You already know how important credit scores are. A good score can save you hundreds if not thousands of dollars. If you want to raise your credit score, why not aim for the stars and try and get a perfect score of 850?
Credit scores take time and patience to build, which is why it is imperative to set a concrete goal to achieve. Setting the goal of a perfect 850 credit score will “gamify” the experience and make it a more exciting experience. You’ll also be motivated by the progress as you check your credit score and see it continually rise.
Here are 5 ways you can get a perfect FICO of 850.
Make Timely Payments
It’s important to make your payments on time. To get a perfect credit score you’re going to need to make every single payment on time, every single time with no exceptions. Your recent payment history makes up 35% of your score and is the most important component of your score. Just one late payment can derail your path to perfection.
Watch How Much You Owe
How much you owe accounts for 30% of your score. To get a perfect score you need to have high income and low debt. The less you owe the better, while still using your credit of course. Strive to keep your credit card balances on the lower end. Aim for a 10% credit utilization rate. This means that if you have a total of $10,000 in available credit on all your credit cards combined, you’re only keeping a balance of $1,000.
Having a zero balance isn’t a good idea either though. This is a sign that you don’t use your credit at all so lenders won’t actually know how you handle having a debt.
Have A Lengthy Credit History
Time matters, especially for a perfect FICO score. This piece of data makes up 15% of your score. If you just got your first credit card and have zero debt, you won’t have a perfect score. To get a perfect score you need to have a long history of using credit responsibly. If you have a long history of paying off your debts and have a clean record, lenders will reward you with the best interest rates they offer.
There isn’t much you can proactively do about this one, as by now you should already have items on your credit report. But keep in mind that canceling your oldest credit card won’t actually affect the age of your credit history. This is a common misconception. Your report will show the account as closed, but it will not affect the age of your credit.
Don’t Open So Many New Credit Accounts
If you apply for credit frequently, your score will decrease. You’re allowed to go shopping for the best rates, that’s not a problem. The problem lies when you open a new credit card, then go to the bank and ask for a loan, then you refinance your home to take money out. These actions are the actions of a desperate person in need of money.
Have A Good Mix Of Types Of Credit In Use
Add a variety of different types of credit to your account history. Lenders want to see that you can maintain different types of accounts. A perfect credit score will have a good mixture of credit card accounts, car loans, student loans and a mortgage. This proves you can handle both revolving credit and installment type credit accounts.
Having a diverse account history makes up the final 10% of your credit score.