How to be a credit score high achiever


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You may never know what it's like to be rich or famous, but you don't need either of those attributes to join the ranks of another elite and desirable group: people with the highest credit scores.

Fair Isaac Corp., creator of the widely used FICO credit scores, recently lifted the veil on some common traits among so-called "high achievers," those with scores above 785, on a scale of 300 to 850.

These credit-score superstars get the best rates on a range of products from car loans and home mortgages to lines of credit and credit cards, potentially saving thousands of dollars in interest payments over the life of the loans.

The good news is that with a little know-how and discipline, "Anyone can become a FICO high achiever," said Fair Isaac spokesman Anthony Sprauve.

As might be expected, people with stellar scores -- accounting for roughly 25 percent of those with FICO scores -- consistently pay their bills on time, don't max out their credit cards and keep low revolving balances relative to their available credit.

What may come as a surprise is that high achievers are not debt free. In other words, having good credit does not mean having no debt.

People with top-tier scores typically have multiple credit cards with revolving balances. One-third have total balances of more than $8,500 on non-mortgage accounts.

Since a credit score is designed to show the likelihood of an individual repaying a loan, "You need to have debt and manage that debt in order to show your ability to repay that debt," Mr. Sprauve said.

People who don't have a mortgage, car loan or other loan, and who don't use any credit cards won't have a credit history needed to calculate a credit score.

People who pay credit card balances in full each month will generate a payment history. Roughly 13 percent of high achievers don't carry balances on their cards.

The two biggest influences on a credit score are payment history and the amount of debt owed in relation to available credit -- two places where high achievers excel.

For people concerned about their credit scores, the general rule of thumb is not to use more than 30 percent of available credit, which would equate to a revolving balance of no more than $3,000 on a credit card with a $10,000 limit.

But high achievers use only an average of about 7 percent of available credit.

On the payment side, the vast majority of high achievers -- 96 percent -- have no missed payments on their credit report. Among the few high achievers who have slipped up, their last late payment occurred an average of four years ago.

Loans and credit card payments more than 30 days overdue are quickly reported to credit bureaus, Mr. Sprauve said. Other types of late payments, for such things as utility bills, medical bills or parking tickets, are only reported if they go into collection, he said.

People who stumble on some payments can still become high achievers.

That's because over time, the impact of missed payments diminishes. "Missed payments from two years ago will have much less impact than if they were two months ago," Mr. Sprauve said.

"Dust yourself off and start good habits again."

People with top-tier credit scores also tend to have long credit histories, with their oldest account opened an average of 25 years ago. And they are judicious about opening new accounts, with their newest account an average of 28 months old.

Opening a new account can have a negative impact on a credit score for a variety of reasons, Mr. Sprauve said.

Nevertheless, "It will be a short-term hit if you manage that account well," he said.

People trying for a top-notch credit score should follow three key rules, Mr. Sprauve said.

"Pay your bills on time every time, keep your balances low and only open new credit when you need it," he said. "If you do those three things consistently, your score will improve steadily."

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For some facts and common fallacies about FICO scores visit http://www.myfico.com/CreditEducation/FactsFallacies.aspx Patricia Sabatini: psabatini@post-gazette.com or 412-263-3066.


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