800 plus Credit Score Challenge
Your credit score falls on a scale between 300 to 850.
Generally speaking, here’s how lenders view different scores:
- 800 plus credit score is excellent
- 720 to 800 is very good
- 640 to 720 is average
- Below 640 is bad
Having an 800 plus credit score is what you want to shoot for. Around 20% of consumers have a score this high.
You can start taking steps to raise your score by following these seven habits of people with 800 plus credit scores.
Habit #1: They Monitor, But Don’t Obsess Over, Their Score
Someone with an 800 plus credit score knows they have an 800 plus credit score. This might sound obvious but most consumers don’t know what their credit score is.
They go to apply for a loan, then cross their fingers hoping their credit score has improved.
Habit #2: They Set Up AutoPay
The largest factor in your credit score is your payment history.
If you miss a payment, whether that’s a credit card, mortgage, or say a medical bill goes to collections, this negatively impacts your credit score.
The best way to overcome this is whenever possible set up bills on autopay. Even if it’s the minimum payment.
For those bills without an auto payment option, set up an alert in your calendar or phone.
Habit #3: They Keep Their Credit Utilization Rates Low
According to FICO, the average credit utilization of someone with an 800 plus credit score is 7%.
Meaning they use only 7% of the credit limit available to them.
So the first rule is to keep balances low.
For example, if you have $10,000 in available credit, keep your balance to less than $700.
Just as easily, you can increase the amount of credit available to you.
Two easy ways to accomplish this are to:
- Call your current credit card provider and ask to increase your limit
- Take out a new credit card
Habit #4: They Don’t Close Accounts
15% Of your credit score is made up of the length of your credit history. The longer the better.
Your oldest open account determines the length of your credit history.
For most, this is a credit card.
This is why it makes sense to apply for a good no-fee credit card which you can count on to stay open for some time.
If you’re considering canceling a credit card because of an annual fee, check first to see if the issuer has any no-fee cards you can switch to before closing the account.
Habit #5: They Know When To Apply For Credit
10% Of your score is determined by recent credit inquiries. A lot of new applications for credit may signify financial trouble.
According to FICO, those who have a score over 800 last opened a line of credit on average 15 months ago.
Keep this in mind if you’re planning on buying a new home in the next few years–as the time you want to start raising your credit score is now.
Habit #6: They Pay Balances In Full
You can have an 800 plus credit score, yet still be running a credit card balance. After All, you’re not missing a payment.
So why do those with an 800 plus credit score pay in full?
Because making minimum payments eventually catches up to you.
There are two ways:
- Your credit utilization will rise over time due to the impact of interest
- So will your average balance rise overtime
Making minimum payments may be fine this month but over time it’s impossible to maintain an 800 plus credit score.
Habit #7: They Know How To Choose Credit Cards
One option for those struggling with debt is to take out a secured card. This requires you to make a deposit, however, a secured card can help build your credit score fast.
Another smart credit card strategy is to have a stable of no-fee cards you plan to keep for a long time. This will help lengthen your credit history.
This is especially important for those who like to play the points game, where you’re applying for credit card offers consistently.
Another thing to keep in mind here is retail cards. You may get a nice discount for signing up for a retail card, however, retail cards typically have low limits. Therefore, your credit utilization may be high. That’s why it’s much better to get a card from a major bank.
What can we conclude?
Having an 800 plus credit score isn’t out of reach.
The habits to maintain this type of score are quite easy and should come quite passively.
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