How to Get the Perfect Credit Score – 850 Points Club

Want to learn how to walk into any bank in the country and leave with a lot of cash at low-interest rates? No, we’re not talking about robbery. What we need is a perfect credit score. A perfect credit score isn’t out of reach, it’s a game you can win. And, the sooner you start, the easier it is to get. 

Is your credit score perfect? If not, you’re not alone, as the average credit score in the US is 687. The ideal of a sparkling 850 points is undoubtedly the ultimate goal for everyone. Having a perfect credit score is not about luck or any shortcut. By understanding how credit works and developing a credit strategy that works for my financial situation. Perfect scores are achievable over time.

It all starts with the basic understanding that credit and debt (credit is the ability to get debt, and debt is the amount owed) are not inherently bad. The word credit may conjure up the idea of ​​being in debt. But that’s not always the case, and fear shouldn’t keep you from building your credit (in fact, not using it can hurt your financial future. We’ll discuss that later). Lack of financial education and discipline can create bad, high-interest debt. When used properly, credit can provide benefits that you can’t get. It allows you to quickly take advantage of good investments and business opportunities. It can also help protect you in an emergency.

What is credit? How is credit scored?

Credit enables you to obtain goods or services (such as a credit card, car loan, or mortgage) before payment is made. Credit is trust. Trust to pay in the future. For all of us, credit doesn’t start when we reach a certain age, but when we take out our first loan or receive our first credit card. From then on, your credit report (i.e. your financial report card) can be tracked wherever you are. Not only will your report be pulled when you apply for credit; but it’s also treated equally by employers, landlords, government agencies, and insurance companies. Your credit score is based on the information on your credit report. The overall goal of credit scoring is to predict behavior. Lenders use these scores to predict the risk of borrowing money.

A credit report contains four types of information:

  • Personal information (name, address, social security number)
  • Account information (monthly payment amount, payment history, loans, and leases)
  • Public Record Information (Liens)
  • Inquiries (companies that have recently seen your credit report)

Credit scores were enacted in the late 1980s for banks to use scores based on industry-standard algorithms. This score will determine whether someone can be trusted, and a credit score ties personal identity to financial responsibility. It makes every American permanently responsible for their financial decisions. Of course, once everyone has a credit score, we need credit bureaus to monitor it. Credit bureaus emerged and developed algorithms to rate consumer credit scores.

Credit bureaus ( Experian, TransUnion, and Equifax ) have been scoffing at how the algorithm works. However, they provide grading scales that demonstrate that some factors carry more weight than others:

A factor for your credit score, expressed as a percentage, by dividing your total credit card balance by your credit limit (or available credit), your credit utilization ratio (“Total Available Credit” in the chart) can be found. A general rule of thumb is that lenders prefer a ratio below 30%. For example, a credit card with a credit limit of $10,000 and a credit limit of $8,000 would have an 80% credit utilization rate, which would scare away most lenders. Lenders prefer a revolving credit ratio of 2-3%. It shows that you are using it, and using it responsibly. People with very low credit utilization usually have high credit scores.

With this chart, you can easily see, for example, that a large balance can lower your credit score even if you pay on time and have a long credit history. Just because you’re good at one, two, or three factors doesn’t mean it’ll make up for poor performance in the other categories.

How to check your credit score

Several websites offer “free credit scores”. Ironically, you have to pay for most of these sites, and since each of the 3 credit bureaus rate your score differently, these sites will give you a credit score and try to get you an Additional payment. Avoid free scam sites. For example, you can receive a free credit report from once a year. It is authorized by federal law. Otherwise, look up your credit score with a specific credit bureau, or use a trusted site like Credit Karma.

When looking at your credit score, the breakdown of bad credit scores to excellent credit scores ranges from 300 to 850. The higher your score, the better your chances of getting a loan, and the higher the interest rate on those loans. Since there are no guides or specialized courses on specific ways to improve your credit score, there are many misconceptions that can negatively impact your habits and credit score. Consider the following misconceptions:

Myth 1: Credit cards are the best way to improve your credit score.

While it’s true that using and paying off your credit card can improve your credit score, there are several other ways to build and diversify your credit profile. An installment payment or car loan can have a bigger impact on your credit score.

Myth 2: Doing too many credit inquiries in a short period can seriously damage your credit.

Although too many credit inquiries can lower your credit score, usually only by a few points. For example, if several inquiries from car dealerships are reported in a short period, the credit bureaus will know that you are buying a car. Also, if you do get bored, it will be trivial. Hard inquiries, or simply lowering your credit score by a few points when a financial institution looks at your mortgage or credit card report.

Myth 3: Checking my credit score will lower my score.

Checking your score will act as a soft query, but will not lower it.

Myth 4: If you have a credit card but don’t use it, close the account.

Since 15% of your credit score depends on the length of your credit history, closing an account can hurt your credit score and utilization. If you have too many credit card accounts and have no choice but to close one, choose wisely.

Steps you can take to improve your credit score:

Step 1: Check your credit report. You need to check your credit report before you can improve it. Services like Credit Karma will give you a free report detailing where you need to improve.

Step 2: Make sure there are no errors in your credit report. Make sure your credit history is correct. If it is incorrect, please file an objection. You are guilty until proven innocent. You won’t be the first to have an inaccuracy on their credit report. More than 40 million Americans have inaccurate credit reports.

Step 3: Establish roots of credit. Here are some different ways to build the roots of your credit:

  1. You can do this by getting a premium rewards card (Visa, MasterCard, American Express, Discover). Spend all possible expenses on them and pay them in full each month. 3 to 5 cards are a good option for creating an established credit profile.
  2. You can also get affordable installment loans. This builds deeper roots so that your profile isn’t just based on credit cards. Also, having other bad reports (not just credit cards) will keep your score from dropping dramatically if you are forced to close your account. 
  3. Every 6 to 12 months, call the credit card company and ask for a credit limit increase. Be as demanding as possible! For example, the $50,000 limit you are required to invest in.

If I have $5,000 per card used on average, then my goal is to have a credit limit of $100,000. Even if I pay it off in full each month, that 5% rate is still on my credit report. If you need to improve your credit score quickly, consider attaching a credit history to someone else with good credit, such as someone with good credit giving you a secondary or co-branded credit card.

Step 4: Set reminders and reminders to avoid late payments.

Do not exceed 30 days overdue, otherwise, the borrowing bank will report the overdue payment to the credit bureau, and you may be charged a late fee. Once there are reports of late repayments, it can taint your credit report for up to 7 years.

Step 5: Pay off bad debts.

You go to great lengths to learn how to get out of bad debt. Distressed debt can sometimes snowball, and staying away from high-interest debt is a necessary strategy to free yourself from financial stress.

Reminder: There is no one-size-fits-all strategy for improving or improving your credit, but understanding these principles and following them will help you achieve your ideal credit score. Let’s work together to make yourself a person with a good credit history. 

By Cary Grant

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