850 Credit Score

By: George Paunov

8 Lessons You Can Learn from People Who Have a Great Credit Score: 850 Score

To know what makes the people who belong to the club of 850 + credit score different, you need to understand how the scores are determined. FICO credit score is based on the information that your creditors report to three credit bureaus. 

In essence, your payment history is responsible for 35 percent of your score. The credit utilization ratio (how many of the credit cards are you making use of) is 30percent; the total length of your credit record for fifteen percent, and your credit mix for 10 percent; as well as your new credit (have you applied for lots of new credit in recent times?) for 10 percent.

Bird said a variety of elements positively impacts her credit score. She has all of her credit lines in a good state (meaning that she pays in time), maintains low credit utilization, and has corrected any inaccurate information about a lender that she discovered in her credit bureau’s files.

Singletary shared with readers that the 850 credit score.  They received (for free via Discover) included her credit score and length of credit as well as recent inquiries. She also listed her use of credit cards as a contributor to positive credit.

Here are eight things you can learn from those with perfect or outstanding credit scores.

1. Verify Your Credit Reports Regularly

Singletary and Bird review their credit reports regularly. After the Experian data breach in the year 2017, Bird signed up for credit monitoring. She is constantly checking the alerts that she receives regarding transactions on her credit to ensure there’s no evidence where identity theft has occurred or errors.

“As an issue of protection against identity theft, I always check my credit score to see when something isn’t right. It will be reflected on your credit report,” said Singletary.

2. Fix Any Errors

Bird stated that she had an error on her credit report five years ago, affecting her credit score. It was discovered in a complex credit report (the one conducted while she was trying to get credit). 

The mistake caused her score to fall from a high area (740-799) down to a low place (670-739). The lender contacted her to ask questions and discuss the issue. Once the mistake was fixed, the score was restored to FICO’s excellent standing.

Credit reporting bureaus such as Experian, Equifax, TransUnion, and other specialized agencies are prone to errors. A search on the Consumer Financial Protection Bureau’s Consumer Complaint Database turns up 12300 complaints regarding incorrect information from credit bureaus. 

The most prevalent complaint included “information does not belong to me” and was followed by the status of your account, account terms, and public records. To guard against false information, make sure you check the credit report at least every year.

3. Make sure your financial relationships are in Good Standing

Singletary hasn’t made a payment late over the last seven years. Bird says her improved score is due to her husband’s and his wife’s financial management abilities. 

They have a substantial savings account and pay off their installment and revolving credit in time. The couple doesn’t like carrying outstanding balances in their credit cards.

Bird continues to have loans that she borrowed to finance her medical school, and she makes payments on them each month without fail. She also pays off the balance of the four department store credit cards each month too.

4. Don’t push it to the Limit

Credit utilization is included in FICO’s amount owed, which comprises 30 percent of your FICO score. When lenders look at the amount of credit you hold, the duration of your credit, and how much credit is utilized. Anyone who is getting close to their credit limit could not be able to manage another credit line.

“If you’re using up excessive credit, you’re unlikely to be able to reach that 850 credit score,” Singletary said in an interview. “FICO assessed those with scores that are high and found that they generally use 7 percent of their balance at any given moment or month. I was at just 1 percent.”

5. Keep Your Lines Open

Discover It informed Singletary that the time of her credit cards was a contributing factor in her score. The length of your credit history accounts for 15 percent of your score.

FICO says that lenders look at the account’s age and the frequency of your account use. The older your budget is, the more positively it influences your good credit score. This is the reason why some money experts and coaches recommend against closing accounts.

Even though you’re not using the account, the creditor for the account will still affirm your connection with them. If you are tempted to end a credit card that took you a long time and a full day to pay, consider cutting off the card and allowing the account to remain open.

6. Learn the benefits

The people who aim to reach 850 might be in the direction of perfectionists. However, 21% of the club with an 800+ score have a good and practical reason to be there: they can access lower rates of interest and credit whenever they need it. Credit score benefits.

“When I speak of getting a perfect score on your credit report,” claims personal finance expert Lynette Khalfani-Cox (a.k.a. The Money Coach), “I want to live a life free of all anxiety, rejection, and stress about your creditworthiness and the credit rating.”

High-scoring applicants have better rates and, sometimes, no-money-down offers and could save money in the longer term. 

The difference in the monthly payment you would pay for the $100,000 mortgage that has an interest rate of 4% against one with a rate of 7% could be hundreds of dollars. In 30 years, it is hundreds of thousands of dollars.

7. Know The Debt Hierarchy

“All loans are not made equal,” said Khalfani-Cox. “Credit credit card debt is judged more severely.” You’ve likely been told that credit card is the most dangerous type of debt. 

This is because it usually has very high-interest rates and is typically not used to purchase assets, as they can increase value. 

Creditors or credit card issuers examine revolving debt such as credit cards to examine the number of cards you hold as well as the balances on the cards to determine whether you’re in the process of overextending or nearing the limit of your credit cards.

The debt, which is considered good, can assist you in acquiring an asset (say an apartment) or investing in yourself (such as earning a college degree or getting accredited for something). 

So, mortgages, as well as students loans, are considered to be as good debt. But, of course, one could nevertheless be overextended when using student loans or a mortgage. Every debt can be beneficial or damaging, depending on the circumstances you face and how you make use of the loan.

8. Have savings

At its heart, it is a measure of how well you control your credit. Both Singletary and Bird were in the middle of debt they managed. Their scores indicated the fact that they handled the credit card debt well, making punctual payments and clearing balances.

Bird stated that her family has enough savings that they’re at ease with allowing gym memberships and streaming services to be charged onto their credit cards to collect reward points.

“If you’re living above your budget, then you’re not going to have enough cash in your account, and you’re unlikely to be able to cover items,” said Bird.

The bottom line is that you don’t require an 850 credit score to find the most lucrative bargains. However, some lenders “differentiate between huge FICO scores in their decision-making processes,” says Tommy Lee, the principal researcher at FICO. 

In addition, he says, the behaviors that can lead to a higher FICO Score are similar that people can raise or keep their FICO Score high by making sure they pay their bills punctually by making sure their credit card balances are at a minimum and applying for credit only when it is needed.”

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