Credit scores range from a poor score to an exceptional range of 800 and above, the highest level of FICO scores. Read this blog if you are trying to get to that level, as we share details on how to achieve it.
But before we go any further, what does it mean to have an exceptional credit score?
The badge of a credit score above 800 may not guarantee you approval for all types of credit, but some benefits include
Credit offers
The higher your credit score, the more lenders will feel comfortable lending to you or offering you credit. And as soon as you reach the 800 mark on your FICO score, more than 90% of lenders consider you a safe bet to lend you money.
Interest rates
A good credit score can help you get loans or credit at lower interest rates because it shows lenders that you’re reliable.
Insurance rates
A good credit score can help you get a lower premium on your home or auto insurance.
Chances of credit approval
A score of 800 probably exceeds a lender’s minimum credit score requirement. Therefore, as long as you meet other eligibility criteria, you’re more likely to be approved.
Credit Limits
Having a FICO score of 800 or higher allows you to access higher credit limits, improving your purchasing power. It can also help you keep your credit utilization ratio low.
So how do you achieve that excellent credit rank of 800 and above?
5 steps to improving your credit score
Before we talk about it, remember these important factors that make up your credit score.
1. Payment history: 35%.
2. Amount owed: 30% 3.
3. Length of credit history: 15% 4.
4. New credit: 10% and
5. Credit mix: 10%.
1. Make payments on time
Payment history accounts for most of your credit score, and that’s understandable because all lenders want to know your payment habits.
As a borrower, if you’re trying to increase your credit score, all you have to do is pay all your payments on time, every time.
2. Keep credit card balances low.
It is suggested to keep your credit utilization ratio (also known as balance-to-limit ratio) below 30%.
From a lender’s point of view, it can be risky to lend to you when you tend to borrow almost as much as your available credit. You become a more favorable loan candidate if you don’t use much of your credit.
Ideally, consumers with a score of 800 or higher should maintain an average utilization rate of 11.5%.
3. Pay attention to your credit history
The older your credit history, the better, as it makes up 15% of your overall credit score.
Experts suggest that even if you no longer use a credit card, don’t close that account because doing so can reduce the length of your credit history.
4. Check your credit report
One of the reasons you have a low score may be because of errors or inaccurate comments on your credit report.
By reviewing your credit report, you can identify and dispute any errors with the lender who reported the information or take it to the credit bureaus for corrections. You can also enlist the help of credit repair service providers who will handle the task for you for a nominal fee.
5. Improve your credit mix
Being able to handle different types of credit is attractive to lenders, and this credit mix accounts for the last 10% of your credit score. There are three main types of credit:
1. Revolving credit
2. Installment loans and
3. Open-end credit
To earn this part of your score, you have to juggle this mix of credit.
Use a credit card to have revolving credit.
If you have a mortgage or car loan to pay, your monthly payments are enough for the Installment Loan portion of the credit mix.
Your monthly utility bills or phone bill, which vary a little each payment cycle, can be considered part of your Open-end Credit.
Final Note
Some of you may have already taken some of these steps and are still struggling to reach the 800 mark.
Fortunately, 800 Credit Solutions is here to help. Connect with 800 Credit Solutions’s team of professionals for a free consultation right away.
