6 Habits of People with FICO Scores Over 800
A FICO score over 800 is seen as the Holy Grail in credit circles. Once you reach this level, you qualify for low interest rates and lenders have little hesitation about lending you money. While few people reach this highest level of credit scoring, it isn’t an impossible goal. In fact, there are six things you can do that will boost your scores without fail.
Always make your payments on time
Those with FICO scores over 800 know the importance of paying their bills on time, all the time. You can make this easy by setting up automatic payments so you never miss a payment. On time payments are the number one rule of good credit, and no other action will have as large of an impact on your score. Payment history can make up as much as 35 percent of your credit history, and missed payments aren’t the only thing you need to worry about. Late payments show up as well, and the later the payment, the bigger the effect.
Mind your balance
Just because you have a $10,000 credit limit doesn’t mean you should use $9,000 of it and make the minimum payment each month. Using a large percent of your available credit makes lenders nervous. Individuals with high FICO scores keep credit card balances less than 30 percent of their available credit, and ideally, less than 10 percent. Pay down any credit card balances and you will see a boost in your FICO score.
If your credit history consists only of a mortgage, or several credit cards, your FICO score will suffer. People with high FICO scores know that lenders like to see a mix of available credit, which demonstrates an ability to successfully manage finances. Auto loans, credit cards, mortgages, and revolving credit lines all benefit your credit score, as long as they are paid on time.
Limit credit inquiries
It can be tempting to sign up for new credit to score a discount while you’re shopping, or to frequently refinance a vehicle or home to lower your interest rate, but each new account causes a temporary dip in your credit score. This is because someone looking to open multiple lines of new credit may be facing financial difficulties, which makes them a risk. Individuals with high FICO scores realize constantly opening new accounts is a short-sighted approach to their finances.
Don’t cancel old accounts
The younger your credit history, the more trouble you’ll have getting a high FICO score. FICO takes into account your average age of open accounts, so even if you have several old accounts, adding many new ones will lower the average age of your accounts. The more established credit lines you have, the less a new account will lower the average, but it makes sense to apply for new credit selectively.
Individuals with FICO scores over 800 understand that good credit is a marathon, not a sprint. They pay their bills on time each month, keep utilization on their cards low, and get satisfaction from the gradual increase in their credit score.