If you get your credit score above 800, you will earn elite status. According to Experian, only 21% of consumers have a credit score of 800 or greater. A credit score of 800 means you qualify for the best loan terms. This can result in significant savings over time.
But how hard is it to get an 800 credit score? The Penny Hoarder spoke to several people with credit points over 800 to find out exactly what they did to get high credit.
9 habits of people with 800 credit points
While many people with 800 credit scores have carefully managed their money for years, many admit that they have made mistakes with credit in the past – so it is possible to recover even if you were not perfect. If you’re wondering how to get an 800 credit score, copy these nine habits that people with near-perfect credit scores have in common.
Habit 1: You never miss payments
This is not exactly a secret. But the number one thing people who have hit the 800s have in common is that they never miss payments or pay their bills late. According to Experian, only 6% of people with a credit score over 800 have a missed or late payment on their credit report.
Your Payment history makes up 35% of your FICO score, more than any other Credit factor. A missed or late payment will stay on your credit report for seven years, although the damage to your creditworthiness is greatest in the first two years.
Habit 2: You create your own payment plan
Many people with credit ratings in the 800s range simply pay their bills once a month with Autopay. However, many of them find that more frequent manual payments are key to their success. Many pay weekly, biweekly, or as soon as the balance is posted if they have made a major purchase.
Phillip Godinez, a finance coach with Achieve your personal finance coaching goals makes payments on the 15th and 30th of the month after receiving the payment. This has helped him achieve a near-perfect credit score of 840.
“I’ll sign up on the 15th and pay all my bills due between the 15th and the 30th,” said Godinez. “On the 30th, I’ll pay all my bills that are due between the 1st and the 15th. Having a set schedule helps me remember it. Since I probably won’t get any more money between paychecks, I prefer this method to take care of everything and not have to worry about it for a few weeks. “
Habit 3: You Have No Balance Carry
One of the best things that you can do for your credit score is yours Credit utilization rate low. Your Utilization Level is the percentage of your outstanding credit that you are currently using.
The standard recommendation is to keep it below 30%, but most of the 800 club members say they keep theirs below 10%. Most report that they withdraw their entire credit card balance every month, although some occasionally make an exception for larger purchases, especially if they have a 0% temporary interest period.
Antonio Talledo, founder of Limon Financial, has achieved a credit score of 807 since he received his first credit card about 12 years ago. Although he used to have credit, he now pays the bill in full on the first of each month.
“I would say the biggest impact on my creditworthiness was getting my balances below 10% initially and now to 0%,” he said. “A few years ago I was carrying around 30% credit and my score was below 700.”
Habit 4: Don’t cancel old credit cards
People with great credit ratings rarely cancel old credit card accounts even after they have paid off the balance. The reason is twofold: when you close a card, you reduce your available balance, which increases your level of usage. Unless it’s one of your newer cards, lower that too average credit agewhich determines 15% of your score.
Andrew Chen, website founder Hack your fortune whose credit score is above 800 suggests only canceling old accounts if you are sure you will no longer use the card, the annual fee is expensive, and the card is relatively new, ideally less than two years old.
“I especially urge you [against] Closing card accounts that do not have an annual fee, ”said Chen. “It doesn’t cost you anything to keep the card, and it helps your creditworthiness to have experienced credit accounts on your credit record.”
Habit 5: You use your cards regularly
Once you have an exceptional credit score, you qualify for cards with some pretty cute ones Credit card rewards. But people with high credit ratings usually use all of their cards from time to time – even the older cards that don’t offer noticeable perks. If you don’t use a card regularly, the credit card issuer may cancel you because of inactivity. That will lower your credit limits and your credit age, both of which are bad for your score.
Alli Williams, Founder and CEO of FinanceALLIFocusedFor this reason, she keeps her oldest card open and only uses it for subscriptions. “This card isn’t the best for reward points so I don’t miss out much by just putting a few small subscriptions on it,” she said.
Habit 6: You selectively apply for new loans
People with excellent credit scores are picky about applying for new loans. New accounts can lower your credit age. Even if you apply for a loan, it leads to one hard request to your credit report. Too many credit inquiries or multiple credit inquiries in a short period of time can damage your creditworthiness.
Most people with a credit score of 800 say they don’t apply for new credit accounts more than twice a year – and many apply much less often.
Annette Harris, owner of Harris financial coaching, said that she and her husband have each maintained credit ratings of over 800 for the past five years. You apply for new credit roughly every three years, usually only for credit cards that offer reward points.
“When we apply for credit cards, we are very selective and make sure there is no annual fee associated with the card and that the interest rate is below 13%,” said Harris.
Habit 7: You ask about frequent increases in your credit limit
Rather than opening new accounts frequently, people with a credit score of 800 often request an increase in the credit limit on existing accounts – and they never say “no” to an increase in the limit when their credit card issuers offer one. A limit increase lowers your credit utilization without lowering your credit age. Often times, you can also avoid a hard request.
Habit 8: You Use Credit Stops
Credit stops are a popular tool for people with near-perfect credit scores. A Loan freeze blocks access to your credit reports and makes it harder for scammers to apply for credit on your behalf. You can contact any of the three credit bureaus to set one up. From September 2019 you can freeze your credit and release it again.
“It used to cost $ 10 per action,” said Chen. “Now that it’s free, there’s no reason not to freeze your balance. It protects you by preventing unauthorized access to your credit file and is an effective way to protect your credit. “
Habit 9: You are not obsessively monitoring your creditworthiness
People who have excellent credit scores tend to monitor their credit scores. Many use a free credit report service and pull all three of their credit reports with them every year AnnualCreditReport.com. But beyond that, they really aren’t too obsessed with their results. Their scores are high because of the good financial habits they have developed over time.
Tyler Ellis, founder of Don’t panic, do this!, is 28 years old and has had a credit score of over 800 for several years. He only uses one credit card to accumulate points and pays them out immediately, keeping a second in case his main card is lost or stolen.
“I bought my car in cash and paid off my student loans pretty quickly, so the only debt I ever keep is my mortgage,” Ellis said. “In addition, I’ve never done anything special to artificially increase my creditworthiness. I just don’t spend money that I don’t have. “
Do You Really Need an 800 Credit Score?
An 800 credit score will surely give you the right to brag, but don’t panic if you aren’t there already. The good news is that if you have a good credit score – mid-700, you will qualify for the best credit terms and lowest interest rates.No matter where your credit score falls, here are some things you need to do to improve your credit score:
- Make payments on time. As you make payments on time for six months to a year, you will see improvements in your FICO scores. The damage from late payments will also fade within two years.
- Lower your loan usage. Paying off your credit card balance and asking for higher limits will increase your credit score. Reducing credit card debt has a bigger impact than paying back a car loan or student loan because it will decrease your credit utilization.
- Be patient. Building the credit history takes time. Nobody gets a credit score over 800 overnight. Stick with your oldest account to maintain the highest credit age possible.
- Be vigilant. Use a free credit monitoring service to keep you informed of any changes to your credit report. Also, check your credit reports with the three major credit reporting agencies – Equifax, Experian, and Transunion – once a year AnnualCreditReport.com. Deny inaccurate information directly with the credit bureaus.
By finding a payment system that works for you and spending as much as you can, you too can achieve a credit score of 800 or more. But see it as a long-term goal. As you improve your credit score, you increase your chances of getting financing and lower your interest rates. Well worth celebrating even if you don’t hit the 800 mark.
Robin Hartill is a certified financial planner and senior writer at The Penny Hoarder. She writes Dear Penny, a personal financial advisor. Send your tricky money questions to [email protected]
This article originally appeared on www.thepennyhoarder.com