How to Get Into the 800+ Credit Score Club

Considering the influence credit scores have on almost every aspect of our financial lives, it's not surprising that so many people want to improve their credit score -- some even aiming for that perfect FICO 850. But is a perfect score really necessary?
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A good credit score could quite literally save you thousands, if not hundreds of thousands of dollars over your lifetime. So what does it take to join the ranks of the credit elite and enjoy a richer life?

In credit, as in life, it's good to have goals. Knowing where we want to go motivates us to work hard, be responsible, and delay short-term gratifications to achieve lasting happiness and success.

This is especially true when it comes to our credit scores. It takes time and patience to build a good one. And if you've ever applied for a credit card, an auto loan, a mortgage -- or any type of financing -- you know how important this three-digit number is to your bottom line.

The higher your credit score, the more likely you are to qualify for the best interest rates and terms a lender has to offer. The lower your credit score, the more you'll pay in interest on everything you finance. And in some cases, if your score is too low, you may not qualify at all.

The Perfect 850

Considering the influence credit scores have on almost every aspect of our financial lives, it's not surprising that so many people want to improve their credit score -- some even aiming for that perfect FICO 850.

But is a perfect score really necessary? The answer is no, and striving for perfection could cause more damage than good if you're not careful.

The fact is lenders aren't looking for perfection. They're looking for good credit risk, or rather, a borrower who will pay a loan back in full and on time. Generally, a credit score of 780 or higher will get you the best interest rate and terms a lender has to offer. And when you're trying to qualify for a loan, your goal is to get the best deal. Even if you have a score of 800+, or somehow manage to reach that ever elusive 850, you'll still qualify for the same interest rates as someone with a 780.

7 Habits of the Credit Elite

If your heart is set on perfection, rather than reaching for that perfect 850, a more healthy goal is to aim for the 800+ club. Earning a credit score of 800 or higher will put you well within the ranks of the credit elite. No one else will receive a better loan than you, and no one will pay lower interest rates.

How do you join the credit elite? It starts with developing the right credit habits and then gradually allowing them to build over time. Here are seven habits that will help pave your way to the 800+ club:

1. Always pay on time -- no exceptions. Your payment history is the single most important factor in determining your credit score, accounting for 35 percent of the total. If you're striving for perfection -- or close to it, the last thing you want to do is miss a payment or pay late.

2. Watch your credit card balances -- less is more for your credit score. The proportion of your balances in relation to their credit limits on your credit cards can have a drastic impact on your credit score. For optimum results, aim to keep your credit card utilization to 10 percent or less.

3. Apply for credit sparingly. How often you apply for new credit accounts for 10 percent of your score. Too many inquiries in a short period of time can wreak havoc on your credit score. While not a large percentage, every point counts when you're aiming high.

4. Live within your means. When you apply for credit, only apply for what you can realistically afford and never spend more than you earn. This will keep you from overextending yourself financially. Over time, these positive accounts will help you build a solid, lengthy credit history -- another habit that will push you toward your goal.

5. Mix it up and diversify. Credit scoring models love to see that you're able to manage and maintain a variety of accounts. By gradually adding various types of accounts -- credit cards, auto loans, student loans, or a mortgage -- you'll be well on your way to reaching your goal.

6. Focus on the long haul. The longer you've had credit, and the older your credit accounts get, the better for your credit score. Credit scores love stability and to break into the 800s, they want to see a history of accounts that have been open for ten years or more.

7. Wash, rinse, repeat -- and track your progress. With credit scores, consistency is key. This means repeating the steps and staying the course. Over time these habits will insure that you reach your goal. And to make sure you stay on track, it's also wise to periodically check your credit score and monitor your progress.

Reaching an elite credit status maybe closer than you think. By following these rules and keeping reasonable, attainable goals in mind, you too can reach the 800+ club and join the ranks of credit elite.

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