Achieve the Perfect 850 Credit Score
The perfect credit score is an elusive and fickle mistress. The 850 credit score calls like a Greek siren, surrounded by treacherous terrain. Many credit users have damaged their scores in a misinformed attempt to achieve such perfection.
But the perfect 850 is possible, and with our guidance, it’s not a risky endeavor. We’ll help you avoid the traps and learn the secrets to breaking the 800 barrier:
First, avoid the common myths about how to improve your credit score. Rumors about credit are often completely wrong. Closing your credit accounts will actually cause your credit scores to be damaged. Moving your debt balances around will not help you hide it from the scoring formula. Not using your credit accounts doesn’t help. Disputing accurate negative records will not remove them from your credit history. Don’t take advice from anyone other than an actual credit industry insider.
Now that we’ve got the myths out of the way, let’s focus on what can actually help you achieve the elusive perfect credit score. Here’s your roadmap:
- Always pay your bills on time – Our first tip is also the most commonly understood. 35% of your credit score points come directly from having a long record of on-time payments. For the perfect score, you want to have on-time payments reported from all of your accounts dating back seven years. You also can’t have any sort of negative record – bankruptcy, lien, charge-off, collection account, or judgment – on your credit report dating back ten years.
- Keep your credit card debt under control – This is a tricky one. To achieve the best possible credit score, you should use your credit cards each month and pay the bills on time. Not using the credit card means you’re missing out on positive reports. At the same time, you shouldn’t ever spend more than 10% of your total credit limit. So, if you have $38,000 as your total credit line, your statement balances on all the cards should never equal more than $3,800. In that example, spending $1—$3,800 a month would earn you the most points. You can either reduce your spending or increase your credit limit to improve this “debt utilization” ratio.
- Focus on longevity Credit scores love stability. To earn the perfect 850 score, the scoring formula would like to see that all of your credit and loan accounts have been open for ten or more years. This element of the credit score considers both the age of your oldest account and the average age of all your accounts. So it is a good idea to keep your accounts open as long as possible and avoid opening new accounts or closing old ones.
- Mix it up – Someone with a perfect credit score would have at least one credit card, one home loan, one auto loan, and one student loan on his or her credit report. Each account should be open and active. The diversity of credit account types is seen as a sign of stability and credit responsibility. Of course, don’t rush out to get a student loan just to earn all the points in this category. One credit card and one loan is a fine combination for this category that only counts for 10% of your score.
- Don’t apply for credit – Any hard inquiry from an application for credit will hurt your credit score for six or more months. You may want to avoid applications for new accounts entirely if you already have the right mix and are aiming for the perfect credit score. Applications for credit cards, loans, and even cell phones, bank and/or utility accounts can damage your credit scores.
As you can see, achieving the perfect 850 credit score would require a great deal of planning and time. But a credit score over 800 is easily reachable if you follow our guidelines and use your credit responsibly.