an impact on your overall credit score. For example, the age of your oldest credit account compared to your newest one will help to give a broader picture of your credit history and how you have taken steps to pay money back throughout the years. 

How does collections activity affect a credit score?

Perhaps surprisingly, each collection account can take over 100 points off your credit score. So, having multiple collection accounts at once can make serious dents in your overall scoring. 

And, believe it or not, if you have a credit score of 700 or over, your credit score will be more easily affected by a collections account than someone with a lower score. 

But, before you begin to panic, it’s important to remember that things aren’t so black and white. The way collections affect your credit score depends on your credit history. And, the importance of a collection account reduces over time when it comes to your credit history. The farther away from it you are in time, the better. 

So, if you have multiple collections accounts, it is wiser to pay off newer debts before older ones, as it will help improve your credit score. 

Generally speaking, collections show on your credit report for up to seven years. And, when you’re trying to improve your credit, getting rid of collections is the best way to start. 

How to improve your credit score when you’re out of collections 

Any activity with collections will always harm your credit. That is why getting rid of them as soon as possible is so important. And once you do, it’s vital to get back on track and start working on improving your credit score again. 

Here are some of the best ways to improve your credit score once you are out of collections.

Dispute your score with credit bureaus

Disputes aren’t always possible, but the avenue is still worth pursuing. For example, if a collection activity has been reported incorrectly or fraudulently, you can report them as such to specific bureaus. 

They host dispute forms on their respective websites, and have 45 days to investigate any disputes – and notify you regarding whether or not they will update your credit report, or remove the collection entirely. 

However, this takes time and is only useful if there has been a mistake on your credit report. 

Keep your account clear and paid off

The best way to keep your credit report clean is to ensure no more collections activities are arising any time soon. This means paying attention to all of your debts and ensuring that you keep up with your loan payments. Any late payments will only harm your credit score further. 

Take out a secure card and keep paying off your debts

Your credit utilization ratio will need addressing if you wish to improve your credit score. If you are approaching or have exceeded your credit limit on all of your cards, you will have a very high utilization ratio, which is never good for a credit score. 

Remember to keep paying off your debts and try to balance how you use each credit card to better ensure that you do not go over those limits again. 

Negotiate with a collections team to “delete” your debt

Sometimes, when you are paying off a collection account, you can negotiate with the team to have a collection deleted from your credit report. You will need to send an official request in the form of a “pay to delete” letter to the debt collector directly. 

In the letter, you will need to clearly note how much you are paying and the stipulation for the collection to be removed from your credit report. 

Ideally, you should ask for a confirmation letter before making any payment. Then, once the payment is made, the collection team should delete the collection from your credit report, which will ultimately help your credit score. 

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