There’s nothing like having excellent credit. You get offered the best credit cards, qualify for the lowest interest rates and get approved for loans easily. With a FICO score of 800 and above, almost anything is possible. However, not everyone falls within this range. In America, the average FICO score is only 704 which leaves a lot of room for improvement. If you’re looking to improve your score, take a few pointers from people who have already crossed the 800 mark. Here are 4 habits of people with excellent credit.
They pay their bills on time
The number one thing that sets high scorers apart from the rest of the pack is their payment history. When you pull up their credit report, you won’t find a blemish in sight. Studies show that 95 percent of people with a FICO score of 800 and above have never made a late payment. Not even one. They know how important it is to maintain a squeaky-clean image, so they always pay their bills on-time and in full. If this is something you struggle with, try putting your bills on auto-pay to avoid missing anymore due dates. Alternatively, you can use a bill reminder app so you’ll be alerted when a deadline is approaching.
They keep their credit card balance low
The main reason to keep your credit in tip-top shape is to show lenders that you’re trustworthy. Maxing out your credit card or carrying a high balance sends the opposite message. In their eyes, it’s a warning sign that you may be struggling to make ends meet. Normally, experts recommend using no more than 30 percent of your available credit. However, people with scores in the 800-850 range use a lot less. On average, they only use 4%. Although that number may not be realistic for everyone, you can always strive to get there anyway. The key is to track your spending to avoid going overboard. You can also setup balance alerts, so you’ll know when you’re getting close to your limit. Another way to keep your balance low is to make multiple payments throughout the month.
They don’t apply for credit often
Credit card companies are always trying to gain new clients by offering zero-percent interest, bonus signup points and other incentives. Although it may peak their interest, high scorers know better than to jump at every offer that comes their way. Whenever you apply for a new credit card, lenders must do a hard inquiry which dings your credit score. Plus, submitting back-to-back applications sends a red flag to lenders. It seems a little fishy when you get a credit card then quickly turn around and apply for another one. Therefore, high scorers don’t apply for credit often. For most of them, it’s been around 15 months since they opened a new line of credit.
They have a long and positive credit history
Anyone can be on their best behavior for a few months, the true test comes over a long period of time. That’s why the length of your credit history accounts for 15% of your score. People with excellent credit have been practicing good habits for years. On average, their credit history dates back 128 months. Unfortunately, there’s no special time machine you can use to speed things up, so you’ll need to be patient. Keep paying all your bills on time, using your credit wisely and eventually your score will increase.
Want to improve your credit?
Get in the habit of monitoring your credit score regularly. By doing so, you can catch negative changes and correct them quickly. A Discover survey found that 76% of people who checked their score 7 times or more for the year, saw their scores increase. Meanwhile, only 38% of people who checked once said their score improved. Credit card companies typically issue your FICO score as a perk with your monthly statement. You’re also entitled to a free copy of your credit report annually from TransUnion, Experian and Equifax.