#how to get credit score
7 ways to get an 800 credit score
By SARAH ELLIOTT
Good credit is a lofty goal, but what about perfect credit? Securing the best three-digit FICO score can save hundreds of thousands of dollars during your lifetime. With FICO scores ranked from 300 to 850, reaching the top of the pack — the so-called “800 Club” — is a goal few consumers achieve. According to a 2012 FICO study, only 18.4 percent of the population had a score between 800 and 850.
According to Ken Chaplin, senior vice president and CMO of TransUnion Interactive:
“One of the most common challenges people face when trying to improve their credit is the impact from past borrowing mistakes. Delinquent accounts, bankruptcy or other issues from years past can still hurt your score today. Past problems stay on your credit report for at least seven to 10 years and will have a negative impact on your credit score.”
So, what does it take to achieve 800 Club greatness? Read on to learn a few necessary tips.
How to Get an 800 Credit Score
1. Know the Facts
Credit improvement is impossible without the facts, and unfortunately, many consumers are still living in the dark. A 2013 survey conducted by the American Bankers Association revealed that 58 percent of respondents don’t know their credit scores. Begin your 800 Club induction by gathering the information you need to succeed. Get a copy of your credit report and score at CreditRepair.com. If you don’t like what you see, you’ll also find credit score improvement services to get your credit back on track.
2. Establish a Long History
Time is valuable in the world of credit scoring. Maintaining old accounts is the best way to solidify your experience and improve creditworthiness. The ideal credit history is 10 years or greater. Cash in on your history by keeping accounts open and active.
3. Pay Your Bills on Time
Payment history is a defining factor in determining your credit score, accounting for 35 percent of the total. While chronically overdue bills can lead to fees, collections and credit damage, even small infractions can hurt over time. The credit bureaus are sometimes notified when you miss a utility payment or even a small medical copay. Illustrate responsibility by treating each bill with care.
4. Redefine Credit Card Usage
Think of credit as a tool rather than a bottomless bank account. 800 Club members use their accounts sparingly, striving for a credit utilization ratio of 10 percent or less. For example, suppose you have three credit cards, each with a $10,000 limit. Strengthen your credit score by maintaining a balance of $1,000 or less on each card. Better yet, consider paying off debts at the end of the month to avoid accruing interest. Zero debt equals complete credit control.
5. Diversify Your Accounts
Diversity accounts for 10 percent of your credit score. Use the FICO scoring model to your advantage by gaining experience with different types of credit. Mix credit cards, personal loans, federally backed student loans, auto financing and mortgages to illustrate your ability to manage multiple accounts. Apply for these loans gradually to avoid placing too many hard inquiries on your credit reports.
6. Cut Spending
Budgeting is a vital part of credit health — a map to help you navigate expenses and ensure financial stability. Although income doesn’t factor into your credit score, 800 Club members understand the importance of living within their means. Managed costs and increased savings lead to lower risk and opportunities for credit improvement. Consider the following example:
Claudia is a marketing manager earning $75,000 per year. Although she has an affordable mortgage and car payment, Claudia fails to track her miscellaneous spending. Within two years, she has accumulated $7,400 in credit card debt and has a credit utilization ratio of 64 percent, a consequence that has damaged her credit score.
Don’t allow the comfort of a living wage to interfere with your credit score aspirations. Create a budget plan and stick to it.
7. Limit your liability.
In addition to living frugally, protect your credit score by limiting other harmful factors, including:
- Cosigned Accounts: Assuming responsibility for another person’s debt is a serious risk, one you won’t find on the credit reports of many 800 Club members. Allowing a friend or relative to rely on your credit score is kind, but it could be catastrophic if they fail to pay.
- Bad Credit Cards: Many lenders offer lines of credit to consumers with bad credit. Applying for similar cards means grouping yourself with high-risk individuals. Practice discernment when shopping for a new card. Find a lender that provides high credit score standards and membership rewards.
The 800 Club is an elite group, but membership is possible with the right tools. Implement these habits as you strive for better credit. The result could change your life.