What is a perfect credit score and how many people have one? Recent studies show that just 1.2% of the American population has a credit score of 850. However, 45% of the population has a credit score that’s considered to be very good or exceptional.
While it’s not necessary to have a perfect credit score in order to access certain things such as great rates on a mortgage loan or the best rewards credit cards, it’s a great goal to strive for. It takes time and a lot of financial responsibility to have a perfect credit score, meaning that if you’re going for it, prepare to be in it for the long-haul.
Aside from monitoring your credit score, and the credit score of your friends and family, via Float, here are eight financial tips and tricks that can help you work towards your goal of having a perfect credit score or at least one that’s pretty darn close.
How to Get a Perfect Credit Score
1. Pay Your Bills on Time
Payment history is one of the biggest factors affecting a credit score. If you want to learn how to get a perfect credit score, you’re going to have to become diligent about making your payments on-time every month. According to FICO, about 98% of “FICO High Achievers” have zero missed payments. Missing one payment isn’t the end of the world, but if you’re working towards reaching that 850 goal, you can’t afford to miss a single payment.
2. Keep Your Credit Utilization Ratio Low
Credit utilization refers to the amount of available credit you use each month. Generally, it’s a good idea to keep this at or below 30%, but it’s even better if you can stick to using just 10% of your available credit each month. Credit reporting agencies look at this when determining your credit score. So, avoid charing large purchases to your credit card if you don’t plan on paying it off immediately.
3. Avoid Hard Inquiries
It’s hard to build credit without applying for new lines of credit, specifically credit cards. But, each time you apply for credit (in most cases), it’s counted as a hard inquiry against you as the company has to pull a credit report to look into your creditworthiness. Soft inquiries are okay, such as the kind that occurs when using Float, but definitely avoid hard inquiries to keep your credit score high.
4. Have a Good Mix of Credit
Credit mix is the mixture of lines of credit that you have open. It’s a good idea to have a good credit mix, meaning that you should have various different accounts open and reporting to credit reporting agencies. This can be anything from credit cards and auto loans to mortgage loans and student loans. If you’re just starting out building credit and don’t qualify for many loans or credit cards, look into getting a secured credit card.
5. Work Towards a High Credit Limit
The more credit you have, the higher your credit score will be as it demonstrates that you’re financially responsible enough to handle that limit and pay your bills on time. Over time, if you’re working towards a perfect credit score, try to increase the credit limits on the cards you have. And, follow the same tips as mentioned above; always pay your bills on time and keep your credit utilization ratio low.
6. Keep Accounts Open
One of the determining factors of your credit score is the average age of your accounts. The older the average age of your accounts, the higher your credit score will be. So, don’t close old accounts! If you have a credit card that you don’t use, it’s often wiser to keep it open and try to use incorporate it into your financial life (use it for gas or groceries, anything small) as opposed to closing it out.
7. Ask to be an Authorized User
Having trouble building credit in the first place? If you’re young, start out now by asking to become an authorized user on your parent’s credit card. Of course, you’ll want to make sure that your parents are responsible with the way that manage their own credit. But, if they have a low credit utilization ratio and make payments on-time, you’ll benefit from their usage of the open account.
8. Monitor Your Credit Score
It’s hard to know whether or not your efforts are working if you’re not consistently monitoring your credit score. While you won’t want to request reports straight from the credit bureaus (as that will result in multiple hard inquiries each time after the first), you should download an app to help you keep track of your credit score.
Download Float Today for Credit Reporting
Need help staying on top of your credit? Float is a fun new app that not only lets you access your updated credit score, but also allows you to share your score with friends and family and vice versa.
This is a great way to increase financial accountability while making it easy for you to celebrate and participate in the wins of your loved ones. See that somebody you know has a near-perfect credit score? Check in to see what’s working for them and what’s not.
Ready to unlock your financial future? Download Float today.