Climbing your way to the top of the credit score mountain.

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Do you have a top-notch credit score? If you have a 720 or higher FICO score, you may be patting yourself on the back, as that’s commonly considered a superior score. But most people don’t realize there is another whole level to climb on the credit score mountain and reaching the peak will get you even better savings on interest rates, mortgages and loans. FICO scores go all the way to 850, yet many people stop looking upward once they achieve that 720 or even 740-or-better score.

In fact, 32.8 million people have FICO scores between 700 and 749 but approximately 70 million consumers with FICO scores above 760. But that’s just base camp on the credit score mountain because roughly 36.4 million people have scores between 750 and 799 and 38.6 million are in the 800-to-850 range.

Only about 1% of people with FICO scores, around 2 million individuals, ever reach the summit with a score of 800-850.

So here are 10 strategies to reach that perfect credit score:

1. Always pay on time.
It may seem like basic advice, but even one late payment or derogatory item on your credit report can hurt your score on a long-term basis, since they “stick” for seven years. According to FICO, 96% of people with a FICO score of 785 or greater have no late payments on their credit reports, so be one of those people who have a spotless payment history if you want the perfect FICO.

It’s a good idea to pay well ahead of the due date and give a quick call or log in to your account to make sure they payment was received and processed. Since payment history is 35% of FICO’s scoring model, paying on time is crucial.

2. Check your credit report periodically.
It’s important to make sure that there are no errors on your credit file and everything is in order. These days, you also need to make sure that your identity hasn’t been stolen or compromised, which effects up to 1 in 8 Americans every year. You can receive a free copy of your credit report from each of the three bureaus once per year, or an ongoing credit monitoring service is a wise idea if you want the best score.

3. Spend less and pay down your balances.
FICO calculates a significant portion of your score by your credit utilization ratio – how much debt you keep to how much your total available balances are. Common advice is that you should keep that ratio at or below 30% ($3,000 of debt for a credit card with $10,000 available. But credit experts now suggest that 10% or less is a better ratio to maintain to boost your score to the top. (A survey of those who had the top scores revealed their average credit card balances relative to their limits was just 7%.) However, don’t go all the way to 0% because it won’t show an established payment history they can use in their calculations (you won’t have any payment.)

FICO calculates 30% of their scoring model by the overall money you owe and how close you are to the limits on your credit cards and revolving debt, so low balances and healthy ratios are the key to a top score.

4. Don’t wait until your monthly bill to make payments.
Of course it’s easy for consumers to pay on time once they get their monthly bill, but that’s not the best way to maximize your credit score. Each creditor has a report date, when they send their information into the credit bureaus and FICO. If you use your credit card a lot and pay it off at the due date, the higher balance will always show on your credit report that month because report date is before due date. So experts recommend you make payments well before you receive your bill and the due date. Try paying off (or down) your purchases at the end of every week for the best credit score. Online payments are usually processed in 2-3 days, so that’s an efficient way of paying before it reports.

5. Increase your credit limit when offered.
One way some people try to increase their credit score is by increasing their debt to total credit ratio. These days, credit card companies often mail offers to expand your available debt based on good practices. Take them up on it, but don’t charge more or use the added debt. By keeping the same low balance with a higher total credit limit, your ratios look much better to FICO, improving your score!

6. Don’t keep too many credit cards.
To get to the top of the credit score mountain, it’s recommended you don’t use too many credit cards because FICO may ding you. Try to use only one or two cards with high balances on a regular basis. Charge cards like American Express may be your best bet, because the balances don’t report to FICO since you have to pay them off in full every month.

But you should use each of your credit cards at least once a month, or else they may be shut down for lack of use, which could inadvertently hurt your score.

7. Don’t tolerate incorrect or inaccurate information.
If you notice that there is something incorrect listed on your credit report or a duplicate item, you should have it corrected or removed by filing a dispute with the credit bureaus. Blue Water Credit can help you dispute and remove negative and inaccurate items.

8. Keep a good mix of credit.
Consumers with FICO scores above 760 have, on average, six accounts that are currently “paid as agreed” and an average of 3 accounts with a balance. Those with a mortgage and installment loan in good standing also show a strong mix of credit use, improving their score. 10% of your credit score depends on your track record with responsibly managing a mix of credit.

9. Older is better.
Most super scorers also have, on average, an oldest account that’s 19 years old. The average age of their accounts is between 6 and 12 years old and they opened their most recent account 27 months ago or more. 15% of FICO’s scoring is calculated by the credit history.

10. Shop around in clusters.
10% of your FICO score depends on whether you have applied for credit recently, so you want to avoid too many credit pulls and “hard” checks. But of course it’s necessary to search for the best loans, especially on big-ticket items like mortgages and car loans. So when you “shop around”, make sure it’s all within a 30-day window.  FICO won’t factor those pulls into your score, and even if they are spread out within 45 days, they’ll only be treated as one credit inquiry.


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