Getting an excellent credit score can be vital to achieving financial success. Having a good credit score won’t just help you get better interest rates on loans, it can help you rent an apartment, get lower car insurance rates, and even help you land a job. To get an excellent credit score, there are a few steps and strategies you can adopt. In this article, we’ll explore everything you need to know about perfect credit and how to get an excellent credit score.
What Is an Excellent Credit Score?
A great credit score ranges from above 750 to 850, and an excellent credit score is any score above 800. Scores above 800 mark you as an especially financially responsible person who is always up to date with payments and is typically always “in the good” when it comes to credit. The vast majority of lenders look for credit scores over 750 when approving loan applicants and consider those with scores over 800 to be even more creditworthy.
Why an Excellent Credit Score Is Important
It can be tempting to ignore your credit score, but an excellent credit score is important to have if you ever need to take out a loan or open a credit card. An ideal credit score may get you the best interest rates and give you access to more favorable loan terms. Plus, a good credit score may also help you qualify for rental agreements, auto loans, and other big financial decisions. Even if you don’t plan to apply for credit immediately, keep in mind that many employers check credit scores as part of their hiring process.
How to Get an Excellent Credit Score
It can seem impossible to get an excellent credit score, but with dedication and time, it’s definitely possible. Here’s a list of the steps you can take to make sure you stay on track to get the best possible credit score.
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Check Your Credit Report
The first step to improve your score is to know your current situation. Requesting a credit report is totally free, and you can receive one every year from each of the three major credit reporting bureaus – Equifax, TransUnion, and Experian. This will allow you to see any errors or potential areas where you need to improve. -
Make Sure Your Debts Are Staying Current
If you have any past due debts, it’s important to make sure those are up-to-date as soon as possible. Making just the minimum payments on time is not enough – you need to pay your balances in full each month. Paying your debts on time for several months or years in a row is one of the best ways to raise your score. -
Pay Down Credit Card Balances
Having outstanding credit card debt can do major damage to your score. Keep track of your spending and make sure your credit utilization ratio stays below 30%. If you have too much debt, you can try to make a payment plan with your creditors, payoff high-interest debt first, or even consider transferring your balance to a lower-rate credit card. -
Keep Older Credit Accounts Open
Opening a new credit card may sound like a good idea, but don’t close any of your existing cards because doing so will lower your average credit length. Also, if you do open a new card, make sure you use it responsibly and pay off your balance each billing period. -
Limit Hard Credit Inquiries
When a creditor pulls a credit check, it’s known as a hard inquiry. This type of inquiry lowers your score because lenders may see it as a sign that you are overusing credit. Try to limit these inquiries to a few times a year and make sure to only apply for credit cards when you truly need them. -
Monitor Your Credit Report
Credit scores are based off of the information in your credit report – so it’s important to monitor your credit report regularly to make sure it’s accurate. Some websites, such as Credit Karma, allow you to monitor your credit score and report for free, which is great for keeping an eye on any changes that might affect your credit.
Getting an excellent credit score takes time, dedication, and paying attention to the details. The six steps outlined above can help you get on the path to excellence and give you the financial security you need when dealing with major decisions. To get started, request your credit report, make sure your debts are up-to-date, pay down credit card balances, keep older credit accounts open, limit hard credit inquiries, and monitor your credit report. With these steps as your guide, you’ll be well on your way to perfect credit.
