The 800+ Credit Score Club.
That elite club of “top tier” borrowers that get to brag that lenders really trust them with their money. Isn’t that exciting!?
If you think balloons and confetti drop from the sky when you reach an 800+ credit score, I am here to tell you that does NOT happen.
In fact, it’s extremely uneventful, and as I have argued in “13 Credit Score Myths You Need To Unlearn”, having an 800+ credit score isn’t even necessary.
Being in the club, however is not without its perks.
For example, I recently applied for a business account credit card at my bank and got approved ridiculously fast; with a ridiculously high credit limit. Even the banker was shocked at the limit considering I put on the application that I expect to make close to nothing in my first year of business-lol.
But, the quick approval, great terms, and high limit is purely because I have what’s considered “perfect” credit.
If I am being honest, I probably could have received the same terms with a 790, or 780. 800+ wasn’t 100% necessary.
But hell, for those of you who just want the extra bragging rights, this is How I got Into the 800+ Credit Score Club, and how YOU can do it too.
By the way, it’s not a real club. Although, it would be cool to have a neat jacket, or magnet.
I Pay On Time
If you take nothing else from this, please PAY ON TIME.
I’m sorry for yelling, but it’s super important.
Payment history accounts for 35% of the FICO Scoring model. That means, your score really depends on your ability to pay on time.
In order to have excellent credit you need to make all payments (e.g. credit cards, loans), on time.
Credit scoring models reward trust-worthy borrowers. If you can’t be trusted to pay your bills on time, your score will reflect that.
My Utilization Is SUPER Low
Aside from paying on time, the second most important factor to get into bragging rights territory is keeping your utilization very low.
By utilization, I mean my balances are very low in relation to how much available credit I have.
I pay my credit card balances in full and I rarely, if ever, charge more than 10% of my total limits. That goes for each individual credit account, and across all accounts.
That means for every $10,000 I have in available credit, I avoid charging more than $1,000 (10%).
So, if your normal routine is to max out your credit cards, you are really shooting your score in the foot.
It’s actually impossible to shoot a score in the foot (it doesn’t have feet), but you get what I’m saying. Keep your utilization LOW!
I Only Open Credit When I Really Need It
A good way to tank your credit score is by opening a bunch of accounts that you don’t need.
That means you’ll need to abstain from the cashier at your favorite department store that offers “20% off your purchase if you sign up for a store card”.
Just. Say. No.
Yes, 20% can be juicy, but you also need to be aware of your credit history.
Why? Because generally speaking, you want to avoid having two hard hits (inquiries) on your credit within a two-year period.
That means avoiding signing up for new credit cards or loans more than twice within two-years.
Of course, if you need to, then fine. But if you don’t, avoid it as it will lower your credit score.
My Credit History Involves Good Behavior and Multiple Types Of Credit
I’m going to keep it real with you: for years I only had like two credit cards, and a car lease and my credit score was like 750.
That was pretty dang good for having minimal activity and a LEASE, which, is not weighed favorably in credit scoring models (more on that in a future post).
The reason for my 750 with such little activity was because as I have emphasized a million times by now, I paid on time, and kept utilization low.
That said, my score didn’t shoot past 800+ until I started responsibly managing *different types* of accounts.
In my credit history you will find:
- Credit cards that I never max out and keep utilization at or around 10%
- A car loan that was paid off 2 years early, and was never late on payments
- A mortgage with on-time payments
- Paid off student loans with on-time payments
- A minimal amount of hard hits/inquiries within two years
- No bankruptcies, accounts in collections, liens, or other derogatory info
This has been a good 15 years of credit history with “good behavior” in all of the major factors that make up your credit score:
- Payment History (35%): Pay your bills on time!
- Amounts Owed (30%): Keep your utilization low!
- Length of Credit History (15%): The longer your credit history, the better.
- Mix of Credit (10%): Being able to show that you can handle of variety of debt looks good.
- New Credit (10%): You don’t want to open a bunch of new accounts within the same time frame.
I Regularly Review My Credit Report
No, you don’t get points for reviewing your credit report.
But, you totally should because you need to ensure there aren’t any negative items on your report that could be negatively impacting your score.
I pull one free credit report every four months, alternating among the three major bureaus.
For instance, in April I pull Experian, August-TransUnion, and December-Equifax.
I review them and ensure my personal and account information are spot on, and not showing any signs of shady activity.
If you aren’t doing this, please start. It’s literally FREE through annualcreditreport.com, so you have no excuse. And if you see anything suspicious, dispute it with each of the major bureaus via their websites!
Well, there you have it.
If you are completely unimpressed with how I did it, good, you should be.
Building a healthy credit score does NOT involve needing to be some type of magical wizard.
If you know and understand how scores are developed, you can definitely learn which areas to focus on.
In other words, learn the game, and then use it to your advantage.