How to Make the Most of Your 800 Credit Score
If you have an 800 credit score, this means that you are an exceptional borrower and you are beyond the average score for many U.S. borrowers. In addition to some bragging rights, this type of great credit score allows you to qualify for faster approvals, as well as better offers when you are applying for a loan or new credit. There are some things you should know in order to make the most of your score.
Keep in mind that a FICO score will be based on different information from your credit report but it doesn’t consider your employment history, income, marital status, zip code, age, gender, or education.
Each lender will have its own credit risk standards of what they accept. However, most use the FICO score and you can use this general guide in order to see what each credit score represents.
A score below 580 is generally considered poor and shows lenders that you are a risky borrower.
A score that is between 580 and 669 is considered fair and is still below average but some lenders will still approve loans with this score.
A score between 670 and 739 is considered good and is right around average and even slightly above average. Many lenders consider this a good score when it comes to borrowing purposes.
A score between 740 and 799 is considered very good. It’s above average and shows the lenders that you are a dependable borrower. You are very likely to get approved for a loan and get better rates.
A score of 800 or above is considered exceptional. It is well above the average and shows that you are an exceptional borrower.
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More People Are Joining the 800 Credit Score Club
The average credit score in the United States today is 704 and this is the highest since FICO began tracking different score distributions. The average bottomed out in October 209 and now has been increasing for the past eight years, which represents an upward trend in U.S. credit quality. Not only is the average credit score higher but there are also more people that are scoring 800 and above. In April 2018, there were 21.8% of consumers in the 800 to 850 range. There are different factors that are contributing to higher scores.
1. Fewer Profiles with Negative Blemishes
The percentage of consumers that have any third-party collections on file is down. Since payment history makes up a majority of the FICO score a drop in late payments increases the score.
2. People Are Applying for Credit Responsibly
Consumers that had more than one hard inquiry hit a four-year low. More inquiries mean an increased repayment risk and a lower credit score.
3. Consumer Education Is Helping
Research from Sallie Mae and FICO shows that consumers who check their sores are more likely to not only have higher credit scores but also make better financial decisions. It’s important to be educated about what goes into a score and how certain financial decisions can affect your score.
The Benefits of Having an 800 Credit Score
You have likely worked hard for your credit score so you need to make the most out of it. Just having bragging rights isn’t enough. There are a lot of financial advantages to being able to take advantage of a score this high.
You Will Be More Likely to be Approved for New Credit
Since your credit score shows how creditworthy you are and how likely you are going to be able to repay that money, an 800 credit score means you will most likely get approved. If you have a high credit score then you are seen as less risky and will get that approval.
You Get Higher Credit Limits and Lower Interest Rates
When you have a score of 800 or above then you are considered someone who is going to be likely to repay your debts and lenders can give you better deals. This is true no matter what kind of loan you are getting, whether it is an auto loan, mortgage, or even a better interest rate on your credit card. Assuming you have everything in order for a mortgage or car loan and meet the other requirements set forth by the lender, you will automatically get better rates.
If you currently have an existing loan and have worked to get a better score you can get better terms by refinancing at a better rate. Just like with any type of refinancing, you do want to check the numbers first in order to make sure that it makes great financial sense. You may have to ask for a better deal when it comes to credit cards, especially if you have had the card for a while.
If your score just recently hit the 800-plus range or if you haven’t really looked at your existing terms then call your existing credit issuer. Let them know that your credit score has increased and ask if you can get an increased credit limit or better interest rate. Even if you don’t necessarily need the increased limit, it’s good to have since it helps you have a better credit utilization ratio. This is the ratio of how much you owe versus your available credit line.
You Can Quilify for Better Credit Cards
Using the same card for years is good for your score since it helps lengthen your credit history but it’s possible you are missing out on some benefits. With a score this high, you may be able to qualify for some perks, such as access to free breakfast in hotels, access to an airport lounge, or the ability to earn cash back and airline miles at a faster rate.
One way to see if you can get a better deal is to work with your current credit card issuer and ask if you can get a better card with rewards and benefits. If you do qualify then your issuer can explain the application process. The application process may be easy and something you can do online or over the phone to be switched over to a new card. You also may want to research cards on your own and see if you find one that has rewards that work the best for you.
If you are considering a credit card, you should definitely check out the following options:
The Basics of the Credit Score
If you have an 800 credit score or are hoping to get one in the future, it helps to know the basics of what makes up the credit score. Your credit score is a three-digit number that shows your credit risk, based on credit data from your past. The most common one that is used is the FICO score. The FICO score is calculated by using five different main categories of credit data that come from your credit reports.
This makes up 35% of your score and shows whether or not you have paid your bills on time in the past.
This makes up about 30% of your score and shows how many loans you are using and how much credit you currently have.
This makes up 15% of your score and shows how long you have had a credit history. If you don’t have any credit history, you likely won’t have a credit score.
This portion makes up 10% of your score and shows the types of credit you have, whether it’s a loan, mortgage, or credit cards.
