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There are many benefits to having a good credit score. From qualifying for low interest rates for a mortgage, car loan, top tier credit cards, get approved for rentals, better insurance rates, and more. Having a great credit score can save you hundreds or thousands of dollars in interest. While there are many benefits to having great credit there are simple ways you can implement to get a score over 800. I’ll show you the exact tips I used to get a good credit score to over 800.
What is a credit score?
A credit score is basically a 3 digit number which is a financial institution’s version of a report card that assesses your overall credit risk. Basically, it determines how likely you may be to pay back a loan.
This is why lenders, landlords, or employees may check your credit score. It gives them an idea of the overall risk involved when lending you money, renting you an apartment, or even giving you a job.
All credit scores are not created equal. There are different companies that created their own credit scoring model which may yield different results. However, the most well known type of credit score is the FICO.
A FICO credit score is calculated based on 5 factors:
- Payment History 35%
- Amount Owed 30%
- Length of Credit History 15%
- New Credit Opened 10%
- Type of Credit 10%
Is a credit score and a FICO score the same?
Usually, when people think of a credit score, they may be referring to a FICO score which is the most well-known type of scoring system.
The FICO score was created in 1989 by the Fair Isaac Corporation. It was meant to streamline the lending process and make it fair and consistent, it is used by more than 90% of lenders.
Over time, other scoring models were created by other companies to serve as competition to the FICO score. It will be good to familiarize yourself with the idea that there are other credit score models out there. Another scoring model that may be more commonly used second to the FICO score is the Vantage Score Model.
Vantage Score Model
The Vantage Score Model was created in 2006 by the three well-known credit bureaus-Experian, Equifax, and TransUnion.
It has a very similar model compared to a FICO score which consists of:
- Payment History 40%
- Age and Type of Credit 21%
- Credit Utilization 20%
- Total Credit Balances 11%
- Recent Behavior/Applications 5%
- Available Credit 3%
Other Credit Scoring Models:
- FAKO Scores
- Free scores referred to as “educational” or “equivalency” scores for consumers knowledge only. It is not used during the lending process.
- FAKO score range can be very similar to your FICO score.
- Based on data from TransUnion which determines risk of newly opened accounts rather than existing ones.
- Not widely used due to it’s limitations in assessment.
- TransRisk scores have been known to be lower than a FICO score.
- Experian’s National Equivalency Score
- Can be obtained for free at Credit Sesame or Credit.com
- Score ranges from 360-840
- Credit Xpert Credit Score
- Developed to help approve new accounts for businesses.
- It was created to help detect inaccurate information on credit reports to help raise scores fast.
- CE Credit Score
- Free and available at Quizzle to give consumers a transparent and accurate depiction of their score.
- The scoring ranges from 330-830
What are the ranges for a credit score?
Credit scores have numerical ranges. For the FICO score, it goes anywhere from 300-850 at the highest. The chart below is based from the information provided from Experian. For simplicity purposes, we’ll cover the two major credit scoring models: FICO and Vantage Score Model.
The FICO credit score ranges from:
- 300-579 Very Poor-16% of the American population
- 580-669 Fair-17% of the population
- 670-739 Good-21% of the population
- 740-799 Very Good-25% of the population
- 800-850 Exceptional-21% of the population
Vantage Score Model ranges from:
The Vantage Score Model is very similar to the FICO Score Model. It has a range from 300-850. According to White Jacobs, the data below indicates which percentage of the population falls within the credit score range.
- 300-549 Very Poor-17% of the American population
- 550-649 Poor-34% of the population
- 650-699 Fair-18% of the population
- 700-749 Good-13% of the population
- 750-850 Excellent-30% of the population
Where can I get a free credit score?
If you want to check your credit score, there are plenty of sites that can give you a glance for free. It’ll be good to know where you stand.
- Discover Credit Scorecard
- Bank of America
- Wells Fargo
- CreditWise from Capital One
- Chase Credit Journey
- Credit Sesame
- Lending Tree
Why do I need good credit?
People often rely on credit for many big financial decisions in their lives. We often need credit to borrow money for purchases like a car, home, credit cards, personal loans, student loans, apply for rentals, or even to pass employment checks.
Having good credit can often save you more money and simply just make your life a bit easier. There are 6 great reasons to bump up your credit score and maintain great credit.
1 | Savings On Interest
Those who have great credit will generally be eligible for lower interest rates than those with poor credit. This can save you a lot of money over time! Check out the example for different interest rates applied between poor credit to good credit below:
|781-850||4.69% Interest||$25,000 Loan Amount||60 Months||$28,094||$3,094 Interest Paid Over Time|
|601-660||10.91% Interest||$25,000 Loan Amount||60 Months||$32,546||$7,543 Interest Paid Over Time|
When any money is borrowed from banks, interest is applied. You want to aim for the lowest interest rate as possible so it can save you money in the long run.
In the example provided above, a person within the 781-850 credit score range pays $3,094 over 60 months compared to paying $7,543 if they had a 601-660 credit score. The person with the better credit score would save $4,449 over time.
