Secrets of How To Get a Good Credit Score


So is 800 a good credit score? Well according to Fair Isaac (developer of FICO) only 13% of Americans have a credit score above 800. When you consider the national average is 692 and the median is 723, being in the 800 and over crowd is an exclusive club indeed. But how do you get there?

If you want to know how to get a 800 credit score, you should go straight to the horse’s mouth….

  • MyFICO – This is FICO’s site for consumers. Yeah, a lot of it is trying to sell you on their credit score monitoring services – but aside from that – there’s a great deal of free information in the education and community sections of their site.
  • Members of the 800 club – Know someone with a FICO score in this range? Grill them on the types of accounts they have, their credit utilization, payment history, and more. Want someone to start with? Well in a recent post I wrote about my credit score of 790 which you may find useful (used to be 800 before some recent credit inquiries were made).
    Is that too much work? Okay, here’s a cheat sheet for you…

If you don’t want to spend your waking hours scouring the MyFICO site and interrogating those who already have a high score, I’ve created the following cheat sheet just for you.

This information is derived from the clues that MyFICO gives about so called “High Achievers” which are those with a score of 760-850, as well as my own experience and knowledge.

1. Age of accounts

Unfortunately this is one of the few things that you can’t control. Just like you can’t accelerate the aging of a fine wine, nor can you speed up the clock on the age of your credit account.

The oldest revolving account (translation: credit card) for the “high achievers” is pegged at 19 years on average. Furthermore, the average age across all their accounts is between 6 and 12 years.

What does this mean? Age discrimination that’s 100% legal! Even though I first hit 800 in my mid-twenties, that is extremely rare and for most, they may not hit that number ‘til their thirties.

2. Bad debt

Collection or public record on your file? On MyFICO it says that “virtually no” high achievers will have that. So even if you do everything else right, don’t think you can get away with having that one ER bill charged off or that old credit card from 5 years ago in collections.

Don’t get me wrong, you can have charged off debt and a few years later, it might be possible to have a FICO in the mid-700’s. But if you are shooting for a credit score over 800, then you need to seriously do whatever it takes to prevent charge-offs, or if they’re already on there, find a way to get them removed.

3. Number of accounts

According to a post by a MyFICO moderator, 6 accounts currently being paid as agreed is the average for high achievers. Moreover, there’s an average of 4 to 5 credit cards on file (which includes accounts both currently open and those that have been closed but are still on the report). Just a little FYI though – I have many, MANY times more cards than that!

So for all the haters out there that love to harp about how evil credit cards are… just remember, when used responsibly, they can be quite helpful for your credit score! If you honestly think you’re going to get to 800 and above by only having a student loan and car loan on record, then I have some swampland in Florida I would like to sell you.

It’s a Catch-22. If you have bad credit, you pay more in interest on home loans, auto loans, credit cards and more, making it more challenging to make your payments, get out of debt and improve your credit score. On the other hand, if you have good credit, you pay less in interest, increasing the likelihood that you can manage your monthly payments, keeping your credit score high and in tact. The truth is, no matter what your credit score is now, you can achieve the “platinum standard” of credit—a score above 800—and nab yourself the best deals on life’s largest purchases. P

As your average 30-something, I’ve been in debt, struggled to pay bills and never had a substantial income to bail me out. But, the one thing I do have (now, anyway) is a credit score of 808. And I’m here to tell you my secrets:P

Never miss a paymentP

I’ve never had a payment reported as late on my credit report. This is crucial to your credit score. Payment history makes up about a third of your credit rating. If you have a good score and miss just one payment, your credit score can suffer upwards of 110 points. Besides debt settlement, foreclosure and bankruptcy, a late payment is about the worst thing you can do to your credit score.P

Of course, I’m human. I’ve had flaky moments where I forgot about a bill’s due date and made my payment a few days late. While I was slapped with hefty late fees, I did not get the black mark on my credit report. But I may have been lucky.P

Technically, a “30-day late” is any payment received one to 30 days after the due date,according to FICO. However, in many cases, your bank, creditor or lender will give you a grace period of a few days to up to the next due date before reporting your payment as late to the credit bureaus. Find out what your grace period is so you don’t find yourself in a credit crisis.P

Keep your balances low and your limits highP

Another good chunk of your credit score is determined by your credit utilization, or how much credit you use (balances) compared to how much credit is available to you (limits) – the lower, the better. A good rule of thumb is to keep your balances well below 50 percent of your limits. As soon as you hit the 50 percent mark, your score will begin to take incremental hits. On the other hand, the lower you keep your balances below that 50 percent mark, the more your credit score will incrementally benefit.P

As a point of reference, the average credit utilization of a person with an 800+ score is 7 percent, according to FICO. Mine averages out to 2 percent, depending on when I pull my credit, as I ordinarily pay off my balances in full each month.P

If you’re doing all that you can to keep your balances low, try your hand at the other side of the equation – your credit limits. This can be tricky, as the recession prompted many creditors to not only deny credit limit increases more often, but actually lower your credit limit based on the credit review they do on you. My advice would be to only ask for a credit limit increase if your credit card is in good standing and you have the income to support the possibility of greater debt.P

Mix it upP

Another ingredient to the 800+ credit score recipe is a good mix of credit—revolving credit (e.g. credit cards), installment credit (e.g. car loans, student loans) and mortgages. I’ve always had a good mix of the first two, but haven’t yet ventured into home loan territory. Now, I would never recommend that you apply for credit you don’t need, but be aware that the ability to manage different types of credit responsibly bodes well for your credit score.P

If you only have credit cards and are eager to mix it up, consider talking to your bank about a savings- or CD-secured loan. This is a type of personal loan in which the money in your savings account or CD is used as collateral in case you default on the loan. This loan typically qualifies as an “installment loan,” like car loans and student loans, and may help you break out of the credit card-only slump. If you go this route, make sure your bank will report your payment activity to the credit bureaus, so your timely payments will help your credit score.P

Don’t apply for credit you don’t need, but don’t close accounts eitherP

With the exception of my college years, I never applied for credit I didn’t need—and still don’t. I have three regular credit cards, two of which I use often. I also have two retail credit cards that I use on occasion (mostly for the perks). One of my credit cards I use only for gas. Not only does this help keep my budget simple, but the little amount I charge on it each month, then pay off in full, will be reported on my credit report as “OK,” thereby strengthening my credit history.P

Each time you apply for a credit card or a loan, your credit score takes a small hit. While one or two won’t hurt you that badly, many inquiries—especially in a short period of time—can. That’s why it’s a good idea to only apply for credit you need and try not to succumb to the temptation of “10 percent off your purchase” every time you hit the register at your favorite stores.P

If you have any credit card accounts you don’t use, don’t close them! When you close an account, you’re lowering the amount of credit that’s available to you and if you carry balances on any other cards, your credit utilization will go up and your credit score may go down. Instead, you may want to dust off that old card and use it for small purchases that you will pay off in full each month—like me with gasoline. Ultimately, a good credit score is about more than having credit. It’s about having credit and using it responsibly.P

A good credit score is like having a coupon book for the biggest purchases you’ll make in your life. The lowest interest rates afforded to those with top credit scores translate to lower monthly payments—in the case of a mortgage, that could mean many hundreds of dollars in savings each month. Given all those hard-earned dollars at stake, why wouldn’t you manage your credit on a regular basis to make sure your score is where it needs to be?

February 16, 2014 |

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