A high credit score often shows that you are a highly responsible consumer who fulfills financial obligations and manages their budget well. This can actually open many doors, for example, lenders are more willing to offer lower interest rates and better conditions while recruiters are more likely to hire you, while landlords offer the best apartments. While the highest possible score is 850, getting to 800 is enough to enjoy the above mentioned perks.
Both FICO and VantageScore credit scores have a scale from 300 to 850. The top category (800-850 for the former) is known as “excellent credit”, and it is the most ambitious goal for a borrower. Lending institutions do not price their products for the group, which is why 800 unlocks the best conditions by default. So, what should you do to get to this magical figure?
1. Identify Where You Stand
Let’s see what your score is at the moment. Then, you should determine the number of points you should gain. There are two ways to boost the total — through repair and rebuilding. In the first case, you need to fix errors in your borrowing records. On the other hand, rebuilding is the improvement of a poor history through responsible borrowing and timely repayment.
If your status is unjustified, you can demand correction. Repair companies are there to help you achieve the goal much faster. For example, check on creditfixed.com about the Credit People company. You should always keep in mind that the best providers have high BBB ratings and customer feedback on websites like TrustPilot.
All credit repair agencies work similarly. First, they collect and analyze your records to find inconsistencies. Then, they gather evidence and initiate formal disputes with the reporting agencies. The issue is that any of the bureaus can make mistakes. Sometimes, consumers need to have all three reports corrected, which requires more time.
To check your records, go to the only authorized source — www.annualcreditreport.com. As the address suggests, every US citizen has a right to get one free copy of their records from each of the major agencies once a year. Now, due to the economic toll of Covid-19, the frequency has been changed to weekly. After collecting the documents, analyze them thoroughly to see if the assessment is justified.
2. If You Need Repair
You should know that credit repair is not an exact science. The experts may give a tentative evaluation of score increase, but they will not promise to add a certain number of points. Therefore, depending on your situation, it may be reasonable to repair and rebuild the history at the same time.
The process of fixing your credit score might take several months depending on the number of disputed errors. After detecting errors and collecting proof, the experts will send formal correspondence to the agencies concerned. The law obliges every bureau to investigate each claim within 30 days (it can even take 45 days in special situations).
Improving a Fair Score
If your total is disappointing but accurate, unfortunately there is no way to fix the past. In this case, all you can do is reconsider your current borrowing behavior. Note that any negative information stays on your records for 7 years, except for some bankruptcies that linger for a decade. Mind that fulfilling your financial obligations is the most influential factor. In addition, you may work with other components of the score. And here are a few suggested strategies.
1. Work with Balances And Limits
Roughly a third of FICO — about 30% — depends on a factor known as credit utilization, which applies to credit cards only. This is the proportion between available credit and the amounts charged. In order to determine your current status, divide the sum of balances by the sum of limits. For example, if you have three credit cards with a collective limit of $10,000, and you have spent $3,000 in total, the indicator is 30%. This is well above the recommended limit of 10%.
There are two ways to reduce the percentage. First, you may pay off some or all of the balances — in this case, you would need $2,900, so there would be just $100 left to pay. If you cannot afford this, you can try getting more credit instead. Ask for a limit extension, or you can get another card from a different issuer. Note that utilization is calculated for all of your cards collectively, so the new limit will also contribute to it.
2. Become an Authorized User
If you have a family member or a friend with a positive borrowing history, you may ask to be included in their account. Explain to them that you are not going to use any of the money and that this is only necessary to boost your score.
If you succeed, their account will be added to your report, and the limit will work in favor of your credit utilization. Of course, the account holder should also be responsible for their payments. Otherwise, their failures will only exacerbate your problems.
3. Add More Information
Try Experian Boost, a free service from the nationwide bureau. It allows you to extend the range of data included in the scoring. You can add utility payments, phone bills, your HBO subscription, and other items. On average, consumers see their scores rise by 12 points due to such information included.
Getting to 800 may be a simple or daunting task depending on where you stand. If your current score is inaccurate, begin by improving It through repair — DIY or professional. At the same time, work with your current balances and limits, and make all payments on time to maintain a good reputation as a borrower. If you need a boost for a specific goal, such as getting a mortgage, plan ahead. Check your status months in advance, so you have enough time to improve it.