This makes up 10% of the score and applies to new credit openings and inquiries.
Why a Good Score Matters
If you don’t have an 800 credit score yet, working toward one is still beneficial. Having a good score matters for different reasons.
Credit Affects Where You Live
If you don’t have good credit, you can get denied for a mortgage. If you are approved then your credit affects your interest rate. Interest rates will impact your monthly payment and can impact if you are able to buy a more expensive home. If you aren’t in the market to buy a house, your landlord can still use your credit score in order to decide if it’s a good idea to rent to you.
Auto Loans Need to Have Good Credit
Many people just don’t have the funds to cover living expenses and pay for a car, which means they will need to apply for an auto loan. Your credit score affects whether or not you will qualify. A low credit rating is going to limit your choices so you will also pay more for your car.
Credit Checks for Employment
Some employers conduct credit checks during the hiring process. Some employers will just check the reports but not the scores. Some places do prohibit this but not all. If you don’t show financial responsibility on your credit report then an employer may not want to hire you.
Business Loans Require You Have Good Credit
If you dream of having your own business then you are going to need the cash for it. You likely won’t be able to qualify for a business loan without good credit, even if your idea for a business is solid.
Living Expenses Can Require Good Credit
You may be surprised to learn that you need good credit to get utility services. Cell phone servicer providers and water, telephone, and cable companies may do credit checks.
Allow You to Live More Comfortably
When you have a score this high and you need credit, you will be able to get it, which means you may be able to live more comfortably.
Do a Score Check
By law, you are allowed to receive one free credit report from each of the three credit rating agencies each year. The big three credit agencies are TransUnion, Experian, and Equifax. If you plan it out and stagger the reports then you are able to get a free credit report once every four months so you are able to look after your credit throughout the year.
A credit report won’t include your FICO score but you may be able to see it for free since some credit card issuers take place in the FICO score Open Access program. Some popular issuers include Chase, Bank of America, Citi, Discover, Wells Fargo, PNC Bank, and the Navy Federal Credit Union. If your issuer does participate then you are able to check your score when you log into your account online. It may also be in your monthly statement. If you aren’t able to access your credit score through a lender or your credit card issuer then you can purchase it online at one of the three credit rating agencies.
Working to Get an 800 Credit Score
Don’t be fooled into thinking that this exceptional credit score is only for those that have special privileges or who make a lot of money. Anyone is able to get this score, as long as you manage your credit properly. There are some tips to keep in mind.
Pay All Your Bills on Time
This not only goes for your credit card payment and payments on your loans but you shouldn’t be late on any of your bills. The more on-time payments you have then the better your score is going to be.
Keep Your Credit Card Balance Low
Your goal should be to have your credit card balances across all your accounts below 30%. This is the best way to work on your score. For example, if you have a card limit of $10,000 across your cards then the balance should stay below $3,000. If you are really aiming to work on your score then your goal should be even lower than that. Those with high scores usually only use 11.5% of their total limit on average.
Avoid Applying for Credit with Too Many Hard Inquiries
Every time you fill out an application for credit that requires a credit check then you have a hard inquiry placed on your credit report. While these hard inquiries only make up about 10% of your score, and that’s not a lot, it can be the difference between a score of above 800 or 780 depending on what other information is in your credit report. When you need to apply for a loan or credit card, do research ahead of time so you are able to apply for just one and avoid having multiple credit inquiries completed.
Monitor Credit
It’s important to get access to your free credit reports so you are able to clear up errors and make sure you are doing a score check. Your credit score will be based on the information that is in your report at any given time. You could lose your 800 credit score if there are changes to your report, especially errors. Keep an eye out for any errors on your report and then dispute them to clear them up as soon as you can.
Negative Information Will Age Off Your Credit Report
It may be hard to get a high score when you have negative information on your credit report or late payments. However, keep in mind that negative information will usually fall off your credit report after seven years. Make sure the negative information is not an error, but if it isn’t then be patient and keep paying everything on time and work toward bettering your score.
How Long Does It Take to Get an 800+ Score?
This answer to this will depend on where you are starting. It can take years to build a score this high. You do need to only have a few years of positive payment history, as well as a good mix of credit accounts, to show how you have experience managing different types of debt. A good credit mix includes a real estate loan, another type of installment loan, or a few major credit cards.
The accounts need to be a few years old in order to show that you are able to handle this responsibility for a period of time. If you do have negative information on your report then it can take longer in order to make sure this information eventually falls off.
Is a High Score Worth the Effort?
The high score is definitely worth the effort since it comes with many different benefits. Most lenders do consider 760 as the cutoff for having excellent credit. When you have a score above that number then you will get many of the same benefits but you might just have to work a little harder to get that exclusive 800 score.
Having an 800 credit score comes with a lot of benefits. You are more likely to get approved and have lower interest rates. This means you are paying less for the same services over time than other people. There are plenty of different things you can do to get a score above 800, including making sure you make payments on time. While it may take years to get an 800 score, it is possible with some work. The score will be worth the effort.