6 Most effective strategies to achieve 800+ credit score
Your credit score is one of the most important data that may influence your financial life. This three-digit number will show your creditworthiness or somehow your affordability to repay the money you borrow from lenders.
As per the FICO.COM - The average U.S. FICO® Score hit 706 in 2019. “Since bottoming out at 686 in Oct 2009, there have been nine consecutive years of increases in the national average FICO score,” writes Ethan Dornhelm.
The widely popular score ranges at 300-850, on FICO and at its competitor VantageScore. FICO reveals about 1% of its scores reach 850. VantageScore spokesman, Jeff Richardson, also added that fewer than 1% of its scores reach 800+ credit scores.
#What are the qualities that 800+ credit score members have?
As per FICO, members of the 800+ credit score club may have these qualities in common:
- They owe less than $3,500 on credit cards.
- They utilize only 7% of their credit limit.
- Credit history of about 25 years.
- No late payments on credit reports (it means since the last 7 years they do not have a single late payment).
How does Fico scoring work?
People normally follow a popular credit scoring model which many other financial institutions also follow. It is known as the FICO (Fair Isaac Corp.) score or FICO score. This score is useful for deciding the affordability of a borrower before lending money or issuing a credit. FICO has a credit score range from 300 to 850. Any score above 750 will be considered as an excellent credit score. As per Wikipedia - “The FICO model is used by the vast majority of banks and credit grantors, and is based on consumer credit files of the three national credit bureaus: Experian, Equifax, and TransUnion. Because a consumer's credit file may contain different information at each of the bureaus, FICO scores can vary depending on which bureau provides the information to FICO to generate the score”.
FICO considers five different factors to calculate score. Those include:
- Your payment history
- How much total debt you have
- How long you’ve had credit
- How much new credit you have
- What types of credit you have used
People may get another credit score model from each of the three major credit reporting agencies – Experian, TransUnion, and Equifax. It is called Vantage score. If you have a score of 720 from Transunion, a score 750 from Experian, and a score 770 from Equifax, then your actual Vantage score will be considered as 750. In this case, the score between the lowest and the highest of the three will be taken into consideration.
Check out FICO's basic credit score range:
- Exceptional Credit: 800-850
- Very Good Credit: 740-799
- Good Credit: 670-739
- Fair Credit: 580-669
- Poor Credit: Under 580
An 800+ credit score is considered an excellent credit score and it will get you some added benefits compared to others.
#What are the benefits of a 800+ Credit score?
So, what benefits can you achieve by gaining an 800 credit score? Is it really necessary to have an excellent credit score after all?
The below-given list only gives you a sample of the benefits that come with high credit scores.
An 800+ credit score gets you:
|Type of Credit||Qualification status|
|Any Credit Card||YES|
|No Annual Fee Credit Card||YES|
|Big Initial Credit Card Bonus||YES|
|Credit Card with 0% Financing||YES|
|No-Foreign-Fee Credit Card||YES|
|Favorite Store’s Credit Card||YES|
|Airline/Hotel Credit Card||YES|
|Best Mortgage Rate||YES|
|Auto Loan with 0% Intro Rate||YES|
|Lowest Auto Insurance Premium||YES|
|Best Personal Loan Rate||YES|
*Data courtesy - wallethub.com
#How do you get an 800+ credit score?
a. Keep your utilization rates below 30%
You need to lower your credit utilization ratio for all of your accounts. If you let your credit utilization creep higher, it will harm your high credit score. If you reach 100% of your credit limit, it can seriously demolish your credit score. The utilization rate is responsible for nearly one-third (30%) of your credit score.
b. Pay every bill on time
Your payment history also makes up a huge part of your credit score. Each and every on-time payment will help you to grow your credit score to your desired level .
c. Upgrade to better credit cards
Some people like to keep their old credit card accounts open and active, which they have since their 20’s. It is good to maintain old credit cards as it will give you a great length of credit history. But if you ignore new credit cards with perks, you could be missing out on some lucrative rewards and benefits, especially with a high credit score.
“Excellent credit scores will qualify you for the latest rare metal or expensive jewel-named cards – whether it’s platinum or diamond or black,” added Rod Griffin, director of public education for Experian.
d. Avoid too many credit inquiries
When you apply for a loan or other credit lines, the lender might perform a credit check. When it happens, it may also include a hard inquiry on your credit report. These hard inquiries may affect your score badly as it influences 10% of your credit score. A difference of 10% might become unpleasant for you as it might turn an 800+ score into a 780, considering other information on your credit report.
When you're ready to apply for a loan or credit card, make sure you do your homework properly to avoid multiple credit inquiries.
e. Have a good mix of credit accounts
The FICO® credit scoring system is designed to favor multiple credit accounts, with a good mix of revolving credit and installment loans.
The credit reports from the three major credit bureaus may include the following items:
- Installment loans, including auto loans, student loans, and furniture purchases
- Mortgage loans
- Bank credit cards
- Retail credit cards
- Gas station credit cards
- Outstanding loans, sold to collection agencies or debt buyers
- Rental data
f. Let negative information age off your credit report
You may have waited a long time to achieve an 800+ credit score with negative items on your credit report. Don’t worry, most negative items will be removed from your credit report automatically after 7 years.
If you can’t remove the negative items from your credit report after that time, then you may contact the credit bureaus and file a complaint. However don’t stop making on-time payments every month.
Although it’s nice to have a perfect or excellent score, to keep that intact is the actual thing. If you have a credit score of 780 or above, the lenders may consider you as a low-risk borrower. You might be offered the lowest interest rates with maximum benefits. Also, your credit applications might get approved easily by most of the lenders.