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8 ways to improve your credit and save money for future investments with a good credit score.

To understand what makes those in the 800 plus club different, it helps to know how these scores are calculated so you can build a good credit score. Credit Checkers uses information reported by your various lenders to the three national credit bureaus. Roughly speaking, your payment history accounts for 35% of your score; your credit utilization rate (how much of your credit card lines you’re using) for 30%; the length of your credit history for 15%; your credit mix for 10%; and new credit (have you been applying for a lot of additional credit recently) for 10%.

Note that several factors affect a good credit score. Keep all lines of credit in good standing (meaning pay them on time); keep credit utilization down; and corrected inaccurate informations from lenders on credit bureau file.

Here are 8 things to learn from people with perfect—or excellent–credit scores.

1. Check Your Credit Reports Frequently

Check your credit reports often. Following Experian’s data breach in 2017, signing up for credit monitoring. Checks every alert received for transactions against your credit to make sure there aren’t cases of identity theft or inaccuracies.

“As a matter of identity theft protection, I regularly check my credit score because if there’s something funky happening it can show up on your credit score,” said Singletary a 847 credit score person.

2. Fix Any Errors

Bird another 800+ credit score customer, said there was a mistake on her credit file five years ago that was affecting her score. She discovered it during a hard credit check (meaning one that took place when she was actually applying for credit). That mistake had caused her score to drop from a very good range (740-799) to a good range (670-739). She called the lender to inquire and address the mistake. When the mistake was corrected, her score returned to a very good status.

Credit reporting bureaus like Experian, Equifax, TransUnion and specialty agencies are susceptible to error. A search of the Consumer Finance Protection Bureau’s Consumer Complaint Database turns up 12,300 complaints about incorrect credit bureau information. The top gripe was “information is not mine” followed by account status, account terms, and public record. To be proactive against inaccurate information, check your credit reports at least once a year.

3. Keep Your Financial Relationships In Good Standing

MacDonald, another of our previous customers with a good credit score, hasn’t paid a bill late in the past seven years. She attributes her increased score to her and her husband’s money management skills. They have significant savings and they pay their revolving and installment credit on time. The couple also doesn’t like to carry any balances on their credit cards.

She still has loans she took out to fund her medical degree, and she pays those down monthly without fail. She pays off the balance on her four department store credit cards every month too.

4. Don’t Push It To The Limit

Credit utilization falls under amounts owed, which accounts for 30% of your score. When lenders check how many lines of credit you have and the recency of the credit, they also look at how much of your credit is being used. Someone who is approaching their overall credit limit may not be able to manage another line of credit.

“If you use too much credit, you’re not going to hit that 850,” Matt Moore, our Finance Specialist said in an interview. “FICO (a data analysis company) looked at those people who have high 800 scores and found [those people] tend to use about 7% of their available balance in any given time or month. I was at 1%.”

5. Keep Your Lines Open

The age of your credit accounts is a supportive element of your score. Credit length history makes up 15% of your score and, according to Moore, lenders examine the age of your accounts and frequency of account usage. The older an account, the more it positively affects your credit score, which is why some money experts and coaches advise against closing accounts.

Though you may not be using an account, the lenders for that account will continue to report your positive relationship with them. If you find yourself itching to close a credit card account that took you forever and a day to pay off, consider cutting up the card and leaving the account open.

6. Understand The Benefits

Okay, those who strive for an 850 may be a tad on the perfectionist side. But the 21% in the 800 plus club have a solid, practical reason for being there: they have access to lower interest rates and credit when they need it. “When I talk about having good credit score’’ says Moore, “I really mean living a life that is free from all drama, rejection, frustration and hassle as it pertains to your credit worthiness and your credit score.”

Those with high scores get better rates and sometimes no-money-down deals and can save big bucks in the long run. The difference in monthly payments you could pay on a $100,000 mortgage with a 4% interest rate versus one with a 7% rate is thousands of dollars. Over a 30 year term, the difference is tens of thousands of dollars.

7. Know The Debt Hierarchy

You may have heard people refer to credit card debt as the worst kind of debt. That’s because it typically comes with high interest rates and it’s normally not used to gain assets, which can appreciate in value. Lenders look at revolving debt such as credit cards to see the number of cards you have and the balances on those cards to see if you are over-extended or close to maxing out your cards.

The debt that is considered good debt can help you obtain an asset (say a house) or make an investment in yourself (such as earning a degree or becoming certified in something). That means mortgages and student loans could be considered good debt. Of course, you can still get overextended with a mortgage or student loans. Any debt could be helpful or harmful, depending on your circumstances and how you use the debt.

8. Have Savings

At its core, a credit score is about how well you can manage your debt. Both Singletary and Bird had some form of debt that they were managing. Their scores reflected that they were handling it well by making timely payments and paying off balances.

Bird said her family is saving enough that they feel comfortable allowing gym memberships and streaming services to be billed to their credit cards to collect the card reward points.

“If you’re living beyond your means, then you’re not going to have enough money in your account and you’re not going to be able to pay off things,” said Bird.

The bottom line: you don’t need an 850 to get the best deals. But some lenders do differentiate between very high Credit Scores in their decision-making processes. A good credit score is important to reach more credit opportunities and a good way to save money.

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