Well, Bargain Radar readers – come with us on a journey! We are throwing ourselves into a dream future! We have all woken up and logged into our credit score and seen 700+ pop up. After a little jig of delight and silent self Hi-5, we run through our solid and steady daily checklist that has got us here.
Now we are ready to move into the next stage! What do we do now to continue to see consistency and see further increases into the mid-700s and beyond? What do we need to do to hit that elusive ‘Very Good’, ‘Excellent’ or ‘Exceptional’ rating?
It will, without doubt, generally hold true that you should keep up the good practices you have got into the habit of doing to reach this point. You can review those factors and their relative importance in our article on ‘Improving Your Score’.
However, now you can also start looking at smaller tweaks and smart moves that can trend you upwards more quickly. You can concentrate on getting to the ‘top’ band in each of the factors on your credit score. These will take a little time, or a long time, as some will include having to be ‘aged off’ your report.
- Payment history: To help make sure you never miss a payment, one additional idea is to set up auto-payment options on all your accounts, so you don’t have to even think about it!
- Credit Card use: You will need to keep your overall usage rate at 29% or under. To avoid any potential mishaps and to give yourself some leeway, aim to be at 10% or less, plus NEVER close older accounts.
- Derogatory remarks: These can be added to your report by collections agencies or any public record, like filing bankruptcy. These stay on your report for 7-10 years. One tip here is to make sure and check your credit report very regularly. Identity Theft is a real concern these days and you want to be vigilant to spot any potential issues and bring them up with the credit bureaus as quickly as possible.
- Credit Age: This is one of the hardest factors to influence quickly, of course! The ideal average credit age is over 9 years. This is another very important reason to keep accounts open even after you have paid them off completely. Keep all your accounts open and in good standing. Also, refrain from opening new credit lines, as those brand-new ones will significantly impact your average.
- Hard Inquiries: Keep these at 0. This does mean not applying for any new cards if you have some inquiries already on your report. Those inquiries tend to take 2 years to ‘age off’ your report.
- Total accounts: The top band here is over 21 in total. This is a low impact factor and hard to make a large difference on quickly. You can add accounts over time but be sure to counter that positive impact with concerns over shortening your average credit age, which is a more influential factor when calculating your credit score.
- Try to diversify the mix of credit ‘types’ on your report: Most people tend to have ‘Credit Cards’ and ‘Student Loans’ listed in this section. Creditors like to see that you have a mix of different types of credit accounts. An ‘Auto Loan’ or ‘Home Loan’ can diversify your mix and help your score. However, this has a balance between the number of hard inquiries on your credit, so you must be careful to balance the advantages and disadvantages.
The Benefits of a 750+ Credit Score:
Once you get to the ‘Very Good’ or ‘Excellent’ levels of credit score, you will get preferential interest rates on many types of loans.
Your mortgage alone will be significantly cheaper, as the lender will see that you have a history of being able to meet your financial commitments. This makes them confident in loaning you money as against someone who has shown difficulty in making payments. The RISK you present is lower, so you benefit from all the work you have done. This alone could save you TENS OF THOUSANDS of dollars.
Additionally, your interest rate charges on other loans will be less, you will get access to credit card promotions that offer special deals and more perks. The list will go on and on!
But hey, as of right now, you’re in a dream and your score has crept over 700, which is awesome. Don’t sweat the small stuff and congratulations. Now you can really start to look at ways to continue to improve and start making that hard work pay! Maybe it’s time to look at Investments. We have some great articles for you here!