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Hi I’m Rob Franek, President of East Coast Mortgage Lending and today we’re going to
find out if the perfect credit score of 850 is possible.
Is a perfect credit score of 850 possible? Yes it is and here’s your roadmap:
•Always pay your bills on time. Our first tip is also the most commonly understood.
35% of your credit score points come directly from having a long record of on-time payments.
For the perfect score, you want to have on-time payments reported from all of your accounts
dating back seven years. You also can’t have any sort of negative record – bankruptcy,
lien, charge-off, collection account, or judgment – on your credit report dating back ten
years. •Keep your credit card debt under control.
This is a tricky one. To achieve the best possible credit score, you should use your
credit cards each month and pay the bills on time. Not using the credit card means you’re
missing out on positive reports. At the same time, you shouldn’t ever spend more than
10% of your total credit limit. So, if you have $38,000 as your total credit line, your
statement balances on all the cards should never equal more than $3,800. In that example,
spending $1—$3,800 a month would earn you the most points. You can either reduce your
spending or increase your credit limit to improve this “debt utilization” ratio.
•Focus on longevity. Credit scores love stability. To earn the perfect 850 score,
the scoring formula would like to see that all of your credit and loan accounts have
been open for ten or more years. This element of the credit score considers both the age
of your oldest account and the average age of all your accounts. So it is a good idea
to keep your accounts open as long as possible and avoid opening new accounts or closing
old ones. •Mix it up. Someone with a perfect credit
score would have at least one credit card, one home loan, one auto loan, and one student
loan on his or her credit report. Each account should be open and active. The diversity of
credit account types is seen as a sign of stability and credit responsibility. Of course,
don’t rush out to get a student loan just to earn all the points in this category. One
credit card and one loan is a fine combination for this category that only counts for 10%
of your score. •Don’t apply for credit that you don’t
need. Any hard inquiry from an application for credit will hurt your credit score for
six or more months. You may want to avoid applications for new accounts entirely if
you already have the right mix and are aiming for the perfect credit score. Applications
for credit cards and even cell phones, bank and/or utility accounts can damage your credit
scores.
As you can see, achieving the perfect 850 credit score is attainable but can require
a great deal of planning and time. No worries though because a credit score over 800 is
easily attainable if you follow our guidelines and use your credit responsibly. Thanks for
joining me and I hope that you’ll make it a great day!