Get on the fast track to an 800 credit score!
The national average for FICO Scores may be right around the 700 mark these days, but that good score still leaves a lot of room for improvement. In fact, FICO ranges from 350 to 850, and a score about 800 is considered superb. However, only 10% of the American public have achieved a credit score of 800 or above, and a tiny segmeny of 0.5% can boast about a perfect 850 FICO Score.
If you’re looking to get on the fast track to an 800-credit score – or higher, here are some tips to get you started:
Always pay on time
If you want to see your credit score soar into the 800s, the single most important thing you can do is to pay all of your debts on time every month. In fact, 35% of your credit score is calculated based on your track record of paying your accounts, and missing a payment or being late even once can severely impact your score.
Remember that it may not always be your fault or intentional that you miss a payment or pay late, as “life happens,” although you’ll be held accountable either way. It’s no wonder why the average American has six late payments across their credit reports!
So, the best way to make sure your credit is clean and rising towards the 800s is to make sure your payments are all sent in head of time, and to confirm they were received before their due dates!
Mind your credit utilization
One of the major factors that goes into your credit score calculation is utilization (it counts for 30% of your score), or the ratio of your current outstanding balances compared to your total available debt. So, if you owe $1,000 on a credit card and the total available is $3,000, you have a 30% utilization rate.
The key to build a good credit score is to keep your utilization below 30%, which signals that you’re using your credit responsibly and not overburdened.
However, if you want to achieve a top-flight credit score in the 800s, it’s recommended that you lower your utilization rate all the way down to 10% – or less! In fact, consumers with “super” credit scores well into the 800s have, on average, a 7% utilization rate.
Don’t necessarily close old accounts
15% of your credit score is computed by the history of your various credit accounts, or how “seasoned” they are. At first glance, many consumers think it’s common sense to pay off and close a debt, which they believe will improve their score.
Unfortunately, that’s usually not the case when you’re closing and canceling older or well-seasoned accounts. What they’ve just done is erase an established and mature history of on-time payments, which the credit bureaus used as evidence of responsibility.
So, while it’s best to have several well-seasoned and older accounts in good standing if you want a score in the 800s, closing these down could actually do the opposite and sink your score!
As a perfect example, the average person with an 800+ credit score has been using credit for22 years (even if their accounts aren’t all that old), which demonstrates longevity and stability.
Keep a healthy mix of credit
If you’re going to reach the top of the credit mountain with a score in the 800s, attention to detail is a must. And while it only makes up 10% of your score’s calculation, a healthy mix of different types of accounts will give you a boost.
For instance, you don’t want to keep too many credit cards but no auto loan, or have several installment loans but no mortgage, etc. In general, keep a mix of well-respected, positive tradelines from quality installment, revolving, home loans, and more.
Don’t go crazy with new credit applications
If you truly want to get on the fast track to an 800 FICO Score, exercise caution when it comes to applying for new credit. Even something that seems innocent like applying for a retail store card to save 20 percent when you check out, or signing a pre-approved credit card offer you receive in the mail can raise a red flag (albeit a small one) with the credit bureaus, and your score could take a slight hit.
It’s also recommended that you “rate shop” for big purchases like mortgages or auto loans within a two-week or month timeframe instead of spreading them out.
Hard credit inquiries and applying for new accounts may not seem like they would have a big effect on your credit score, but when you’re on the fast track to 800, it all matters!
If you have any more questions or would like to get on the fast track to an 800 credit score, just contact Blue Water Credit for a complimentary consultation!