There are many articles that tell you how to increase your score, such as going from fair credit to good credit. But my goal is to show you how to get a high credit score.
Not just any score, but a really high credit score. And you’ll be happy to know that you don’t need a perfect score. If you can raise your FICO score to at least 760, you’ll qualify for the best interest rates for credit cards, mortgages, and personal loans. A high credit score, depending on the state you live in, can also help you save on auto, health, and life insurance premiums.
So make yourself comfortable and reach for the credit stars. If you follow these tips, you will get there.
How high do credit scores go?
FICO scores range from 300 to 850. A very good FICO score is between 740 and 799. An exceptional score ranges from 800 to 850. Achieving a score above 800 is satisfying, but useless.
As long as you have a FICO score of 760 or higher, you’ll get the highest interest rates when applying for credit. So a FICO score of 760 is your minimum goal. But if you want a score over 800, I wouldn’t think of stopping you. In fact, my tips will help you get there.
You probably already have a good idea of how your score ranks, but check to see the current status so you have a starting point. Also determine if you see a FICO score or a VantageScore. VantageScore also ranges from 300 to 850. But it weights the factors differently. Do not attempt to compare your VantageScore directly with a FICO score.
Here are some places where you can often get a free credit score:
- Your monthly credit card statement.
- Your bank where you have checking or savings accounts.
- Free credit score websites (this is usually a VantageScore).
- Credit card issuers that offer scores to everyone, like American Express and Discover.
The credit score you see may not be a FICO score, but even educational scores have value. If your only access is to a VantageScore and you want a FICO score, American Express and Discover both offer free FICO scores, and you don’t need to be a cardholder to access a score.
If all else fails, you can always pay for a FICO score at myFICO.com for $19.95. Be sure to select “One Time Reports” so you don’t accidentally sign up for a monthly subscription.
How to get a higher credit score
The good news is that your credit is already well placed. And if you pay attention to the following tips, you can achieve a high credit score.
It’s like cleaning up your credit. You should review your free annual credit reports to make sure there is nothing inaccurate in your report. If so, it may unnecessarily lower your credit score.
So if you haven’t checked your free annual credit reports with the three major credit bureaus in a long time (or ever), go ahead and check all three. Review each line and make sure it looks correct. Also check for new accounts that you haven’t opened. This is a sign of fraud and you will need to take action as soon as possible. The Federal Trade Commission offers steps to take if you need to dispute errors on your credit report. You can report identity theft at IdentityTheft.gov, which is also part of the FTC.
Your credit utilization ratio is the amount of credit you have used compared to the amount of credit you have. Credit usage accounts for 30% of your FICO score, so this is an important factor to keep in mind.
Example: You have a credit card with a limit of $5,000. Let’s say your balance is $2,000. This means that you have a credit utilization rate of 40% (2,000/5,000 = 40%).
Your utilization rate should not exceed 10% if you are aiming for a high credit score. So in this example, your balance must not exceed $500 during the month (500/5000 = 10%).
Maintain a usage rate of 10% on all your cards and on your individual cards. The FICO algorithm considers both in the calculation.
Another little trick to lower your ratio: ask for a credit limit increase on one of your credit cards. This increases the amount of credit available, which can lower your utilization rate.
If you have a balance of $5,000 on a credit card with a limit of $10,000, you have a ratio of 50%. Cut that balance in half and your ratio is 25%. That’s much better, but your score won’t be as high as possible until your balance drops below $1,000.
The best antidote for this is to pay off your debt. As your ratio begins to drop, your score begins to rise. As long as you have your budget in place and you continue to track your spending, you will achieve and maintain a high credit score.
If you have good credit, getting a balance transfer credit card with an introductory 0% APR might work for you. This situation is an exception to avoid new credit. Credit card debt is toxic and everything else should take a back seat. A balance transfer card allows you to pay off your debt while paying no interest during the introductory period.
As you have just learned the credit utilization ratios, as your debt decreases, your score increases.
Unless you need a credit card with balance transfer, I want you to stop applying for credit cards or loans. Every time you apply for a credit card, for example, there is a thorough investigation of your credit file. You could lose up to five points on your credit score for each request. So, while you’re aiming for a high score, take a break from your new credit.
If you’re in a situation where you need a car loan or something similar, it’s good to move on. The silver lining is that having a credit mix can help your score a bit. I’m not saying buy a car. But if it’s a necessity, consider the possible benefit to your score.
Here’s another strategy to turn your score up to 700. If you had a big expense, make a payment in two weeks. Then make another payment before the balance is due.
This lowers your utilization rate because your debt is smaller. If you’re trying to increase your score quickly because you want to apply for a mortgage or other credit, this is a tool you can try. It’s even more efficient if you ask your issuer when they report your history and balance to the bureaus. This way you can time your payments so that they are very low when your balance is reported.