A perfect credit score could help you do a lot. It would be much easier to obtain a personal loan or credit line when you are in need. It can also be useful when you are looking for a new home, a job, or new insurance.
Is this a real possibility or a fantasy? A perfect credit score of 85 is possible for a select 1.4 percent of FICO customers.
Good Credit Management Tips
You must make sure you are able to keep your negative entries from your credit report clean. You will be out of the running if you have delinquencies or charge-offs and accounts in collections.
Bad credit entries typically last around seven years in your credit file. For some, it may take a while to achieve perfect credit scores.
Don’t be discouraged if you have a subprime credit score. It’s still possible for you to get a line. CreditFresh, a financial institution, may offer credit to people with poor credit for unexpected emergencies.
You can still add positive entries to your credit record. These habits may eventually influence your credit score with time and effort.
You should check your credit regularly
When it comes to building positive entries, monitoring your credit is essential. You can see the contents of your credit report and its impact on your score by regularly checking it.
You may not be able to identify the changes that result in a drop or boost in your score if you don’t keep an eye on it.
This also allows you to spot any errors or inaccuracies that could be adversely affecting your history. Either errors are made by accident or fraud. You’ll need to know how to reverse errors in either case.
This is also true for your score. You may not be able to see where you stand if you don’t monitor what goes into your file or how it affects you score.
How often should your credit report be checked?
The three checks that AnnualCreditReport gives you are sufficient for most people. If you are recovering from identity theft, or preparing for a major purchase, you might want to check more often.
Pay your bills on time
Your payment history is a significant factor in your FICO score, which is the most widely used scoring model. It accounts for 35% of your score. Although there are many factors that can impact your history as well, this is the largest.
It is important to pay your bills on time.
Sometimes, paying your bills on time can add positive entries to one’s record. Some bills may be positive, while others might keep you from being tarnished by negative ones.
This is because many financial institutions and utility providers will only report late payments to credit bureaus. This problem can be avoided by paying your bills promptly, or even better, sooner.
Wisely open new accounts
Your FICO score will also be affected by your history. It may not be as important as payment history, which accounts for only 15% of your score. This element is vital if you want to achieve perfect credit scores.
A perfect credit score is a guarantee that there are no mistakes. People with a longer credit history tend to be rewarded if they have good habits.
A personal loan or credit line may temporarily lower your average age. You should only take out one if you absolutely need it.
It is important to learn how to prepare for financial emergencies to manage this aspect of your consumer file. You can tap into your emergency funds before you need to borrow money or take out credit lines that could affect your credit score.
Keep a Low Utilization Ratio
A perfect credit score means that your revolving credit balance is important when applying for a credit card or line of credit. A flawless 850 is less likely to be earned if you have a higher balance.
As a general rule of thumb, a ratio of less than 30 percent is acceptable. This is only for the average consumer. You can do more than just good when it comes to your credit score.
A perfect score consumer tends to keep their utilization ratios under 10 percent. The lower the number, the better. If you want to have a chance of achieving your goals, it’s reasonable to keep your revolving balances below one percent.
The better your credit utilization ratio, generally speaking, is. There is no perfect credit utilization ratio that will instantly improve your score. It’s only one factor of your score. The other five factors are weighed to create your exact three-digit number.
It is not easy to reduce your dependence on credit cards or lines of credit. Here are some tips:
- To free up credit, reduce existing balances
- To avoid carrying over a balance, pay your bills on time
- Unexpected emergencies are the only reason to use a credit line
- Only use a credit card if you have the funds to fully pay for your purchase
- Only close revolving accounts if absolutely necessary
Here’s the takeaway: Your credit score is not something you can take for granted. You may lose your score of 850 over time as credit is used more frequently.
This is important to remember when you make these habits yours. To see the best results, they must be a life-long habit.