You can obtain the lowest interest rates on any loans you take out, as well as the credit cards with the best rewards, which you should pay off each month.
You’re losing a ton of money if you apply for a mortgage without having an excellent credit score.
Given that employers and landlords frequently check it, it may even improve your chances of landing a job or finding a good rental. It’s the most accurate gauge of your level of responsibility provided by the financial sector, and its application extends beyond the world of finance.
Since I was 22, I have had an 800 credit score, and I have occasionally been close to a perfect 850. In the past, I managed an engineering facility’s corporate credit line, which required me to keep my credit score extremely high.
I’m very critical of the way credit is used worldwide and the different methods credit rating agencies employ to gather information in order to determine an individual’s credit score. They gather a ton of data about you, and every now and then they get hacked and release that data onto the dark web. But it exists, so you should know how to use it in your favor at least.
An overview of how to raise your credit score quickly and consistently is provided in this article, along with the four most effective strategies you can use this week.
Hello, credit aficionados! Have you heard of the elusive 800 credit score? It’s comparable to a golden pass to financial independence, granting access to the greatest credit cards, the lowest interest rates, and even the opportunity to apply for desirable jobs and apartments. But how do you get there?.
I’ve been rocking an 800+ score since I was 22 even hitting a perfect 850 at times. So, trust me I know the secret sauce. And guess what? It’s not magic, it’s just smart strategies and a little bit of patience.
Here’s the lowdown on how to boost your credit score to 800+:
1. Payment History is King (35% of your score): This is the biggest factor, accounting for a whopping 35% of your score Pay all your bills on time, every time. Even a single late payment can ding your score. Automate your payments if you need to, and check your accounts regularly to avoid any surprises
2. The credit utilization matters, which account for 30% of your score, are as follows: this is the percentage of your available credit that you are actually using. Aim for a low utilization ratio, ideally below 10%. Pay down your credit card balances regularly and avoid maxing them out.
3. Length of Credit History Counts (15% of your score): The longer your credit history, the better. This shows lenders you’re a responsible borrower with a track record. So, keep those old accounts open, even if you don’t use them much.
4. Credit Mix is Key (10% of your score): Show lenders you can handle different types of credit. Aim for a mix of revolving credit (credit cards) and installment loans (mortgages, auto loans).
5. New Credit Inquiries Can Affect Your Score (10% of your total score): Each time you apply for new credit, your credit report is subject to a hard inquiry that may temporarily lower your score. So, limit your applications and space them out.
Bonus Tip: Check your credit reports regularly for errors. You can get free copies from AnnualCreditReport.com and dispute any inaccuracies.
Now, let’s get down to some actionable steps you can take:
1. Obtain authorization: Request that a family member or friend with excellent credit add your name to their card as an authorized user. By doing this, you can increase your credit history without opening any new accounts.
2. Obtain a secured credit card: This is a great way to start building credit if you don’t have any credit history or have bad credit. A security deposit is required, but responsible use can improve your rating.
3. Optimize your credit utilization: Pay down your credit card balances regularly and aim for a low utilization ratio. You can also request credit limit increases to improve your ratio.
4. Diversify your credit mix: Consider taking out a small installment loan, like a personal loan or auto loan, to diversify your credit mix. Just make sure you can afford the payments.
5. Be patient and consistent: Building a good credit score takes time and effort. But with consistent good habits, you’ll be well on your way to that 800+ score.
Remember, a high credit score is your financial superpower. It can save you thousands of dollars in interest payments over your lifetime and open doors to countless opportunities. So, take control of your credit and start building your financial future today!
P.S. Check out these resources for more information:
- Lyn Alden’s article on how to increase your credit score: https://www.lynalden.com/how-to-improve-your-credit-score/
- Experian’s guide to credit scores: https://www.experian.com/blogs/ask-experian/credit-education/score-basics/
- NerdWallet’s guide to credit scores: https://www.nerdwallet.com/article/finance/what-is-a-credit-score
P.P.S. Don’t forget to follow me on social media for more tips and tricks on all things credit!
Peace out!
Check Your Credit Reports
The three credit reporting agencies, active in many countries, are Experian, Equifax, and TransUnion. These are the businesses that maintain thorough files on your credit and provide access to it upon request.
Thanks to the Fair and Accurate Credit Transactions Act, all three companies are required to provide U. S. residents with a copy of their credit report if requested, once per 12 months.
They do so through the website AnnualCreditReport.com; that’s the only source for free credit reports authorized by this Act. They don’t show you the scores for free, but they show you their records of your payment history, so you can check to make sure there are no mistakes. The website lets you check your detailed report one time from each of the three credit rating agencies per year.
You may want to check all three at once if you’re about to make a sizable purchase, are trying to repair extremely bad credit, or have discovered some errors in one report. However, if you’re more in “maintenance mode” and just want to periodically check your credit for mistakes, the best course of action is to get a copy of your credit report from one of the agencies once every four months. In this manner, you can distribute your three free reports equally throughout the year to receive the most recent information.
Although there are more effective free ways to accomplish that, you can also pay a fee to access additional information on that website, such as the score itself:
- You can check your FICO score for free at Discover Financial by going here.
- Credit Sesame lets you check your VantageScore for free, here.
The best part about them is that they examine how you use credit to provide you with targeted recommendations for raising your score.
It’s hard to fix your credit if there are negative mistakes in your credit report holding you back. Make sure they’re accurate!.
How FICO Credit Scores are Calculated
Here is the breakdown of how a credit score is calculated, by myFico:
Numerous companies use different methods to calculate credit scores, and each approach has advantages and disadvantages of its own.
Each method also has a range, with the main ones having a 300-850 range. The chart above shows the default way that the general FICO score is calculated, by the FICO company.
