That’s right. A perfect credit score is far more attainable than you might think. In fact, more than 1 in 7 people already have a perfect score, according to WalletHub data.
That’s because there’s a difference between the highest possible credit score and perfect credit. The standard credit score range goes from 300 to 850. But anything from 800 and up can be considered perfect credit, according to many credit experts. And there’s a simple reason for that: Once you hit 800, increasing your credit score won’t help you save money on financial products.
In addition to the 15 percent of people who already have perfect credit, according to WalletHub data, another 14 percent are in shouting distance with credit scores in the 750 to 799 range. If you’re in that group, or even just the 700-plus club (43 percent in total), it’s entirely possible to perfect your credit by summer’s end.
1. See where you’re starting. Your current credit score will obviously dictate how long it’s going to take for you to reach perfect credit. It will also give you a sense of whether your credit needs minor tweaks or major improvements.
But don’t stop at your credit score. You should also make sure to review your credit reports from the three major credit bureaus: TransUnion, Equifax and Experian. Roughly 1 in 4 credit reports contain an error, according to the Federal Trade Commission. And successfully disputing any errors that you find is a quick way to get a credit score boost.
We’re all entitled to a free copy of each of our major credit reports once every 12 months through AnnualCreditReport.com. So there’s no reason to pay for this initial checkup.
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Thinkstock
2. Make sure you have a credit card. Credit cards are the best credit-improvement tools available to us. Pretty much anyone can get a credit card. They don’t require going into debt, like a loan does. They can be completely free to use. And they report information to the major credit bureaus on a monthly basis. In other words, they give you the chance to add positive info to the files on which your credit score is based 12 times a year.
So make sure you have an open credit card account that is in good standing. If you don’t trust yourself to spend responsibly, even a credit card that’s locked in a drawer can help improve your credit.
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Thinkstock
3. Reduce your credit utilization.Credit utilization is another way of referring to how much of your credit cards’ spending limits you use. Your utilization rate is calculated on a monthly basis for each of your credit cards, and for all of them combined. It accounts for around 20 percent of the most popular credit scores. As a result, improving your credit utilization is one of the easiest ways to improve your credit score.
The golden rule of credit utilization is that you should use less than 30 percent of each credit card’s spending limit. But going lower than that — below 10 percent — is even better.
There are three ways to reduce your credit utilization: repay amounts owed, spend less or get a higher credit limit. But you can also game the system a bit by paying your bill multiple times per month. This will reduce the balance on your monthly statement date, which is what’s used to calculate credit utilization.
(AP Photo/David Goldman, File)
[Read: FICO Score, VantageScore, Credit Score: What’s the Difference?]
4. Pay down your debt. Getting out of debt will start a chain reaction of positive events for your credit standing. In addition to helping your credit utilization, repaying amounts owed will save you a lot of money on finance charges, allow you to contribute more to your emergency fund and prevent current balances from becoming unsustainable.
Escaping debt can directly help your credit, too. Some credit scores — VantageScore 3.0, for example — stop considering collections accounts once they’ve been paid. So getting debt collectors off your back could have the added benefit of improving your standing in the eyes of lenders using that model.
In addition, the less you owe relative to your income and assets, the better a candidate to borrow you’ll be. So even if it doesn’t lead to immediate credit score gains, getting out of debt will make you more creditworthy overall.
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[See: 10 Easy Ways to Pay Off Debt.]
5. Don’t miss due dates. Paying all of your bills on time every month will ensure that your credit score stays headed in the right direction. And missing due dates is a surefire way to stop credit-improvement efforts in their tracks.
So set up automatic monthly payments from a deposit account, plus a calendar reminder to check the balance of that account. At the very least, this will remove forgetfulness from the equation.
Finally, you should make sure to check your latest credit score a few times during the summer. This will allow you to gauge your progress and make adjustments as needed.
It’s also worth noting that there are plenty of incentives for perfecting your credit this season, from the historically valuable credit card rewards available to people with top-notch credit to the simple fact that great credit generally makes life easier.
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