When it comes to the FICO® Score 8, the most widely used credit score in the country, a score of 800 (or higher) signifies excellence.
In FICO terms, a score of 800 or above is “Exceptional” and way above the national average. Borrowers in this range will most likely not have a problem getting credit. Why? Based on history, only about one percent of 800+ credit score holders are likely to become delinquent. Low risk means easier lending.
So who actually has a FICO® Score of 800 or above? What type of person has such “exceptional” credit that he or she can walk into a lender’s office without any worry of being turned down? What traits do these people possess that we might want to consider emulating?
For the most part, the answers lie within the elements that make up a credit score.
Steps to get to 800.
To get to a FICO® Score of 800, it’s important to first know what makes up a score so you know what behaviors to change (or maintain). There are five major factors that make up a score:
Payment History. The repayment of past debt. It accounts for 35% of a score.
Amounts Owed. The percentage of available credit being used/borrowed. It accounts for 30% of a score.
Length of Credit History. The length of time all credit accounts have been open. It accounts for 15% of a score.
Credit Mix. The combination of credit cards, retail accounts, installment loans, finance company accounts and mortgage loans. It accounts for 10% of a score.
New Credit. The frequency one shops for new credit within a specific timeframe. It accounts for 10% of a score.
So what do these factors have to do with those people who have a score of 800 or higher? Let’s take a look at the traits these people tend to possess…
- They pay on time. Payment History is the greatest percentage of a credit score. Therefore, people who pay on time tend to have higher scores. Even if you can only pay the minimum payment, make your payments on schedule and your score can begin its climb to the 800 mark.
- They keep available credit usage to a minimum. The percentage of available credit being used makes up the second largest percentage of one’s credit score. The higher the percentage used, the lower the score. On average, “exceptional” credit score holders use about 7% of their available credit.
- They have a long, solid credit history. People with higher credit scores typically have longer credit histories than those with lower credit scores. That’s why closing old, inactive credit accounts can lower your score. It not only erases some of your credit history but at the same time it increases your credit utilization ratio.
- They have a healthy assortment of credit. From credit cards to auto loans to mortgages, consumers with a greater mixture of credit lines tend to have higher credit score. Just the right mix proves that lenders trust you with their money and also increases your credit utilization ratio.
- They search for new credit carefully. High credit score holders don’t open new accounts within a short period of time. They also search for credit in ways that don’t produce a multitude of inquiries into their credit file. Too many inquiries and an abundance of new credit within a small timeframe can signify greater risk – especially for borrowers with a short credit history.
It appears that people who have FICO® Scores of 800+ pay close attention to the five factors that make up a credit score. In doing so, they’re always mindful of what can cause their score to increase or decrease and then act accordingly. So if you’re working toward the goal of an 800+ credit score, remember how important it is to think before you act – especially when it comes to making credit decisions.
To learn more about FICO® Scores, how they’re calculated and ways to improve them, visit myFICO Credit Basics.
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