It’s best to always aim for a high credit score to benefit from the lowest interest rates available. This can be applied to all types of loans from mortgages, personal loans, car loans, and more.
2 | Better Credit Offers
Those with good to excellent credit can be eligible to apply for great credit offers. There are credit cards that offer significant amount of bonus points for travel based on a spending limit usually. These travel cards will often require Good to Excellent credit in order to be approved. Some of the travel cards are:
- Chase Sapphire Preferred Card– $1,200 Bonus Points Value
- Capital One Venture Card– $700 Bonus Points Value
- American Express Gold Card– $700 Bonus Points Value
- Delta SkyMiles Card by American Express-$580 Bonus Points Value
- Alaska Airlines Visa Card-$820 Bonus Points Value
Ever since we paid off all our credit cards, our credit score has skyrocketed. Now we always get approved for the best travel rewards credit cards. Find out how we got a free cruise or free flights to Las Vegas below.
3 | Better Rates For Car Insurance
Having a higher credit score will often give you better premiums for your car insurance. While you may not be turned down for having poor credit, having a good credit score will certainly get you lower premiums.
4 | Increase Chances of Approval for Rentals
Landlords can check your credit report and credit score to determine if they should approve your tenant application or not. It’s up to the Landlord whether or not they want to approve you based on the information.
If you have poor credit, they may not turn you away depending on the situation. However, they may require a higher security deposit or have a co-signor in order to approve you. On the other hand, if you have great credit they may be quick to approve you.
5 | Waive Security Deposit
There are instances where security deposits may be waived.
Some utility companies that may check your credit history. If you don’t have the best credit, they may ask for a security deposit or a letter-of-guarantee which a family member or friend may pay your bills if you’re unable to.
Cell phone companies may also waive a security deposit to those with good credit and also offer a discounted price of phones.
6 | Employment Hiring Process
Did you know that some companies check your credit as part of the hiring process? They check credit as a means to verify someone’s financial responsibility, verify identity, and background.
In some instances, companies may find it necessary to run a credit check on individuals who will be assigned to managing other people’s funds. They can’t have people who aren’t able to handle their own financial matters properly to take care of client’s finances.
What are the steps to get a good credit score to 800?
For as long as I can remember, my credit score has never broke 800 until last year. My credit score even dipped down to the 600’s while I was in school. My score has passed the 800 mark and I’ll show you exactly what I did to get it there.
Pay Bills on Time
Late payments can hurt your credit score and it accounts for 35% of your FICO rating. The bad news is that late payments, more than 30 days late, can stay on your credit report for up to 7 years! Yikes.
This is one thing that I always tried to keep up with. I tried to always pay my bills on time even if it was minimum payments. However, there were occasional times when bills may slip through the cracks.
There were times when I didn’t set my auto payment for a credit card and missed a payment here and there. The great part is, it’s easy to get this issue resolved with credit card companies.
You can usually call them and explain your situation, most of the time they will reverse any late fee charged on your statement.
Usually, credit card companies won’t report the late payment if it’s a few days late. If it passes an entire billing cycle, they will usually report it to the credit agency.
If you’ve missed a payment, make sure to pay as soon as you can.
Another huge downside to missing payments for credit cards is when they’re able to remove a promotional interest rate offered to you. Say, you were getting a promotional rate of 0%, well if you miss a payment, they can change that interest rate to their original rate of 18% or higher.
- Set reminders to help you pay your bill on time
- Set up auto pay
- Call creditors as soon as you notice you’ve missed a payment
Keep Your Debt Balances Low
Your overall debt to credit ratio accounts for 30% of your FICO score. It’s beneficial to have a higher credit to debt ratio. If you owe too much money compared to your credit limit, this can have a negative impact on your score.
This is the main area that has significantly boosted my credit score to over 800. My current FICO credit score below:
My credit score had always toggled around the upper 600’s and mid 700’s. Especially when I was in school, my credit rating plummeted because I wasn’t working to pay off my credit cards.
I noticed that as soon as we started attacking our credit debt, our credit scores shot up. When my husband and I first started our debt paying journey, we used the Snowball Method and paid off all our credit cards.
Paying off our credit balances dramatically increased our credit availability limit. Since this category makes up 30% of a FICO score, it was the factor that helped me get into the 800 score club.
- Pay off your credit cards using the Snowball Method
- Try using only 1 credit card to pay off the balance in full each month
- Call creditors and ask for a credit limit increase
Want to start getting yourself out of debt? We knocked out over $100,000 in just 24 month and you can find out some great tips to get yourself started too. Grab your free Debt Thermometer and join us in the free 5-Day Debt Free Bootcamp.
Credit Inquiries Impact Credit Score
Credit inquiries can make an impact on your credit score by a few points. If you were to open up many credit cards around the same time frame, it can affect your score significantly.
There are hard inquiries which directly impact your score and soft inquiries which doesn’t have an affect on it.
Hard inquiries generally can stay on your credit report for a little over two years.
