One of the most essential statistics in your life is your credit score. This three-digit number represents your creditworthiness or the possibility of repaying the money you borrow. Credit scores typically vary from 300 to 850. The better your credit score, the more likely you will get approved for new credit. According to FICO data, 21.8 percent of Americans had a FICO score above 800 as of April 2018. This resulted in a record-high percentage of people having credit scores of 800 or above, which was linked to fewer blemishes on people's credit reports, ranging from better payment histories to fewer inquiries. Because payment history accounts for 35% of credit scoring, there is a substantial correlation between a good credit score and a low number of late payments.
The Benefits of an 800 Credit Score
So, what are the advantages of having an 800 credit score? Is this a goal you should set for yourself? Here are three advantages of having a credit score of 800:- You're more likely to have your applications approved. Keep in mind that your credit score is a reflection of your creditworthiness. Lenders regard you as a less dangerous borrower with a good credit score, which increases the chances of approving your credit. Together with other financial information, your credit score helps lenders anticipate whether you'll repay the money you borrow.
- You're more likely to be approved for a loan with a lower interest rate. Your credit scores heavily influence the interest rate on loan. A credit score of 800 will enable you to qualify for reduced interest rates, saving you thousands of dollars throughout your loan. Larger loans that you repay over a more extended period of time, such as mortgages and auto loans, will have the most influence.
- You'll get better credit card offers and pay lower interest rates. With an 800 credit score, you may be eligible for credit cards with 0% promotional rates on purchases and balance transfers. If you keep one of these credit cards in your wallet, you'll be able to carry a credit card balance and pay it off over time without incurring finance costs. Regardless of credit score, everyone can avoid incurring credit card interest by paying off their debt in full every month.
How to Build and Maintain an 800 Credit Score
The elusive 800 credit score isn't reserved for the wealthy or those who enjoy preferential treatment from the credit agencies. Anyone with solid credit management skills can achieve and maintain a credit score of 800. Here are some pointers:- Pay everything on time. Your payment history accounts for the majority of your credit score. The higher your credit score, the more on-time payments you have on your credit report.
- Keep your credit card balances very low. Keeping your credit card balances below 30% of your credit limit is ideal for your credit score. If your credit card limit is $10,000, you'll want to keep your balance below $3,000. Keep your credit card balances even lower than that amount if you want to achieve and maintain an 800 credit score. Experian estimates that consumers with credit scores above 800 use 11.5 percent of their total credit.
- Avoid too many credit inquiries. A hard inquiry is placed on your credit report each time you submit an application that involves a credit check. Hard inquiries account for around 10% of your credit score. It's not much, but depending on the rest of your credit report, it may mean the difference between an 800 and a 780. When it's time to apply for a credit card or a loan, do your research ahead of time, so you just have to apply once and prevent several credit inquiries.
- Keep an eye on your credit and act swiftly to correct any problems. The information in your credit report at any given time determines your credit score. If there are significant changes to your credit record, particularly inaccuracies, you could lose your good credit score. Use free and paid sites like CreditKarma.com, CreditSesame.com, WalletHub.com, AnnualCreditReport.com, and myFICO.com to keep track of your credit information. If you detect inaccuracies, use the credit report dispute process to clear them up right away.
- Let negative information age off your credit report. Late payments or other negative marks on your credit report may make it difficult to achieve an 800 credit score. Fortunately, most unfavorable items on your credit record will vanish after seven years. Be patient and keep paying everything else on schedule if you can't erase negative stuff because they're accurate.
How Long Does It Take to Get a Credit Score of 800?
It can take many years or more to acquire an 800 credit score, depending on where you start. You must have a few years of just positive payment history and a diverse range of credit accounts to demonstrate that you can manage various credit cards and loans. A healthy credit mix consists of a few significant credit cards, a home loan, and another sort of installment loan. These accounts must be a few years old to demonstrate that you can manage a variety of credit obligations over time.Is That Perfect Score Worth the Time and Effort?
The good news is that many lenders consider a credit score of 760 to be great. You'll get most of the same benefits as someone with an 800 credit score if your credit score is higher. If you also want the bragging rights, you'll have to work a little harder and wait longer.Frequently Asked Questions (FAQs)
Is a credit score of 800 considered good?
An 800 credit score indicates that you are a reasonable credit risk since you must pay your payments on time and have a track record of utilizing credit responsibly to get this score.With an 800 credit score, what can I get?
When you have an 800 credit score, you are eligible for preferential interest rates on mortgages, vehicle loans, and credit cards. Contact your current lenders and credit card issuers to request a lower rate if you reach this creditworthiness level.