An 850 credit score is on the high end of the 350 to 850 scoring scale and is considered a top-tier or excellent score. With this score, you’re among the elite; only 20 percent of people have a score topping 800.
What Are the Benefits of a Top-Tier Credit Score?
When you have a top-tier credit score, your options are wide open. However, that doesn’t mean that you’ll get approved for every loan or credit card you apply for. Your income and current debt loan will also come into play. Here are just some of the benefits you can look forward to with a score of 850:
- Premium credit cards with high-level rewards and the lowest interest rates
- The ability to refinance older loans at a lender’s very best rates
- Best mortgage rates
- Best personal loan rates
- Best auto financing
How is a Top Credit Score of 850 calculated?
An 850 credit score means that you’re excelling in all areas of credit scoring criteria, such as payment history, length of credit history, outstanding debt and recent inquiries. Here are some tips for staying in this top-tier score:
1. Missed payments
Payment history weighs heavily at 40 percent of your overall credit score, so missed payments can be devastating. For example, one 30-day late payment can cause your score to take a nosedive by 100 points or more.
2. Age of credit history
The length of your credit history counts for 10 percent of your score. Even though that may not seem like much, every point counts when you have an elite score. Closing credit cards will decrease the amount of credit you have available and might even increase your credit utilization, which isn’t a good thing.
3. On-Time payments
Knowing what you can and can’t afford is vital to achieving excellent credit. Overextending yourself can be fatal. Budgeting can help you know exactly how much money you need to allot toward your monthly expenses, so you’ll never be left scrambling to pay your creditors.
4. Credit utilization under 15%
Although 15% is a good rule of thumb, you may need to go lower to get to an 800+ credit score. If so, try tightening up utilization to less than 10 percent.
5. Few credit inquiries
Each time you apply for a loan or credit card, your credit score takes a hit. To minimize the damage when loan shopping, apply for different auto loans or mortgages in close succession so the inquiries will be counted as only one.
Benefits of an Excellent Score.
Once you’ve reached the highest tier of credit scoring — 810 to 850 — you have proven yourself worthy of the best credit and financing offers. And as long as you meet income and debt-load requirements, you’ll likely be eligible for the majority of them.
The bottom line: Although many have a personal goal of reaching the magical number of 850, it likely won’t matter in terms of saving money.
How to Keep Your Credit Score at the Top
Reaching a credit score of 800+ might seem a pursuit of the elusive to some, but if you’ve already achieved this type of score, you know exactly what it takes. Things like paying your bills on time and watching your debt-load are important factors in keeping your credit score in the top tier, but so is monitoring your credit.
Keeping on top of your credit reports and scores can help you identify any issues quickly, giving you the chance to do damage control. If you’re not already monitoring your credit, what’s stopping you? Let us know in the comments.