Keeping a Good Credit Score

If your credit scores are 760 or higher, congratulations! Now, don't do anything.

The Nearly Impossible Perfect Credit Score

If you are a perfectionist, and anything short of 100% is dissatisfying, here's an oppotunity to engage some flexibility that's even better than being perfect. A perfect credit score is 850, and is practically impossible to achieve. In fact, if your credit score is 760 or higher, every lender will treat you as perfect. Even though there are 90 points between you and the top score, the offers you get from lenders won't improve if your credit score is 760, 800, or even 850.

More Room to Fall

A good credit score is 760 or higher, with more points to be lost than gained. You have done a good job creating and maintaining your credit rating. Now is the time breathe easier, and avoid mistakes that could lower you credit score. If you are tempted to try inventive ideas just to gain a few points, think again. Playing with your credit to raise your scores closer to 850 could backfire - and you simply do not need to.

Healthy Habits Create Good Credit Scores

The best credit scores are born from healthly financial lifestyles. The two most important factors in establishing good credit are paying your bills on time and avoiding negative information in your credit history such as collection agencies and bankruptcy. With a good credit score, you have managed your credit lines very carefully, you are not in a lot of debt, and you only open new lines of credit when necessary.

Calculating Your Credit Score

Your credit score is calculated by applying a mathematical algorithm to the information on your credit report. Your credit scores will likely fluctuate each time the data in your credit reports changes.

There are five main components of your score:

• Payment History: 35% - about 298 available points.
• Outstanding Debt: 30% - about 255 available points.
• Length of Credit History: 15% - about 127 available points.
• Diversity of Credit Accounts: 10% - about 85 available points.
• Number of New Credit Applications: 10% - about 85 available points.

Still Want an Even Higher Credit Score?

Here are some tried and true methods to create and maintain an excellent credit rating.

• Pay all your bills on time. Sometimes the simplest advice is the best advice.
• Keep your debt-to-limit ratio around 10 percent. What's the maximum you can draw off of credit cards and other lenders? Keep you balance at or below 10 percent.
• Do not close old accounts. If you have a back up credit card or two, use them for small purchases every few months, and be sure to pay off the balance.
• Aim for 10-plus years of positive credit history. You've come this far. Just keep going.
• Don’t make dramatic credit changes. Sudden new credit lines and higher levels of debt send up red flags to lenders and can reduce your credit score.

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