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If Your Credit Score has Dipped Below 700, Consider 3 Steps Now  

You’re not alone if you’ve lost wages or reallocated funds for health care and bills. Here’s what to know about credit. Plus: Free live event with The Money Coach Lynnette Khalfani-Cox

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Credit scores. They matter. And if you’ve spent years building to a very good or exceptional rating, you may be upset if your score has dropped as we deal with the current economic climate. You also may feel frustrated if your score isn’t where you’d like it to be. After all, you’re not alone if you’ve recently lost wages or reallocated funds for health care costs and bills.

But don’t beat yourself up about this situation. If your score has dropped, first understand what that means and why it matters. Then consider these tips to get it back on track.

What is a credit score, and how does it affect us?

A credit score predicts how likely you are to pay a loan back on time. And it can vary depending on which entity is issuing it, which means there is no “one” score.

Generally, companies “use a mathematical formula — called a ‘scoring model’ — to create your credit score from the information in your credit report,” the Consumer Financial Protection Bureau confirms. (You can review your report and get one free copy every 12 months from each credit reporting company. Currently, these companies also offer free weekly online credit reports at

As the bureau confirms, factors that make up a typical credit score include those that follow:

  • Your history with paying bills
  • Your current unpaid debt
  • Your number and type of loan accounts
  • How long you have had your loan accounts open
  • How much available credit you’re using
  • Whether you have new applications for credit
  • Whether you have had a debt sent to collection, a foreclosure or a bankruptcy, and how long ago that happened

There’s a lot at stake when calculating these scores. For instance, the higher your score, the easier it can be to qualify for a loan and to get a more competitive interest rate. In fact, “a credit score of 700 or above is generally considered good,” when it comes to scores that range between 300 and 850, confirms credit bureau Experian. Meanwhile FICO says a “good” score ranges between 670 and 739, 740 to 799 is “very good” and 800 or above is “exceptional.” While most consumers’ credit scores are between 600 and 750, Experian notes, the average FICO score in the United States reached 710 in 2020.

It’s also important to check your credit score and monitor it. Your bank, credit union or credit card issuer may offer free access to one of your credit scores.

What to do when your credit score falls

Just as various factors can affect your credit score, there are various ways to help build it back up. Certain strategies may help within a credit cycle or two, while others may help within a few months. But if you’ve had a big financial event, it could take years for the event to resolve.

“[I]f you miss payments on multiple accounts and you fall over 90 days behind before catching up, it will likely take longer to recover,” Experian explains, noting the effects of negative events will lessen over time. It adds: “Most negative marks will also fall off your credit reports after seven years and stop impacting your scores at that point if not sooner. Chapter 7 bankruptcies can stay for up to 10 years, however.”

These issues can be complicated, so if you need help with your situation, feel free to consult a certified financial professional. That said, here are some actions to consider right now.

  • Don’t miss payments. From now on, think of yourself as a debt-paying machine. Pay all amounts due, even just the minimum, on time. If you need to set calendar alerts or account alerts to receive texts or emails when payments are due, do that. And make sure you have enough money in your bank accounts when bills are due. This may mean that you want to turn off automatic payments and send manual payments instead. 
  •  Pay off past-due balances and pay down existing debt. If you’re in the hole with a creditor, prioritize which debts take precedence and pay off that debt as soon as you can. You also can call to ask about a payment plan if you need assistance. Also, if you can’t pay a debt, think about which expenses you can reduce — do you really need premium cable, for instance? — or consider a side hustle or otherwise increasing your income to get the funds you need. (If you receive Social Security and are trying to keep your income under a certain level, you may want to talk with a financial professional about how to manage your income and debt.) The pay-down process can require sacrifice. But it can be worth it.
  • Avoid large purchases and limit applications for new accounts. Credit applications can lead to “hard inquiries” on your credit report. And while one-off inquiries can have little effect, over time they can have bigger effects, Experian reports. One exception is when you’re rate shopping for a new loan. But do you really need that shiny new thing? Since you can use extra money to pay down existing debt, try to avoid creating new bills for yourself. Bonus tip: Be careful with how you treat accounts once you pay them off. Keeping them open can show more available credit, which can help your score.

Attend a free live event! “Money Talks: Manage Your Debt for More Peace of Mind”

You also can benefit from learning as much as you can about personal finance topics like credit, saving and investing. The more knowledge you have from reputable sources, the better when it comes to managing your current accounts and positioning yourself for the future.

One way to keep learning? Attend a new AARP Facebook event, “Money Talks: Manage Your Debt for More Peace of Mind,” on Oct. 27, 2021, at 7 p.m. ET. There, money coach and New York Times best-selling author Lynnette Khalfani-Cox discusses how to manage debt and have more peace of mind in the process. Jean Chatzky, best-selling author and CEO of HerMoney, and George Mannes, AARP personal finance editor, serve as moderators. You can RSVP and register on the Sisters Facebook page or at Or make a note to catch the replay on our Facebook page.

And finally, be patient. When it comes to improving your credit, you may play more of a long game than you anticipated. But the game is winnable … in time.