If you are a perfectionist then at some point the idea of earning an 800+ credit score may find its way onto your “to do” list. FICO and VantageScore credit scores, the types of credit scores that are most widely used by lenders, have a range of 300-850. Therefore, earning a score of 800 or higher lands you firmly in the upper echelon of the credit scoring elite.
It’s not likely you’ll earn an 800+ credit score by accident. Building credit scores of that caliber requires smart and consistent credit management habits. Of course, the good news is that you can study the habits of those who have already achieved these higher scores then simply mimic their actions. Here’s what you can do to get started.
Making Sure Credit Reports Stay Void of Derogatory Items
The single most important way that you can earn and maintain great credit scores is to make sure your credit reports remain clear of derogatory information such as (but not limited to) late payments, collection accounts, bankruptcies, tax liens, past due balances, judgments and anything else that suggests you’re not paying your bills on time. Your payment history accounts for ~1/3rd of the points in your credit scores. If you’re not banking nearly all of them then you won’t get close to 800.
Minding Credit Card Balances
On time payments and clean credit reports are great; however, those actions alone still will not likely be enough to help you reach your goal of credit score excellence. Credit scores pay a lot of attention to the balances of the accounts on your credit reports, especially your credit card balances, and the relationship of those balances to your credit limits. This relationship between credit card balances and limits is known as your “revolving utilization ratio.”
As your credit card balances climb your revolving utilization ratios will climb as well. Unfortunately, climbing revolving utilization will cause your credit scores to head in a downward direction. If you wish to earn and maintain elite scores then you must use a very modest percentage of your credit limits and do your best to pay off your credit card balances every month. Shoot for a a percentage below 10 and you’ll be fine.
Making Sure Credit Files Are Not Too Thin
It is impossible to build elite credit scores unless you have a sufficient number of accounts appearing on your credit reports. Again, there is no magic number of accounts that scoring systems want but it is safe to assume that three accounts or fewer is considered a thin credit file and that file is not likely to earn an 800 credit score. As your credit files bulk up over time your scores will reward you.
Being Prepared to Wait
It is no secret that scoring systems reward those with older credit histories. The age of your oldest account and the average age of accounts on your credit reports both wield a significant amount of influence. The older, the better.
It is safe to say that most consumers with credit scores of 800 or higher will have maintained well-managed credit reports for over a decade. As a result, unless you have a loved one who is willing to add you as an authorized user to one of their older credit card accounts you will simply have to sit back and wait to reach the top of the “Length of Credit History” scoring category.
Is Striving for Excellence Worth the Effort?
Before you allow your obsession with perfect or near perfect credit scores to go too far, it is important to keep in mind that once your credit scores rise above a certain level they will mainly only serve the purpose of giving you bragging rights. Generally once you have achieved scores of 780 or higher there is little actual benefit you will realize when and if your scores continue to climb.
At 780 you will typically qualify for the very best interest rate that a lender has to offer. In other words, even with an 820 or even an 850 credit score it is highly unlikely that you will land a better rate or loan terms than you would have a 780. In all likelihood there will be no tangible, financial benefit to working to drive your 780 credit scores upward into the 800+ club, but it sure is nice to know that you can get there.