What Sets Top Credit Scores Apart From the Rest?

Bottom Line A whole range of different factors contribute to your credit score, and there's no magic formula to a perfect credit score. Still, there's plenty to learn from the experiences of others. Beyond simply having the patience to build a credit file complete with a high number of active accounts and a lengthy credit history, managing your credit file also requires diligence, active concern and measured caution. As you work to improve your credit health, seek out educational resources that can help you make the best decisions for your personal situation. *Data collected in September 2014 based on the most recently available reports of 2,079,070 Credit Karma members with scores above 750 and 3,720,570 members with scores between 650 and 700. **We've defined scores over 750 as "excellent" and scores between 650 and 700 as "fair" for the purposes of this article. What constitutes an "excellent" or "fair" credit score can vary based on the specific scoring model, economic conditions, what the score is being considered for and many other factors.

More Tips on How to Fix a Credit Score & Maintain Good Credit

Payment History Tips Contributing 35% to a FICO Score calculation, this category has the greatest effect on improving your scores, but past problems like missed or late payments are not easily fixed. Pay your bills on time. Delinquent payments, even if only a few days late, and collections can have a major negative impact on your FICO Scores. If you have missed payments, get current and stay current. The longer you pay your bills on time after being late, the more your FICO Scores should increase. Older credit problems count for less, so poor credit performance won't haunt you forever. The impact of past credit problems on your FICO Scores fades as time passes and as recent good payment patterns show up on your credit report. And good FICO Scores weigh any credit problems against the positive information that says you're managing your credit well. Be aware that paying off a collection account will not remove it from your credit report. It will stay on your report for seven years. If you are having trouble making ends meet, contact your creditors or see a legitimate credit counselor. This won't rebuild your credit score immediately, but if you can begin to manage your credit and pay on time, your score should increase over time. And seeking assistance from a credit counseling service will not hurt your FICO Scores. Amounts Owed Tips This category contributes 30% to a FICO Score's calculation and can be easier to clean up than payment history, but that requires financial discipline and understanding the tips below. Keep balances low on credit cards and other "revolving credit". High outstanding debt can affect a credit score. Pay off debt rather than moving it around. The most effective way to improve your credit scores in this area is by paying down your revolving (credit cards) debt. In fact, owing the same amount but having fewer open accounts may lower your scores. Don't close unused credit cards as a short-term strategy to raise your scores. Don't open a number of new credit cards that you don't need, just to increase your available credit. This approach could backfire and actually lower your credit scores. Length of Credit History Tips If you have been managing credit for a short time, don't open a lot of new accounts too rapidly. New accounts will lower your average account age, which will have a larger effect on your scores if you don't have a lot of other credit information. Also, rapid account buildup can look risky if you are a new credit user. New Credit Tips Do your rate shopping for a given loan within a focused period of time. FICO Scores distinguish between a search for a single loan and a search for many new credit lines, in part by the length of time over which inquiries occur. Re-establish your credit history if you have had problems. Opening new accounts responsibly and paying them off on time will raise your credit score in the long term. Note that it's OK to request and check your own credit report. This won't affect a score, as long as you order your credit report directly from the credit reporting agency or through an organization authorized to provide credit reports to consumers. Types of Credit Use Tips Apply for and open new credit accounts only as needed. Don't open accounts just to have a better credit mix – it probably won't raise your credit score. Have credit cards – but manage them responsibly. In general, having credit cards and installment loans (and paying timely payments) will rebuild your credit scores. Someone with no credit cards, for example, tends to be higher risk than someone who has managed credit cards responsibly. Note that closing an account doesn't make it go away. A closed account will still show up on your credit report, and may be considered by a score.

Why You Shouldn't Neglect Your Credit Score

With all the things you have to be concerned about in life, you’d think by the time you hit your 50s or 60s, you could stop worrying about having a good credit score. You may have bought and sold homes, paid off credit cards, successfully negotiated lease agreements, and paid off brand new cars in your day. You are a good credit risk — heck, I’d loan money to you. So why should you care about your credit score at this stage of the game? You might not even have plans to move and apply for a new mortgage. You might intend to drive your car for 250,000 miles, or until your wheels make their last turn. But sometimes life has other plans for us. Benjamin Franklin once said, “The only two certainties in life are death and taxes.” I would add “change when you least expect it” to his list. A change may involve taking out a loan or some other kind of credit check, so you need to be vigilant about keeping a very good or excellent score. According to Banco Capital Corp, a “good” score is generally 720 or higher. Here are some times a great credit history and score could come in handy as you approach your golden years:

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