Most consumers probably know that credit card applications are approved or denied on the basis of their credit score, that all-important number with a huge bearing on your ability to borrow money. While many of us wish our credit score was higher, experts suggest there is not much reason to concern yourself with striving in vain for a perfect score, particularly if your credit score is already excellent.
For starters, even those people who are exposed to lots of credit scores have to admit perfect scores are very, very rare -- if they are ever seen at all. With the popular FICO score, the range goes from a very poor 300 all the way up to a perfect 850. But even the vice president of public education at Experian, one of the three major credit bureaus, acknowledges that she has never seen an 850.
Rather, she notes that the majority of high scores peak at about 825. As a result, your time may be better spent looking for the Loch Ness Monster or Bigfoot rather than hoping to catch a glimpse of a perfect credit score.
Another reason why credit card users need not struggle to hit the top end of the credit score range is practical -- they just aren't going to see much benefit going from excellent to perfect. Washington, D.C.-based advocacy group Consumer Action explains that consumers who improve their credit score from a 775 to an 850 will not see a difference in their rates.
Therefore, if you are able to get a fair interest rate and enough credit when you apply for credit cards, there are other things to focus your energies on as opposed to battling to get your credit score even higher. For example, try alphabetizing the items in your refrigerator.
However, for those of us who have been denied a credit card or loan due to credit scores below the high 700s, there are ways to get your score up that you may or may not have heard before:
Don't go overboard with your use of credit. Even those consumers who pay off their credit card balance every month could still show debt on the day their credit history gets pulled, explains FICO-score developer Fair Isaac Corp. By always using credit carefully, you can be confident that you credit use will appear sensible no matter when your lenders look at your credit history. Aim to use about 25% of your available credit.
Keep credit card applications to a sensible number. While it may be tempting to fill you wallet with the great variety of credit cards available through CreditCardXPO.com, if you want to emulate those people with the highest credit scores, it might be better not to. That is because those consumers with the top credit scores tend to apply for credit much less than the average of twice a year. And, having an excellent credit score means you are more likely to get approved for those credit cards you really want.
Keep your creditors honest. Even if you always pay your bills on time, it won't do your credit score much good if creditors don't report how dependable you are. If a creditor mistakenly hits you with a fee for late payment, be sure to call them and get the situation resolved quickly. Otherwise, you may be not only end up paying unnecessarily, but your credit score may take a hit unfairly.
Don't be afraid to look at your credit report. Like taking a look in your basement, it may be scary to discover what is actually contained in your credit report. Additionally, some consumers may worry that pulling their own credit history could hurt their credit score. But this is not the case. In fact, purchasing or taking a free look at your credit history could actually help your credit score, if you use the supplied information to correct any mistakes in the report and to improve your credit use. While you may not end up with perfect credit by following these recommendations, you can still be content knowing that your improved credit score is the best it can be.