Are you planning to have a credit score well above the average? Let us assume you are aiming to achieve a 800 credit score or above.
Though this is not the highest credit score you can achieve, it puts you in the highest band of users who fall in the highest range available in the FICO credit scoring models. Borrowers who fall under this category pose a minimal amount of risk to the money lenders.
If you are in this category and planning to apply for a loan, you can presume to get a loan with favorable terms, like lower interest rates. Let us see what it means to have an 800 credit score, how to achieve it, and the advantages of having such a credit score.
What is the meaning of having an 800 credit score?
If you have a credit score of 800 or above, the credit score is better than a good credit score. Considering the FICO credit scoring models, it is regarded as an excellent credit score. A report by FICO suggests that in April 2018, only 21.8% of Americans had their credit score in this range.
If you wish to reach this level of credit score, you must perform an excellent job in maintaining your credit history. In simple terms, you have a long credit history, no errors in payment history, have a good credit mix, and have used only a small percentage of the credit limit.
Based on such good credit habits and excellent credit history, money lenders will consider you safe, rather than those with bad credit history & lower credit scores.
How to achieve a credit score of 800 or above?
While we cannot guarantee you that these tips will help you reach a credit score of 800, these tips have the potential to do so.
1. Plan to build or rebuild your credit history
The total length of your credit history accounts for 15% of your credit score. Having a negative, minimal, or no credit history will never help you reach a credit score of 800 or above.
If you wish to solve this problem, you need to plan on how to build your credit. You can start building it either by taking a credit-builder loan or applying for your first credit card.
You might get confused if you are unaware of a credit-builder loan. You might end up assuming it same as a personal loan. But there is a big difference between the two.
A credit-builder loan is a personal loan but with the potential of adding a positive payment history to your credit report. In a traditional personal loan, money lenders deposit the whole loan amount in one shot.
However, in the credit-builder loan, money lenders do not deposit the amount together. Instead, money lenders deposit the amount in the savings account or certificate of deposit account. You get access to the amount once you repay the loan.
As said, using a credit card is another way of building your credit history. However, if you are not interested in applying for a traditional credit card, you can use a secured credit card. When using a secured credit card, you will have to deposit cash from your collateral account, which is considered your credit limit.
2. You need to pay your bills on time
Did you know that your payment history is the most significant factor in your credit score factor?
Because of such a fact, you must never miss any payments. In case your bills fall in the 30 days past due category, your creditors may report to the credit bureaus.
If your credit history shows a late payment, it may negatively impact your credit score. We suggest you use Google sheets if you wish to pay your bills on time.
According to FICO, most individuals having a credit score of 800 or above pay their bills in time before the due date. Additionally, they prefer paying the whole amount instead of paying it in installments.
3. Try to keep your credit utilization as low as possible
The credit utilization ratio is the next most significant ratio in calculating your credit score. The credit utilization ratio is the amount of credit you utilize vs. the available credit limit.
Let’s say your credit limit is $20,000, then plan to use not more than 30%, i.e., $6,000 in a month. If you wish to boost your credit score, try to keep it closer to 0%.
4. Keep a habit of reviewing your credit score and credit report
To keep track of your progress concerning your credit score, you must monitor your credit score and credit report. You can use free credit score apps to check your credit score.
You may also get recommendations in some of these apps on how to increase your credit score. Your credit score is totally based on the information listed in the credit reports. However, in some instances, there might be some mistakes in credit reports.
It might contain inaccurate negative information like late payments. In such a case, you can file a dispute with each credit bureaus to solve the mistakes.
4 Advantages of having a credit score of 800 or above?
Having an 800 credit score will give you several advantages. Let’s look at few of them given below:
1. You get faster loan approvals
If you have an 800 credit score and wish to apply for a mortgage, student, or personal loan, you don’t have to worry about the money lender’s minimum credit score requirements. As long as you meet the money lender’s other requirements like income or debt, you may get faster loan approval.
2. You get a lower interest rate
A credit score of 800 depicts that you may get qualified for the best interest rates possible. You may get a 0% interest rate for your car loan and the lowest possible interest rates for your personal or home loan.
In such a case, you can save thousands of dollars that you may have to pay as interest while having lower credit scores.
3. You get better credit card offers
If you are a high-qualified borrower with a credit score of 800, you may qualify for the best credit card offers. Usually, these cards come with an interest-free period of 21 months on balance transfers and purchases. If you repay the total balance amount before the promotional period, you can even avoid paying interest.
You may qualify for the best travel credit cards. Did you know that some of these travel credit cards come with the benefit of getting a bonus after spending a required amount?
4. You get lower insurance premiums
Several insurance companies consider checking your credit score before deciding your premiums. In case if you live in a city where credit-based insurance is possible, having an 800 credit score can get you discounts on your homeowners’ insurance or car insurance.
For example, if you have car insurance, you may save more than $1500 in your premiums if you have a good credit score. Whereas in case of a bad credit score, you may save up to $580 in your insurance.
How can you maintain an 800 credit score?
👉 Once you reach the milestone of an 800 credit score, your work is far from finished. However, your credit score is not set in stone, i.e., it may vary depending upon the factors we have mentioned here.
👉 If you wish to maintain an 800 credit score, you may have to follow practicing good credit habits over a while. Additionally, you may have to keep monitoring your credit score and credit report using free credit scoring apps.
👉 Also, keep your credit utilization ratio as low as possible, alongside paying your bills on time. These activities will help you maintain your credit score of 800 for a more extended period, and you will enjoy the benefits.
1. How rare is an 800 credit score?
Members in the 800+ credit score family are exclusive, with just 1 of 6 people have this high credit score.
2. What is the decent credit score to buy a car?
The money lenders look out for borrowers in the prime range or better. Hence, having a credit score of 661 or more will be a decent credit score to buy a car.
3. Can a 25-year-old have an 800 credit score?
Yes, it is possible to establish an excellent credit score of 800 or above at the age of 25. However, it depends on how long you have been using a credit card and how good your credit history is.