Generally speaking, if your score is over 750, you are in the top category and will be able to get the best credit cards and loan terms. You will also not face any issues if your credit is checked by landlords or employers.
You’re comfortably in the top tier and about at the maximum end of the range if you can go even further, to 800.
35% Payment History
This is the single biggest factor: how reliably you pay your bills. By never, ever missing a payment over the course of years, your credit score will start to climb.
This can actually be kind of forgiving. The majority of businesses offer a grace period during which they won’t report you to the credit agencies even if a payment is accidentally made a few days late. You generally have to be quite late in order for it to officially become a late payment. It’s best not to take chances though; pay all your bills every month like clockwork.
Automate your payments if it helps you. To keep everything organized and to pay my bills, I personally like to take some time during the third week of every month to sit down and review all of my accounts. It takes about ten minutes.
30% Amounts Owed / Credit Utilization
Creditors like to see that you’re not using anywhere near the maximum amount of credit available to you.
Given that you have two credit cards, each with a $5,000 limit, and they are both fully charged to $4 9k, then it looks to them like you’re being irresponsible. Similar to how some people’s expenses consistently increase to match their income, this example appears to be someone who borrows as much money as they can without thinking twice. That makes them look risky.
Instead, it’s best to have very high credit limits, and then use only a small fraction of them. Generally speaking, you should use no more than 2010% of your total credit limit and no more than 2010% of any one individual credit account.
In order to minimize your credit utilization ratio each month, you can optimize this by adjusting both variables: you can spend less and you can open new credit accounts or request increases on your current credit limits. To ensure that you never use a significant amount of one card at once, you can also divide your purchases across several cards.
15% Length of Credit History
If someone opened their first credit account six months ago and paid all of their bills on time, that appears to be a pretty good credit score. It’s a nice start.
However, it doesn’t seem nearly as nice as someone who has had multiple credit cards for ten years and has never missed a payment on any of them, along with any utility, mortgage, car loan, or student loan payments.
Some of this obviously just has to come with time, but your actions can influence it as well.
Let’s say, for illustration purposes, that you open a credit card account today and another in five years. In a decade, the average age of your credit history will be seven years, as one of your accounts will be ten years old and the other will be five years old. 5 years.
Let’s say that you open a credit card account now and then open a new one every two years. You will have six credit accounts—two, four, six, eight, and ten years old—at the ten-year point. The average age will only be 5 years. It’s generally better to have fewer, older accounts, rather than having a clutter of many newer accounts.
Also, it’s almost never a good idea to close an old account. Your older accounts are your “anchors,” which you should strive to maintain indefinitely since they significantly lengthen your credit history overall.
10% Credit Mix
There are two main types of credit: “revolving” credit and “installment” credit. Ideally, you should have at least one of each to demonstrate to lenders that you are capable of managing a variety of loan kinds.
Credit cards are the main type of revolving credit. If you have at least one credit card, then you have some revolving credit. It’s called “revolving” because you can take out as much or as little as you like each month and make regular payments to keep it that way.
Student loans, auto loans, and mortgages are examples of installment credit. They have a natural end-date, and they expect regular payments each month of the same amount.
I have a co-worker with a high credit score that got rejected for an auto-loan. The credit score is important, but it’s not the only factor lenders look at. Her parents covered all of her educational expenses, so she never had to take out student loans. She also didn’t have a mortgage or auto loan at the time. All she had in her credit history was good credit card usage. Even though she managed her credit cards well, the lender was not confident enough to grant her a large auto loan because there was insufficient information for them to feel at ease.
10% New Credit
If you open up a bunch of new cards or loans at once, it looks risky. Lenders will question whether you may have lost your job, so you must maintain your credit in the interim. Or maybe you had a big medical bill and are becoming insolvent.
Be conservative with the number of times you apply for new credit.
VantageScore is a newer competing model, created through a joint venture by Experian, TransUnion, and Equifax. You can see yours for free at Credit Sesame; I’ve had an account there for a decade. Most credit card companies these days also let you check your FICO score within your account.
Previous versions 1. 0 and 2. 0 of VantageScore used a different range, but the current versions 3. 0 and 4. 0 also use the 300-850 scoring range.
Here’s their breakdown of how the score is calculated, courtesy of VantageScore:
It is evident that, despite slight variations in computations, the same essential elements hold true for optimizing your multiple credit scores: maintain a low credit utilization ratio and a lengthy, dependable, and varied credit history.
How to RAISE Your Credit Score Quickly (Guaranteed!)
FAQ
How to increase credit score from 760 to 800?
How rare is a 760 credit score?
How big of a loan can you get with 760 credit score?
Is 760 a good credit score?
In fact, 760 is classified as “excellent credit,” and having a credit score this high should qualify you for good terms on most loans, credit cards and other lines of credit. Credit Rating: 760 is an excellent credit score, which is even better than a good score. Many people consider excellent credit to be a score of 720+.
Can a 760 credit score get a car loan?
Most auto lenders will lend to someone with a 760 score. With Very Good credit scores, you should qualify for the best interest rates they have to offer. However, lenders also look at other factors, so there’s no guarantee that you’ll be approved for a loan.
What is a 760 FICO ® score?
Your score falls within the range of scores, from 740 to 799, that is considered Very Good. A 760 FICO ® Score is above the average credit score. Consumers in this range may qualify for better interest rates from lenders. 25% of all consumers have FICO ® Scores in the Very Good range.
Can I get a personal loan with a 760 credit score?
Most personal loan lenders will approve you for a loan with a 760 credit score. In fact, you will likely qualify for the best loan rates available. However, keep in mind that your credit score is just one factor that lenders consider when deciding whether to approve your loan application.