An 800 credit score is considered ideal as it is the top mark you can achieve on the credit score system. It proves that you are a worthy credit manager and this will make lenders consider that there is little possibility of you defaulting on your loans and other credit products. It takes hard work, consistent commitment to sound financial practices, and time to build high credit scores that enable consumers to obtain better rates and terms from creditors. Below are the major steps to follow if you aim to obtain an 800 credit score.
All bills must be paid right on time
Your payment history is the most crucial factor in determining your credit scores; it contributes 35% of the FICO score computation. The bottom line is any single late payment will indeed hurt your credit score big time and if you want to achieve 800 you should never allow yourself to ever make a payment that is due, late. Pay by installments where possible or set up recurring payments or payment prompts. In an ideal world, one should not only make the minimum payment but should be able to clear their balances in full. They can all decrease your score by over 100 points if a payment is even 30 days past due. If you do find yourself paying late one month, make sure you correct your mistake the very next month.
Keep Balances Low
The second is your amounts owed or credit utilization ratio, making up 30% of your score. This shows the extent to which one is using his or her available credit limit at any particular time. Gurus suggest this should be below 30%, and for an 800 score, possible, you should avoid credit but if one must use it, the percentage should be as low as possible. Keeping some balance reports each month proves to the lenders that you can manage credit. However, going above this limit might not be recommendable since anyone's balance can go beyond half of the limit even though your overall utilization is low. Do not use credit limits on a single card to the maximum, but rather distribute the amount you would like to borrow over multiple cards.
Avoid Closing Unused Cards
This means that even though, opening several new accounts will adversely affect your score in the short run, closing the old accounts that are not in use will also have a similar effect. This is because it decreases your total available credit thereby increasing your credit utilization. It is recommended that older accounts even if they are not active should be retained unless the cost of maintaining the card annually is exorbitant. It is also essential to log in to these dormant cards sometimes to check if there are any fraudulent charges or if there was a data breach.
Mix Types of Credit
Payment history counts for 35% of your FICO score, while the length of your credit history is worth 15%. Of course, it is acceptable to begin with credit cards, but as credit matures, it is favorable to have installment credit which includes mortgage, automobile, student, or personal loans. This shows that you are capable of managing various forms of credit appropriately. Ideally, a few active installment loans and credit cards would be better for your score than having only credit card accounts.
Review All 3 Credit Reports
These mistakes happen on any of the three credit reports you might have and which bring down your score unreasonably. Once a year, you are allowed to have full reports from Annualcreditreport. com where you may want to glance at them. Challenge any fact you consider to be wrong with specific information on why the fact is incorrect. Whether it is due to identity theft or an outstanding debt being reported multiple times negatively, correcting these errors will improve your actual credit score.
Become an Authorized User
If your credit history is not very rich up to now, then getting an authorized user of the credit card of the spouse or other family member would help build up that credit profile quickly. It goes straight to your reports as long as the card issuer also reports authorized user history on the credit report. That means you do not necessarily have to make purchases using the card to benefit from it. Since the initial cardholder maintains it in good standing meaning paying the balance on time and maintaining low credit utilization, it equally improves your credit score in the long run.
Limit New Credit Applications
Just applying for a new line of credit causes a ‘hard’ inquiry on your credit that can reduce your scores by a few points at first. Inquiries have a lower effect compared to other factors, nevertheless, many inquiries within a short period are considered undesirable by lenders and may cause your scores to go down. After being approved for the first time with a few select key cards and loans, it is better not to apply for a while. Rather, expect issuers to notify you periodically when you can request an increase in credit limit on existing accounts to continue expanding your overall credit limit.
Set Up Payment Reminders
Payment delays are the biggest culprit when it comes to credit scores. This should be avoided through subscription to automatic payments wherever possible directly through issuers. If autopay is not possible, then manually plan out all the bills due for the entire year. You can set up payment email reminders that notify you of due dates, a few days prior in case you do not use the payment reminders. Some banks also allow you to customize text or app alerts for due dates depending on the accounts connected to your application.
Check Scores Frequently
This is the only way of ensuring that you are on the right track in getting an exceptional score that is you must check it at least every quarter if not more frequently. Most credit cards and personal finance applications provide FICO scores at no cost. Any significant drop should be watched closely, particularly before applying for new loans, if not corrected then the errors or utilization that caused the drop should be corrected. An 800 score does not occur overnight and will require time and effort for constant credit checking as well as good payment habits to get there.
Pay much attention to the positive record, limit new applications to bare essentials and on rare occasions only, and avoid paying bills at the last moment in any case. A credit score of 800 translates into hundreds of thousands of dollars in credit and preferred rates offering significant benefits in the long run for approval on credit. If you learn to follow excellent credit practices that are suitable for achieving the best results, you will be proud to be a member of the 800 Club and attract the attention of the lenders.
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