Your credit score is one of the most important indicators of your financial health, and it plays a major role when lenders determine your eligibility for loans, interest rates and more. The FICO score, the most widely used credit score, ranges from 300 to 850, and many people view a credit score over 800 as ideal.
Here are some of the perks of having an 800 credit score and how to get an 800 credit score or higher. Yes, it is possible!
Why a High Credit Score Matters
Excellent FICO scores fall within the 800-850 range. If your credit score is within this range, qualifying for a loan or credit line with a low interest rate could be more accessible.
While everyone’s situation differs, an 800 credit score generally means you’ve managed your credit lines and loans responsibly by making on-time payments. You also probably have an established credit history and a good mix of debt, and you’re likely using only a small amount of your available credit.
There are several perks of having an excellent credit score, primarily when you apply for financing but also in other areas of your life:
- Lower Interest Rates – Whether you’re applying for a loan or a credit card, you’ll often qualify for the best interest rates the lender offers because you’ve shown that you manage your debt well. Depending on the loan type, being in the “800 club” can save you thousands or even tens of thousands of dollars.
- Better Offers – If you’re looking for a new credit card, having an 800 credit score will improve your chances of getting some of the top credit cards reserved for people with excellent credit.
- Higher Credit Limits – Credit cards typically have a credit limit, which is often based on your credit score, income and other factors. The higher your credit score, the more the card issuer can trust you to pay off your monthly balance. As a result, you’ll typically qualify for higher credit limits.
- Better Insurance Rates – In states where it’s legal, most auto and homeowner’s insurance companies use your credit history to help determine your monthly premiums. And while they don’t use your FICO score — they use a credit-based insurance score similar to your FICO score — having excellent credit can improve your chances of scoring low insurance rates.
7 Steps to Getting an 800 Credit Score
The average FICO score in the U.S. is 718, according to Fair Isaac Corporation, the company that created the scoring model. As such, the “800 Club” is relatively exclusive.
If this is your goal, however, here are ways you can work to positively impact your credit score.
1. Pay on Time Every Time
Your payment history is the most important factor in your FICO credit score, so you must always pay your bills on time. Fortunately, if you make a mistake, you can correct it quickly and avoid any negative consequences to your credit score. Lenders generally don’t report missed payments until they’re past due by 30 days.
2. Keep Your Credit Card Balances Low
Your credit utilization rate is another important element of your credit score. This rate is calculated by dividing your credit card balance by your credit limit. For example, if you have a $1,000 balance on a card with a $2,000 limit, your utilization rate is 50%.
Your utilization rate is calculated for each credit card and an aggregate across all your credit card accounts.
According to Experian, people in the 800 club have an average utilization rate of 11.5%.
3. Avoid Overborrowing
In addition to the utilization rate on your credit cards, the FICO score also considers how much debt you have overall. If you’re overloaded with debt, it can negatively impact your credit score and make obtaining an 800 credit score difficult.
Unfortunately, there’s no hard-and-fast rule for how much you should borrow. But if you find that 50% or more of your monthly earnings go toward debt payments, you may want to consider paying off some accounts and avoiding more debt.
4. Be Patient
The third most influential factor in your credit score is the length of your credit history. In other words, it often takes several years to reach the 800 club. This is because the more information lenders have about how you manage debt and credit, the easier it is for them to determine whether you’d be a risky borrower.
As a result, practicing these good credit habits over time will help improve your odds of developing excellent credit.
5. Avoid Opening New Accounts Too Frequently
Nearly every time you apply for new credit, the lender runs a hard inquiry on one or more credit reports. According to FICO, each additional hard inquiry typically reduces your credit score by five points or fewer. However, if you apply for several credit cards quickly, that impact can be compounded and drop your credit score even more.
Additionally, each new account you open lowers the average age of your accounts, which influences the length of your credit history. Try to space your credit applications and only borrow when you need to so you can avoid this potential problem.
Note, however, that this doesn’t apply to rate-shopping mortgage, auto, and student loans. You can apply for several of these types of loans to compare rates. As long as it happens within a short period — 14 to 45 days, depending on the scoring model — all of the hard inquiries will be combined into one for credit scoring purposes.
6. Maintain a Good Credit Mix
Lenders like to see that you can handle a diverse mix of credit accounts. For example, having a credit card, a mortgage and an auto loan will do more for your credit score than having three credit cards.
That’s not to say that you need to take out these different types of loans solely to build credit. It’ll typically occur naturally over time as you use credit cards for everyday expenses, finance the purchase of a car and get a mortgage to buy a home.
7. Review Your Credit Reports Regularly
One of the best ways to stay on track toward reaching the 800 club is to review your credit score and reports regularly. Not only does it give you a chance to see how your habits impact your credit, but it can also give you a chance to spot inaccuracies or even fraud, which could damage your credit score.
You can get a free copy of your credit reports each week through AnnualCreditReport.com. You can also view your credit report information using free credit monitoring tools.
If you notice something is wrong or fraudulent, you can dispute the information with the credit bureaus and have it corrected or removed.
How Long Does It Take To Get an 800 Credit Score?
There’s no timetable for building up your credit score. It will likely vary depending on your situation and dedication to improving your credit. But it also depends on the length of your credit history, which you don’t have much control over. Earning an 800 or higher may take several years.
Regardless, establishing good credit habits can help you stay on track as you work toward your goal.
The Bottom Line
If you need a loan or credit line, you’ll have fewer options with bad or no credit. Given this, building credit while you’re young is a wise move that can pay dividends in the future. Understanding good vs. bad debt and how to earn a good credit score is crucial for a strong financial foundation, and increasing your credit score to 800 and beyond can make it easier for you to get the best terms lenders and insurers offer.
These steps can help you reach your goal, but remember that it will take time to achieve it. There may also be hiccups along the way, but as you review your credit score and reports regularly, you’ll be able to respond to potential issues before they wreak havoc on your credit.
Originally published December 11, 2021.
