Rich and I finally got (broke?) into the 800 FICO Credit Score Club! It took a lot of hard work and research. We researched anything we could to help us get more information to help us. We also found out a load of not so relevant stuff like how the credit score in the UK is much different than the US. The 800 FICO Credit Score Club is a feat reached by only 1 in 5, so it was nice to hit another personal finance milestone.
It’s not about hitting every goal. It’s about having goals to hit.
We encourage everyone to set measurable personal, career, and FinGoals, then revisit your progress during the year to make sure they’re still relevant. Financial goals keep us motivated and eager to reach our next accomplishment. Specific to credit scores, this post covers the strategies each of us focused on to raise our credit scores over 800, the fintech app that helped us stay on track, and why the credit score you may want to reach doesn’t necessarily need to be 800-850.
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Raise Your Credit Score By Focusing On the Major Factors that Impact Your Credit Score the Most
Each of the three major credit bureaus — Equifax, Experian, and TransUnion — all have their own secret original recipe of herbs and spices for calculating your credit score. The exact formula each uses is proprietary. According to Liz Weston, CFP (PB: It’s Time to Raise That Credit Score!) and author of Your Credit Score: How to Improve the 3-Digit Number That Shapes Your Financial Future, lenders can choose from hundreds of scoring models to measure the likelihood you will pay back your debts in full and on time. The percentages may vary slightly but there is a general consensus on the following key factors:
Payment History is 35% of your score, so be sure to pay all of your bills on time. One of the (few) benefits of being Senior Millennials like Rich and
Rich also had one missed payment from a decade ago that he still sees when reviewing his full credit history. He vehemently claims it wasn’t his fault since the bank was trash and no longer exists today. Additionally, he carried balances at various points and finally became 100% consumer debt free earlier in 2018, which got him into the 800
The Difference Between a Good Credit Score and a Great Credit Score
What’s a good credit score? To keep it simple, a “good” score is anything over 700; however, to get the best rates and deals you should shoot to get your score to 740 or above. If you have high-interest debts to offload first, try our D.E.B.T. Free: A 4-Week Starter Kit Course. This actionable 4-step program gives you the exact tools we used to get out of debt. Additionally, by paying off your debt, you will raise your credit score by showing responsible payment habits and reducing your credit utilization rate. Just because your credit score isn’t where you want it to be just yet, doesn’t mean that you can’t improve it. When it comes to finances, there is so much to consider, like can I consolidate credit card debt with bad credit? or how can I raise my credit score? Regardless, there is always an answer if you just ask.
For context, I’m not aware of my credit score ever dropping below 700. Using the information from above, this is likely because I’ve always maintained a positive payment history. However, I didn’t reach an 800 credit score until age 36. Put another way, if you find yourself on the right side of 30, then simply paying your card off in full each month and practising responsible credit card management over time (even if it means opting into something like a line of credit loan) will likely automatically lift you into the 800 FICO club when you’re old dinosaurs with blogs and podcasts like ourselves. Keep hope alive!
While I got my first credit card at age 18, I actually didn’t see my credit score until I was in my late to mid-20s. There are two reasons for this:
- I wasn’t financially responsible, so I didn’t care to monitor my personal finances, budget, or both checking my credit report (freely available at AnnualCreditReport.com).
- Credit Scores weren’t as widely available as they are now, but even if they were, see point #1.
As a benefit to you, my youthful ignorance is your wisdom to gain. These days, there is no reason for anyone who wants to know their credit score not to be able to easily obtain it, usually for free. At any given time, I can view my credit score from a variety of sources including but not limited to Mint, my bank account, and through the website of the only credit card I actively use. In 2018, I can honestly think of no reason to pay for your credit score unless you are just genuinely curious about all of the scores lenders use. In that case, Liz Weston recommends you use MyFICO.com for the most robust and accurate reports.
A Great Credit Score Is Important but It Isn’t Everything
Whether you have a great credit score or a bad score doesn’t matter, unless it matters. In fact, some experts believe pursuing anything over 760 is a complete waste of time. Before driving yourself crazy trying to obtain the highest credit score known to Mother Earth, you might want to first ask: is my credit score already good enough to meet my needs?
Chasing after a high credit score you don’t plan to use is like paying to take the SATs when you’re not interested in college. You might get a high score, and I guess that’s great in principle, but is it worth the stress?
Most experts agree there is limited tangible benefit gained by consumers with scores ranging from 760 – 850. You might qualify for a few more perks, credit cards, or bragging rights on The Gram but nothing is guaranteed. It’s actually more difficult to stay in the 800 FICO Club — like trying to maintain a 4.0 GPA — than it is to reach 800. After 760, the remainder of your race to 800 shouldn’t be something you stress yourself over if you don’t plan on making any major purchases and no one is running your credit report any time soon Stated another way, once you reach 760 you can begin to relax and cruise to victory.
I’m not encouraging anyone to have bad credit, but I am encouraging everyone to keep things in perspective. At the end of the day, a credit score is no more than a measure of how well you manage debt. If you don’t need to manage debt or obtain a loan, please go back to living your best life. After 760, you may be better off dedicating your energy towards focusing on your other financial goals or increasing your net worth. Your credit score is just one part — and potentially a very small part — of the overall health of your complete financial picture.
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