Obtaining the perfect credit score may be impossible for most people, but you need much less than a perfect score to get all of the same benefits. Going for perfect credit is really an effort in futility and doesn't offer much more than bragging rights. This doesn't mean, however, that you should slack off on trying to boost your score.
Identification
The FICO scoring scale goes from 300 to 850. Other scoring systems may use a different range. The VantageScore model, for instance, tops out at 900. In the FICO system, an 850 is only theoretically possible and even if you had it, you may not necessarily be the best investment possible for a lender. FICO uses several different rating systems based on your demographic, such as new borrowers. Thus, you may just be the least risky borrower in your bracket. Alternatively, you might have a perfect rating in one demographic, but less than that in another.
Considerations
Having the best credit does not require you to own an 850 FICO score. Anything over 750 to 760 requires dedication to paying bills off on time and keeping debt levels low. Thus, most lenders consider anyone in the 750 to 850 range equally trustworthy. Some lenders may have a few perks, such as a slightly lower interest rate, for people with extremely high scores -- 800 and above.
Tactics to Get a Better Score
Run your credit report from Equifax, Experian and TransUnion each year -- you get one free from each bureau. Lenders use this data to calculate your FICO score, which is the most popular scoring system. Compare data on these reports to your accounts and search for errors. Do not use more than half your available credit limit on all of your cards combined and each individual one. Mark bill due dates on your calendar and try to pay a few days early to keep a buffer zone.
What Not to Do
Do not close credit card accounts or retail cards. The fewer accounts you have and the lower your available credit limit, the more likely you are to go over 50 percent on your credit utilization ratio. Ideally, you want as much credit as possible available to you, but low balances. This proves that while you are qualified for a high limit, you do not need it and have the wherewithal to avoid using it.
0 comments:
Post a Comment