I got my free credit score for the first time on May 21, 2008. The three big numbers on the screen said 714. Less than a year before, I left a job as a bank manager where I was the guy deciding if you were approved for your mortgage loan, so I knew the importance of a good credit score and report. In the decade since, my score has increased by over 100 points to 831.
I didn’t take one specific action to increase my score, but the payoff has been huge. I’ve been approved for two mortgage loans, a refinance, and all but one credit card I have ever wanted. I enjoy low interest rates, easy access to credit, and never have to worry about creditors turning me down or debt collectors threatening to damage my credit history. While there was no specific action that lifted my score, it didn’t happen accidentally. Here is the story of my credit score and how it has ebbed and flowed from 714 to 831.
A College Graduate with No Credit
I was raised with a healthy fear of credit cards. My grandfather, who grew up in the Great Depression, instilled many personal finance lessons at a young age. My dad also warned of the risks of credit cards, the high interest cost, and urged me to avoid credit cards while in college.
It was during those years that I did open my first credit card, a Wells Fargo Visa, with the help of my uncle, a banker at Wells Fargo at the time. I used the card once ever during college, paid it off in two weeks, and never touched it again.
When I graduated from college, this one card was one of two items on my credit report. When I went to work in my first job as a bank manager, they ran my credit and shared with me that my file was “thin,” but there was no derogatory information either.
My Parents Helped Me Start on the Path to Perfect Credit
Before I went to college, my parents gave me a Marriott Visa card attached to their account to use in case of emergencies or with their permission. I didn’t use the card often, but little did I know, or my parents realize, they were putting me on track to a better credit score.
To this day, my credit report still shows that Marriott Visa account, where I’m listed as an “authorized user.” In my mortgage underwriting days, I disregarded accounts with the authorized user note, but was also aware that an authorized user can piggy back on the positives of a perfect payment history on a card. My parents definitely gave me help getting started by adding me to this card.
While still working at the bank, I drove down the block to a credit union for my auto loan, which I paid off in half of the five years I had to do so. The credit union offered me a competitive interest rate, one better than the bank I worked at, so I decided to go the credit union route. They offered, however, that I could get a better interest rate if I co-signed with a parent. My dad reluctantly agreed, but ended up with a best case scenario when I aggressively paid off the debt.
Fear of Harming My Score Held Me Back
In the next few years, my credit score hovered around 740 thanks to a growing history of on time payments, but aside from a new cash back rewards card, I didn’t mess around with my credit for fear of lowering my score.
I had read that signing up for new cards lowers you score, which it does slightly and temporarily, so I avoided getting too many new cards. It wasn’t until I discovered travel hacking that I opened my third credit card, a British Airways Visa that gave me enough miles for a free round-trip to Europe. But I still resisted diving into travel hacking for fear of harming my sacred credit score.
I took on $40,000 in student loans during this time and paid them off as quickly as possible. I hustled and made my last payment 2 years and 6 days after graduation. Paying off my student loans without ever missing or paying late, thanks to auto pay, left me with an even better credit score.
Diverse Borrowing and Perfect Payment Histories Slowly Lifted my Credit
I bought my first condo, a two bedroom in Denver’s Capitol Hill neighborhood, in the fall of 2011. I found the home for sale on Trulia on August 8, 2011, sent the listing to my agent, and closed about a month later in September. Now, with a home, a mortgage, and more confidence thanks to my higher credit score, I started to see my score really pop.
One of the factors in your credit score is your mix of different types of credit. Adding a new home mortgage increased my mix, which included a few open cards and two paid off installment loans. Paying off my mortgage and opening a new one by refinancing, further increased my credit mix and score.
Travel Hacking Past 800
I kept on making automatic on time payments and watching my score climb, but the biggest jump took place when I fully embraced travel hacking. For people with a tendency to spend more than they can afford and carry a balance, travel hacking with credit card rewards is a terrible idea. But for me, who had a perfect history and had never (and still have never) paid a cent of credit card interest or fees, I was ready to give it more of a try.
I started applying for lots of credit cards. At last count I have 14 cards open currently and typically have around 15 cards open at any given time. Big signup bonuses, changes in rewards programs, and opportunities to earn miles and points for free flights and hotel nights keep me opening and closing cards regularly, a practice known as credit card churning.
Well, travel hacking has paid off big in terms of free travel and my credit score. I have enjoyed well over ten thousand dollars in free travel over the years and my credit score keeps on climbing. Each time I apply for a new card my score drops slightly, usually between 3 and 5 points, but thanks to a perfect payment history, it comes back by those points and then some more.
When I close cards, sometimes my score does drop slightly, but again the effect tends to be temporary. Whenever I can, I convert cards with an annual fee to a no fee version so I don’t have to close the card at all, further building my perfect payment history with more accounts.
Last week I took a screenshot of my credit score less than 20 points from the ultimate score: a perfect 850.
Why I Don’t Want a Perfect 850 Credit Score
I used to think of credit history and credit score management as a quest for 850. But in the years since, I have come to realize that there is no real benefit beyond inflating my finance blogger ego by increasing my score over 820.
Credit scores are alive. Like airline miles and points, a credit score is only as valuable as how you use it. If I do everything to try to make my score a perfect 850, I may be giving up opportunities for better interest rates and credit card rewards. Once you hit a score around 820, there is nothing you can’t attain. Heck, over the 720-740 range you qualify for nearly any top loan rate or credit card in existence. A score over 800 is fun for my ego, but doesn’t give me any further financial gain.
My score rises and falls over time. Since taking that screenshot last week I applied for a mortgage, a step in trying to buy a new home in my new hometown in Southern California, and my score dropped to 828. I’m not too worried however, because at 828 I can still qualify for any new credit I want.
So that’s the story. Nothing too exciting. Just slow and steady increases thanks to a perfect payment history and a growing mix of accounts. My credit grade is still held back slightly by my account mix, where I have 19 credit cards on my history but no open installment loans, and my average age of credit, held down by a constant opening of new cards, but that’s okay by me. My credit gets me anything I need, and that’s what it’s all about.
Joining the 800 Club Gets You the Best Rates and Approval Odds
While a perfect 850 may not get you much more than an ego boost, a great credit score is completely worthwhile. Because it can save you so much money by getting better interest rates on loans in addition to opening up the ability to be approved for virtually any credit card or loan, assuming the rest of your finances are in order, there is a huge value to an excellent credit score.
Join our community of 800+ bound credit score members in The 800 Club today!