The Secrets to an 800+ Credit Score
This article will discuss ways to improve credit score. Thank you for visiting. Enjoy.
We’ve all heard the term, Cash is King. In a perfect world, you would pay cash for everything including your home, vehicles, and education. You wouldn’t owe anyone anything. But let’s face it, unless you’ve gained an inheritance or know a whole lot about investing and finances, you won’t be purchasing your house cash money. Many people these days need to rely on credit to help finance these things.
Having good credit helps you get the good rates, however having excellent credit allows you to snag the best loans and rates available. Some of the benefits of having an excellent credit score (780-850) include 0% interest loans, exclusive benefits with credit cards, lowest mortgage rates, and even lower insurance premiums.
So if you want to be among the elite group of individuals who have an 800+ credit score, then put these habits to work.
Tips to Improve Credit Score
They check their Credit Score and Reports Frequently
Knowing your score is the first step in determining your credit journey. I check mine with Credit Karma every 3 months. You can check it for free anytime you want. Plus, they offer free credit monitoring.
Checking your credit report will give you a detailed summary off all of your debts. It will tell you where all your debt is coming from, what kind of debt you have, and how much debt you have. In addition, you’ll receive tips to improve your score personalized to you.
They Start Early
Many people with 800+ credit scores have begun their credit journey an an early age. I had my first credit card when I was 17 years old. It was a student credit card from State Farm Bank and I started out with a $200 balance. I only used it gas and snacks and paid it off in full every month, until I had my first kid 6 years later.
One of the main things that lenders look at when determining credit scores is the LENGTH of credit. The longer you have credit lines open, the better. So don’t close any credit cards, as this will decrease your average length of credit and subsequently drop your credit score. Instead, keep the line open and shred the card.
They Have a Budget (and Stick to It)
Telling your money where to go is crucial for building a good credit history. While having a budget doesn’t directly improve credit score, it will give you the discipline you need to keep up with your finances.
They are Obsessed with Finances
People who have 800+ credit score are obsessed with finances. If you start a conversation with these people, chances are you’ll eventually end up talking about saving money, reducing interest, investing, and budgeting. This elite group of people are always looking to improve their financial status.
They Live within their Means
“Don’t borrow what you can’t afford”
This is extremely important. They don’t borrow what they can’t afford. For example, if Joe needs a new washer,he will save the money for it. Then, he will use the credit card to purchase the washer and pay it off before interest is charged.
They Pay on Time
Lenders want to know that your will pay in full and on time. Pay on time every time. People with excellent credit scores hardly miss a payment. Set up automatic payments to help you.
They Keep their Debt Utilization Ratio Below 15%
Your debt utilization ratio is the amount of debt you use compared the amount of available credit you have. While creditors say to keep this ratio below 30%, you’ll see that people with 800+ scores keep their ratio less than 15%.
Never max out your credit cards. Lenders see this as risky behavior. Keep your balances less than 30% of your available credit to improve credit score. Better yet, keep your DUR less than 15% if you want that 800+ score.
They Diversify their Credit
Keep a variety of types of loans in your credit profile. Having just credit cards won’t increase your credit score, even if your DUR is less than 15%. You’ll need others such as mortgages, student loans, and auto loans to diversify your credit.
They Have Very Limited Hard Inquiries
Applying for new lines of credit frequently to increase your available credit won’t help you improve credit score. Why? Applying for new lines of credit results in a hard inquiry; too many hard inquiries will actually hurt your credit score.
If you will be applying for an auto loan or mortgage loan, try to apply for many types within a 2-week period as lenders won’t typically count them as multiple individual inquiries but will lump them together.
The best thing to do is research in depth before you actually apply for a loan.