Getting and maintaining an excellent credit score over 800 is vital in this day of age to get the best rates and save the most money. This puts you in the coveted Elite Tier of all borrowers. Only about 20% of all borrowers have achieved a excellent credit score over 800. The financial benefits of having your credit score in this elite tier can be tremendous and could potentially save you hundreds of thousands of dollars.
Take action now to improve your credit score and ensure you save the most money possible by getting yourself the lowest mortgage and loan rates, best credit card perks, and the many other benefits that are only available to this elite financial class of people!
What is a credit score and why you want yours over 800
The most common and most used credit score is the FICO® Score. This credit score is on a range from 300-850, which shows creditors how likely you are to pay them back if they lend you money. The bigger the number, the more creditworthy you appear and the more likely it will be that you will receive the financial product you are after and at the best rate. This number is calculated a lot of ways and some of the financial items that affect your credit score are payment history, debt, and how often you request new credit.
A good credit score starts at 670 or better, but the elite credit scores that give you the best rates and most savings starts at 800. Credit scores of 800 and over are in the top tier of all credit scores. This is the area lenders like best, because they are confident that they will be paid back any money that they loan to you. This confidence entices them to give you the best rates so that you choose to borrow with them.
The average credit score across all age groups in the United States is 703. This means that obtaining a score of 800 will help you stand out from the crowd and give lenders a reason to give you their best rates. This also shows that you have been making better financial decisions and have been more responsible with your money (which boosts my ego just a little and it should do the same for you!).
See how your credit score is determined below:
What can you do with a excellent credit score
- Save a Ton of Money – This is the biggest benefit to having a high credit score. Having and maintaining a credit score can save you hundreds of thousands of dollars over your lifetime.
- Mortgage – This is probably the biggest expense you will ever have in your life. This is also the area that will save you the most money by having a credit score over 800. When I bought my first house I had a credit score in the 600’s. This got me a 4.65% interest rate and a hefty private mortgage insurance (PMI) payment on my mortgage. I recently refinanced my house after getting my credit score over 800. My new mortgage interest rate is 3.1% with no PMI payment. By having an elite credit score I saved hundreds of dollars a month instantly, and will save hundreds of thousands of dollars over the life of the loan.
- Loan Rates – Whatever your reason for you need a loan, having an excellent credit score will ensure you get the loan with the best rates.
- Private Student Loans – Let’s face it, student loans are already crazy enough as it is! If you are one of the many students that need a private student loan having a higher credit score will reduce the amount you have to pay back and decrease the time you have to pay on them. Don’t let private student loans stay with you forever!
- Car – Buying a car is a huge expense with large monthly payments. Lower your monthly payments and get the best auto loan rates. Car dealers might even be more willing to give you a cheaper price on the car.
- Get a Job – The current job market is super competitive and employers are looking for new ways to find the best candidate. Checking your credit gives them a quick snapshot on how you manage your life and the decisions you make (This might be more important to those seeking jobs in the financial sector). Great credit is a must if you want any job in the government or private sector that requires a clearance.
- Business Loans – Have you always wanted to start a business? Show the bank that you are trustworthy and they should invest in you! Lower payments also ensures you have a greater shot at success, by having greater profit margins. Having an excellent credit score can mean the difference between your dream coming true or it just staying a dream!
- Credit Cards – This is often an overlooked benefit of having an elite credit score. Be approved to get the credit cards with the best rewards and perks. My family travels for free every year because of the rewards we receive from our credit card. This would have only been possible with an elite credit score
How to raise your credit score
Now to the good stuff! Earning a credit score over 800 takes time and practice, but it isn’t as elusive as some people think. Anyone can do it by properly managing their credit and making better financial decisions. Here are some tips and best financial practices to ensure you make it into this elite club:
- Payoff Debt – I saw the biggest improvement to my credit score when I started to pay off my debt. By the time I payed off all my debt, my credit score had jumped by over 100 points. The more debt you have, the worse you look to potential lenders. Along with the lower rates I receive from my credit score, I also have a more money left over by not having to make these monthly payments.
- Work with Collectors – Debt in collections stays on your credit report for 7 years. This will affect your credit score for a long time. Often times collectors will buy this debt from the original lender for pennies on the dollar when you default on a loan. They don’t have much invested and want a quick payday. Use this to your advantage to negotiate lower payoffs to get the debt paid off. I’ve negotiated with a couple of collectors to completely remove the collections account off my credit report, as long as I paid them quickly. When working with collectors make sure you get everything in writing and don’t give them your bank information or credit card numbers.
- Pay Bills On Time – 35% of your credit score is based upon payment history. That is why it is vital that you commit to paying all bills on time. One late payment can severely affect your credit score and lower it by a significant amount.
- Setup Autopay – Ensure your bills are paid on time by setting up autopay on all accounts. Don’t take the chance on forgetting to pay a bill on time! Account doesn’t have autopay, setup a recurring bill payment through your bank. Automate the process and easily improve your credit score.
- Don’t Close Your Oldest Accounts – A major area that affects credit score is the length of your credit history. Closing the oldest accounts will lower the average length of credit among your accounts and negatively impact your credit score.
- Don’t Open New Accounts – Hard credit inquiries remain on your credit report for 2 years. It is recommended that you don’t open any new accounts or have any hard inquiries on your account for the 2 years prior to buying a house, to ensure you get the best rate. You can however check your own credit report without it affecting your credit score.
- Switch to a Debit Card – Debit cards give you most of the same benefits a credit cards, without the temptation of running up your credit.
- Only Use 30% or Less of Your Credit Limit – It is healthy to use part of your credit limit to build build your credit score, however if you use more than 30% of this it could negatively impact your credit score.
- Dispute Inaccurate Information – Did you know that you can dispute inaccurate information on your credit report? Submit a dispute to each of the 3 credit bureaus Equifax, Transunion, and Experian where you find discrepancies. You submit the dispute and the credit bureau takes care of the rest. They contact the creditor, which has a certain time to respond and prove that the debt is correct. I had a few paid off debts in collections that fell off my report, because the creditor simply didn’t respond.
- Monitor Your Credit – This is one of the most important things you can do to raise your credit score. Checking your credit score and report will let you know the areas you need to improve. Also, it will also alert you when something is negatively impacting your score. We recommend the following free ways to check your credit report and score:
Annualcreditreport.com – Get a free official copy of your credit report every 12 months.
Creditkarma.com – Check your credit score and report for free.
Creditsesame.com – Similar to Credit Karma you can check your credit score and report for free.
Open a new world
Obtaining a credit score of 800 and above opens up a whole new world of savings and benefits. Taking action and working at raising your credit score can have huge impacts in your life and can reward you with savings of tens to hundreds of thousands of dollars.
Act now to improve your credit score to obtain the best rates! It has already changed my financial life for the better and can do the same for you!