Having a good credit score will help you get approved for mortgages, loans, or credit cards with the best interest rates. And improving your credit score doesn’t require rocket science. What it does require is time, hard work, and self-control.
In order to succeed financially, one must learn how to establish and keep a high credit score. Lenders base their decision to issue a loan or credit card on a three-digit figure known as a credit score. It tells whether they are likely to pay them back on time.
A person with a good credit score is probably more likely to get approved for credit cards and loans with the best terms. If their credit history is less than ideal, they can experience some difficulty receiving credit.
Continue reading if you want to learn how to create and retain a great credit score! This post will go over the advantages of having a credit score of 800, how to get an 800 credit score, and a few suggestions for improving and maintaining.
We’ll break down the process for you in this article.
What is a credit score?
A credit score is a generated number based on your credit report. It tells lenders whether or not they can trust you to handle money well. Your credit score number can range from 300 to 850. The higher the number, the better. The goal for most people is to hit at least an 800 credit score, and use that to fuel their mortgage or car loan.
The five variables used to determine the credit score are listed below, along with the proportion of the score each contributes to.
- Accounts for whether bills have been paid on time in the payment history (35%) category.
- Determines how many loans and how much credit is being used. Amounts Owed (30%).
- The length of a person’s credit history (15%) is taken into account.
- Based on various credit products, such as credit cards, mortgages, and vehicle loans, the credit mix is 10%.
- New Credit (10%): Takes into account the frequency of newly opened accounts and credit inquiries.
FICO ratings often vary from 300 to 850, as seen below:
- 800 to 850: Excellent.
- 740 to 799: Very Good.
- 670 through 739: Good.
- 580 to 669: Acceptable.
- Poor from 300 to 579.
How can you learn your credit score?
Speak to your bank if you wish to view your credit report. Most banks will provide you with a copy upon request. Many include this feature directly on their website or app. Some credit card issuers will also provide you with a copy.
Check your score thoroughly, making sure there is nothing negative hanging around on your credit report. Check your report for any errors or suspicious activity. There is nothing worse than finding out that there’s a small typo or another error on your report that’s crippling your score.
How to get 800 credit score
Now that you know your credit score, let’s talk about how to improve it. Did you know the average credit score in the U.S. is 711? This is higher than it has ever been, which suggests people are getting better at handling their finances.
If you wish to build a credit score in the 800 range, you will need to have a fantastic credit history with very few blemishes, if any.
Get rid of debt.
The first thing you’ll need to do is get rid of all unnecessary debt. If you are struggling to pay off a loan, mortgage, or any other form of debt, you won’t be able to build an 800 credit score
Focus on the end goal. If you want to be approved for low-interest loans in the future, you first need to get rid of all those high-interest loans you currently have.
Make payments on time.
The second thing you’ll need to do is always pay your bills on time. Sounds simple enough, right? But if an unexpected expense sneaks up on you, it’s easy to miss one payment, and that can cost you as much as 30 points on your credit score. If at all possible, pay ahead of schedule, or set up automatic payments for items like rent or car payments, as these are notoriously hard to stay on top of.
If you’re ever late on a payment (which we don’t recommend), call the creditor as soon as possible and explain why it happened, and offer some assurances that it won’t happen again in the future.
Borrow money to prove you can handle it.
Make sure that you have a solid chunk of credit history. The more credit history you have, the more robust your score will be. You can do this by opening new accounts in moderation. Four new accounts in twelve months is usually enough to help your score grow without pushing it up too high.
But don’t overdo it with opening new accounts. If you’re new to borrowing, start slow and take the time to balance your loans before looking for more approval offers. Pay off your balances every month, and never use more than 30% of your available credit at one time.
What are the benefits of getting a credit score of 800?
A person might obtain various financial benefits by getting an 800 credit score. Here are some of the benefits of establishing and keeping an excellent credit score:
Credit applications are more likely to be granted.
As previously stated, a credit score reflects an individual’s ability to repay money borrowed. They will be more likely to get approved for a loan or credit line if they have an exceptional credit score because lenders consider us as less risky.
Access to bigger credit limits and lower interest rates
A credit score of 800 or above provides lenders the idea that someone is more likely to repay loans and, as a result, lenders are more prepared to offer better terms. This holds true whether they are looking for a vehicle loan, a mortgage, or a lower credit card interest rate. One of the many reasons you need to know how to get an 800 credit score.
If they already have excellent credit, they are likely to be offered better terms on an auto loan or a mortgage. For credit cards, it may be necessary to apply for a better offer, especially if it has been in place for some time.
Once a person’s credit score reaches 800, they may need to contact their present credit issuers to inform them on their credit score in order to extend the credit line or cut the interest rate.
Qualification for better credit cards with better incentives
While using the same credit card for a long period can be advantageous in terms of the duration of a person’s credit history, they may also miss out on crucial benefits.
A credit score of above 800 might qualify a person for a variety of benefits, including:
- Earning money and airline miles at a faster rate
- Airport lounge access
- Hotels provide complimentary breakfast.
How to maintain an 800 credit score
Once you have figured out how to get an 800 credit score in a healthy range, you will want to maintain it. There are several ways you can do this.
Evaluate your spending
Knowing where you spend your money is key. Create a spreadsheet and evaluate every purchase over a period of several weeks or months to get an idea of where the bulk of your money is being spent. This can be a very enlightening experience!
Forecast future expenses
If there’s one thing everyone needs in life, regardless of how much money they have, it’s foresight. It’s important to forecast both your costs and your income. Think about each month ahead, and evaluate what expenses might come up, including all major planned purchases. Estimate how much income will be coming in each month, and balance your spending accordingly.
Make a budget
Set up a spreadsheet, or use a budgeting app to track and plan your spending. Using your pay stubs, invoices, and receipts, enter all income, regular expenses, and extra spending to see how your finances line up.
If you’re self-employed, you can use various online tools to track your finances. Stay organized by creating invoices for all your projects, and use a paystub generator to track payments received. When applying for loans, you can also use these documents as proof of income, as long as your pay stubs are accurate.
If there’s one thing you’ll need to pay attention to, it’s impulse purchases! It’s really easy to get sucked into a sale without realizing what you’re spending and have to face the consequences of it later. If your expected income is already budgeted by category, you should be able to evaluate at a glance whether you are able to make a purchase or not.
Having a budget will help you stay on top of your bills and prevent any nasty surprises from sneaking up on you.
Set aside savings
Most people only think about their expenses with the current month in mind. They don’t consider how one purchase can impact them years down the line. But there will be times when additional money is required for unplanned expenses, such as a surgery or perhaps a loss of income, and unless you have money set aside, your credit score will take a hit.
Make room in your budget for savings. Determine a set amount to set aside each month, and don’t be tempted to touch those funds.
As you can see, building and maintaining a credit score of 800 is not impossible. By keeping a close eye on your finances, you can improve them over time to achieve your goal of an 800 credit score.