Hard Inquiries on Credit
- Opening up a cell phone plan
- Applying for a mortgage
- Applying for an auto loan
- Opening up a credit card
- Applying for a student loan
- Requesting for a credit line increase
- Getting a rental car with a debit card (possibly hard inquiry pull)
- Applying for a personal loan
- Applying for rental apartments
Soft Inquiries on Credit
- Credit card companies automatically raising your credit limit
- Pre-approval offer from a lender
- Checking your own credit report
- If you need a loan for a car or mortgage, it’s better to shop around during a short time frame. Some scoring models will consider the multiple inquiries as a single inquiry if it’s done under a small time frame.
- Check your credit report to make sure there are no other hard inquiries that you are not aware of. You may be able to have them removed if you didn’t authorize the credit pull.
- Only apply for credit if you really need it.
Length of Your Credit History Matters
The length of your credit history has a 15% impact of your FICO credit score. The longer you have a credit line opened, the better it will help your score over time. Especially, if you’re making payments on time. It’ll be best not to close out any credit cards you have, even if you don’t plan on using them.
When we started paying off all our credit cards, I didn’t cancel our cards. Some of my cards are over 10 years old. All we did was pay off all balances and just leave them alone.
My husband actually canceled 1 credit card which he had for years not knowing it would impact his score. Next thing we knew, his score dropped and it hasn’t reached the 800’s as I have.
Monitor Your Credit
It’s always important to keep tabs on your credit report. There may be things on there that can have negative impacts on your score.
I check my credit report at least once a year just to make sure everything is in good standing and there are no errors.
One time, my information was associated with a completely random address. I had to correct that right away because that property had a lien associated with it. It was bizarre.
You can also check all your accounts to see if there are any delinquent payments posted. One of my student loans actually reported a 30-day late payment to the credit bureau without my knowledge. Delinquencies have a negative impact on your report and score and can stay on your report for up to 7 years.
I called up the student loan provider and had them reverse that initial report.
- Check your free credit report and score on Credit Karma
- Get your free annual credit report on Annual Credit Report (only credit report, no credit score)
- Fix any discrepancies on your credit report
- If there are any delinquent payments, reach out to your loan provider and see if they can help you remove it
Give Your Score a Boost
If you’re looking for a boost to your credit score, you can give Experian Boost a try.
If you pay for your cell phone bills or utility payments through your checking account, Experian Boost considers that as on-time payments.
Since payment history makes up 35% of your FICO score, this can significantly help your credit score.
How Do You Use Experian Boost?
First, you sign up for free with Experian Boost. Link your bank account that have been used for paying utility and cell phone bills on time.
Experian Boost then pulls all your on-time payments to apply. The boost to your Experian score can take as little as 10 minutes.
What Bills Can You Use For Experian Boost?
Experian Boost won’t work for credit card bills. It has to be payments made from a checking or saving account.
On time payments:
- Utility (gas, water, electricity)
- Cell phone/Land line
Experian Boost gathers your on-time payments and applies it towards your payment history giving you a credit score boost.
What to Consider When Signing Up For Experian Boost
Experian Boost can definitely help your credit score. According to Experian’s website, 86% of users with a FICO score of 579 and below saw an average increase of 21 points.
Although, the service can help boost credit scores, it doesn’t have the same effect across the board for all.
- Can only use a checking/saving account for assessment of on-time payments
- Need at least 3 months worth of bill payment history
- Must have at least one credit card or a loan on your credit report.
- Experian Boost is 64% more effective with very poor to fair FICO scores compared to only 3% effectiveness for those with very good to exceptional FICO scores.
- Just because your score increased doesn’t mean your lender will use the same exact FICO scoring model as the one from your report.
- Adding on-time payments to your credit file with Experian won’t transfer over to TransUnion or Equifax.
Is Experian Boost Worth It?
It’s a free service that can potentially help your credit score and it doesn’t take long at all to set up. If your credit is within the poor to fair range, it may be more worth while to try it out. Just keep in mind that if you are applying for a loan, check to see if the lender uses Experian.
Having great credit will only help you financially and in life. It can save you thousands of dollars in interest, help you get approved for jobs or apartment rentals. You can improve your credit score and get it up to the 800’s as I have.
Most importantly, creating a budget has helped me tremendously in making sure I have enough funds for bills. Set up auto payment if your bad with paying bills on time. It’s very important to not be late with payments since it has a very large impact on your credit score.
Check your credit history and score at Credit Karma and dispute any discrepancies on your report.
Don’t cancel long term credit cards as it will have a negative impact on your credit score.
Keep your debt balances low by using the snowball method to pay off your debt, especially your credit cards. I think this has been the major reason why my credit score broke the 800 mark and is now 836. What I do now is use only 1 credit card and pay it off in full each month. Having a large credit to debt ratio will help your score out significantly!
If you need a fast credit boost, you can try Experian Boost.
I hope you found some helpful tips here and you can also be on your way to the 800 score club, thanks for stopping by!