Ever look at people with saintly-acting children, or really really neat homes, or oodles of money, and wonder to yourself “Man how the heck did they do that? I wish I knew their secrets!” Well, now some of the “secrets” behind having a sterling credit score have been revealed by FICO, the company that invented the FICO score. And I have a feeling you will be pretty surprised when you read the common traits that folks who have high scores share. For instance, the high-achievers who keep impeccable credit scores have an average of seven credit cards. Seven!– though some are closed. They also carry balances on an average of four credit cards or loans. Sounding more and more like yourself? Read this article by Inman news to see what the difference is between those guys and you:
“Tight mortgage lending standards have dashed the hopes of many would-be homebuyers, but the developers of the most popular credit risk score today revealed some habits and behaviors of “high achievers” with FICO scores above 785.
More than 50 million people — about a quarter of all people with credit scores — are considered high achievers and tend to have “strikingly similar” credit habits regardless of background or life experience, San Jose, Calif.-based Fair Isaac Corp. said.
Some of these habits are fairly predictable: They keep low revolving balances relative to their available credit, don’t max out their credit cards, and consistently make payments on time. But high achievers are not debt-free. They have an average of seven credit cards, including open and closed accounts, and carry balances on an average of four credit cards or loans. One-third have balances of more $8,500 on non-mortgage accounts.”
Click here to read the “secrets” behind having a top-notch credit score, and the common denominators that people with near-perfect scores share.
To sum up, it’s best to have well-established credit histories (i.e., don’t close that Gap Card account just because you are cutting back on your shopping. It’s even more valuable if it’s a few years old, because it shows a lengthy account.) Also, try to keep a low balance and use an average of around 7% of your available credit. The FICO study really disproves that people who don’t use their credit at all are by no means in a better boat credit-wise. Au contrare, you’ve got to use credit to build it. How bout them apples!