When talking about credit score most people know that the higher the score the better it is for you. But what some do not understand is how do you achieve this high score? When looking at your credit score a lot actually goes into it. You may not even realize but so much of what you do financially factors into your credit score. The things that you do apply for credit pay bills off, open new lines of credit all factor into your credit score. When credit agencies look at your credit report they look at a number of things. How many credit lines you have, how much credit card debt you have, how many credit inquiries you have, the time of how long you have had your credit accounts, and the payment history of your credit lines and bills.
We are going to explore the different factors that play into your credit score and what a high credit score is. And what you can do to ensure that your credit score stays high enough to give you some financial freedom.
- On-time payments- Paying all of your bills on time and making sure nothing goes into collections is essential for a healthy credit score. When you are late on payments or even miss payments, it is recorded into your credit report. Although the same for when you make on-time payments. The more you pay your payments on time the better it looks for creditors looking to give you credit. The more they can trust you the better it is in getting approved for certain things. Ideally, it is better to set your payments to automatic payments so that you do not have to worry about paying your bills on time.
- Collection accounts- Having accounts in collections is never a good thing. It means that you did not pay your account and it was sent to a credit collection agency. These will normally stay on your credit report for about seven years. And with these, it can bring your credit score down a lot.
- Credit history- A good credit score will have a good amount of healthy credit history attached to the report. Credit history can mean multiple credit cards, mortgage, car loans, personal loans, and the list goes on. Now, remember you do not want to have too much credit as that could be a red flag for creditors looking to approve you. Normally having 5 to 8 credit accounts is ideal. But you never want to take on to much responsibility as that might get you in over your head in bills.
- Inquiries- Inquiries are tricky and can be annoying you have two different inquiries. A hard inquiry and a soft inquiry. A hard inquiry will appear on your credit report and will stay on there for two years. Now to many of these will potentially scare off creditors as it might look like you are trying to get to much credit. On the other hand, soft inquiries are more forgiving as they do not appear on your credit report. Now a soft inquiry is normally like a pre-approval check. When looking for credit it is better to get pre-approved normally if you are pre-approved you will be approved during the hard credit check.
- Credit lines- Most people are not aware of this, but going over your credit limit more than 30% can actually affect your credit score. Even though you have a credit limit it does not mean that you should reach it to its limit. Banks for some reason feel less comfortable when you go over your that 30% mark on your credit card.
What is a high credit score?
When looking into what a high credit score is you may be conflicted you might think that having a 700 credit score is sufficient enough, and while to most lenders, a 70 credit score is something that they feel comfortable with you having an even higher credit score is better. We asked our friends at credit score api what a was considered a high credit score and their response was “ Having a credit score anywhere at 750 and above is considered a high credit score as well as a perfect credit score. And ensuring that you maintain that credit score will take due diligence on your part.
We hope that this was helpful to you in determining what a high credit score is. We understand that sometimes things happen we fall behind, but if we are willing to pick ourselves back up and work on getting that high credit score it is in fact very achievable to get. Just make sure that you stay on top of your credit score and do not go in over your head. You definitely do not want to bring that score down at all.