What Is An Excellent Credit Score?

By: Daniel Holcomb

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When you are wondering what an excellent credit score is, I first want you to know that, literally anyone can reach excellence in credit score. The closer you can get to the excellent credit score level, the better deals you get on everything. Cash is King, but credit is where it’s at! An excellent credit score is a numerical value that represents your creditworthiness to lenders and financial institutions. Generally, a score of 750 or above is considered excellent, and a score above 800 is considered exceptional.

How They Determine Your Credit Score

Your credit score is determined by a variety of factors, including your payment history, credit utilization, credit history, and the types of credit you have. Payment history is the most important factor, making up 35% of your score. This includes whether you pay your bills on time and whether you have any delinquencies or bankruptcies.

Tips To Increase Your Credit Score

Here are a few tips to increase your credit score to hit that 800-850 range! They are:

Credit Utilization:

Credit utilization, or how much of your available credit you are using, makes up 30% of your score. It’s recommended to keep your credit utilization below 30% to maintain a good score. The length of your credit history, or how long you’ve had credit accounts, makes up 15% of your score. Finally, the types of credit you have, such as revolving credit or installment loans, make up 10% of your score.

Pay Your Bills On Time:

To obtain an excellent credit score, the first step is to ensure that you pay all of your bills on time. Late payments can have a significant negative impact on your score, so it’s important to set up reminders or automatic payments to ensure that you never miss a due date.

Keep You Credit Card Balance Low

Next, it’s important to keep your credit utilization low. This sounds a lot like the first one, but I wanted to stress that you have to keep your credit card balance low. This means not using too much of the credit that’s available to you. One way to do this is to keep your credit card balances low, or pay them off in full each month.

A Diverse Mix Of Credit

It’s also beneficial to have a diverse mix of credit types, such as revolving credit and installment loans. This shows lenders that you can handle different types of credit responsibly. I will give you a quick personal story. I was on my way to get an excellent credit score. However, once I paid off my car. I only had my credit card payments. I made them on time, for years. However, my climb to the top was slow. Why? I didn’t have a mix of credit types. If you have a mortgage, car, credit cards, business loan, etc and you are paying them every month, your credit score will go up fast.

By the way, did you know that if you pay rent, you can now have that reported on your credit. If you pay your rent on time, every month, then you should report that. People are boosting their score by 40 points in ten days. Click here to find out more!

Check Your Report For Errors

Another step to achieve an excellent credit score is to check your credit report for errors. You’re entitled to a free credit report from each of the three major credit reporting agencies once a year. Review your report for errors, and if you find any, dispute them with the credit bureau.

Keep You Loans For As Long As Possible

Finally, try to maintain your credit accounts for a long time. I know it sounds dumb, but go back up and read my story about a diverse mix of credit. I learned this from a fellow soldier I worked with. This 18 year old wanted to build his credit. He would go to the bank and get a $1000.00 loan. He would go and pay back (give or take) $1100. After a couple of times, the banker asked why he was doing what he was doing. The banker told him, if he wants do this to grow his credit score. He is going to have to pay this loan over the year (which were the term of the loan). This increased his credit because it built him a history of payment and monthly reporting of his action.

The longer your credit history, the better your score will be. It’s not a good idea to open and close credit accounts frequently, as it can harm your credit score.

In Conclusion

In summary, an excellent credit score is a numerical value that represents your creditworthiness to lenders and financial institutions. A score of 750 or above is considered excellent, and a score above 800 is considered exceptional. To obtain an excellent credit score, pay your bills on time, keep your credit utilization low, have a diverse mix of credit types, check your credit report for errors, and maintain your credit accounts for a long time.