Original article by: CreditSesame ----- If your heart is set on perfection, rather than reaching for that perfect 850, a more healthy goal is to aim for the 800+ club. Earning a credit score of 800 or higher will put you well within the ranks of the credit elite. No one else will receive a better loan than you, and no one will pay lower interest rates.
How do you join the credit elite? It starts with developing the right credit habits and then gradually allowing them to build over time. Here are seven habits that will help pave your way to the 800+ club:
1. Always pay on time— no exceptions. Your payment history is the single most important factor in determining your credit score, accounting for 35 percent of the total. If you’re striving for perfection – or close to it, the last thing you want to do is miss a payment or pay late.
2. Watch your credit card balances—less is more for your credit score. The proportion of your balances in relation to their credit limits on your credit cards can have a drastic impact on your credit score. For optimum results, aim to keep your credit card utilization to 10 percent or less.
3. Apply for credit sparingly. How often you apply for new credit accounts for 10 percent of your score. Too many inquiries in a short period of time can wreak havoc on your credit score. While not a large percentage, every point counts when you’re aiming high.
4. Live within your means. When you apply for credit, only apply for what you can realistically afford and never spend more than you earn. This will keep you from overextending yourself financially. Over time, these positive accounts will help you build a solid, lengthy credit history — another habit that will push you toward your goal.
5. Mix it up and diversify. Credit scoring models love to see that you’re able to manage and maintain a variety of accounts. By gradually adding various types of accounts — credit cards, auto loans, student loans, or a mortgage — you’ll be well on your way to reaching your goal.
6. Focus on the long haul. The longer you’ve had credit, and the older your credit accounts get, the better for your credit score. Credit scores love stability and to break into the 800s, they want to see a history of accounts that have been open for ten years or more.
7. Wash, rinse, repeat — and track your progress. With credit scores, consistency is key. This means repeating the steps and staying the course. Over time these habits will insure that you reach your goal. And to make sure you stay on track, it’s also wise to periodically check your credit score and monitor your progress.
Reaching an elite credit status maybe closer than you think. By following these rules and keeping reasonable, attainable goals in mind, you too can reach the 800+ club and join the ranks of credit elite.