Excellent Credit Score
On a typical scale of 330 to 850, the higher one’s credit score is, the better it is viewed by potential lenders. The highest credit score group is ‘excellent’ on many credit scales while its highly unfavorable counterpart, the ‘bad’ or ‘very poor’ credit group, lies within 550 and below. The latter group is not where anyone would want to end up in.
To be considered to have an excellent credit score, one must be within the 750 to 850 range on most credit score scales. Even with credit already in this area, someone with a score of 830 will be viewed more favorably than someone with a credit score of 760. For credit scores, the bigger it is, the better it is. The great thing about credit is that if one is struggling within this realm, they can seek to improve their score as there are many benefits at hand for those with a higher score.
What’s the highest credit score you can get?
It’s important to note that less than one-percent of individuals have the highest credit score of 850, while 19-percent of individuals do fall within the excellent range whether that be 750 on the dot or 849.
One should seek to reach towards the highest credit score possible, especially 830 or above, if they wish to appear competent in maintaining their finances. It indicates that as a borrower, it is probable that they will be paying their bills on time. For instance, it is more likely that someone with a credit score of 830 will be selected over an individual with a credit score of 650 (in the ‘fair’ range) for a loan. It makes more sense to lenders to go for the individuals with better credit as being in the fair range tells lenders that one may or may not always keep up with their dues owed while someone in the excellent range will always or almost always keep up.
Even someone who has a credit score in the ‘good’ range at 720, someone with excellent credit may be preferred. However, other circumstances are also weighed in the determining process, but no doubt the person in the excellent group has an advantage in this area.
Benefits of having high credit score
While fairly self-explanatory, the excellent credit score group, since viewed as a priority, allows one the most benefits such as the following:
More likely to get approved for an apartment or home rental. Some landlords will use their potential tenants’ credit scores as a way to determine whether they will be financially responsible in paying their rental fees on time. Individuals with bad credit will have difficulty getting approval for a rental as they will be deemed risky.
Stronger chance of being approved for loans (e.g., auto, home) and credit cards. Because lenders eventually want borrowed money back, paying attention to their prospective borrowers’ credit is a way to determine whether they may or may not get their money back on time. Someone with excellent credit would indicate that they will be likely to pay their dues on time most of the time, making them ideal candidates.
Lower interest rates on loans (e.g., auto, home), mortgage, and credit cards. The less risky a borrower is deemed based on their credit score, the lower the interest rate they will have to pay. Meanwhile, the lower one’s score is, the greater the rates they will have to pay, so the lender can profit from their potentially risky borrowing behaviors – especially in the case that the borrower does not end up paying all debts by their due date.
Higher chances of getting approved for a greater borrowing capacity. While individuals with even poor credit have the potential to get approved for a loan, they often have a limited amount in which they can borrow at a time. Those with excellent credit can often receive higher borrowing limits from banks considering that better credit means the individual has had beneficial financial history.
Better chance of getting a phone on contract without a security deposit. Because those with poorer credit are financially risky, phone service providers often require a security deposit on a phone and may not even allow them a phone contract, rather, often only a pay-as-you-go plan. Those with excellent credit, however, can a phone on contract while avoiding a security deposit, and as an added bonus, may even receive additional discounts on newer phone models.
Individuals with excellent credit also have a heftier selection of credit cards to choose from, are often offered sign-up bonuses, and can often avoid security deposits on utilities in addition to having greater negotiating power on interest rates, and of course, have bragging rights. (Excellent credit is something to be very proud of!)
How to get an excellent credit score?
So, how exactly can one get in the excellent credit score range? Consider the following:
Understand what makes up your credit score
Knowing the components that go into determining your credit score and the weight each holds is potent when deciding what needs to be done to boost your score into the excellent range: 30% payment history, 30% credit utilization, 15% length of credit history, 10% recent credit inquiries, and 10% credit mix. From the latter, one can see where they may need to emphasize the most when boosting their credit.
Pay your current bills, then attack your older debts
It’s easier said than done, but refusing to pay your current bills on time can damage your credit score more so than letting older debts linger. Of course, you will want to tackle those older dues later on, but first things first:
Pay your bills as they come in to ensure
1) You can prove you are capable of paying incoming debts, and
2) You won’t continue the cycle by adding new past-due debts along with your already-long-due debts.
Lower your credit card utilization rate
Ideally, one should reach for 10% or less on their credit card utilization rate if they wish to have excellent credit. As an example, someone who has a balance of $200 and $1,000 credit limit, their utilization rate will be at 20%.
Ensure no inaccuracies are on your credit report
Regularly monitoring your report is crucial to ensure no false information is listed. If you do happen to come across inaccuracies, it is integral to dispute them whether they are cases of identity theft or simply errors.
Be smart when applying for credit accounts
Applying for new credit too often can damage your credit score by 10%. The less inquiries you have, the better. Remember that every hit to your credit counts, as well as every little improvement.