Your credit score says a lot about you.  It’s not something that you really think about on a daily basis, but every time you make a payment, open a new credit card, apply for a loan, rent an apartment, or even apply for a new job, creditors are reporting information about you, and potential lenders and employers are gathering information on you.  With so many aspects of your life dependent upon a good credit score, it is important to learn how to get your credit score above 800 and keep it there.

What is considered a good credit score?

Credit scores range between 350 and 850, with the average credit score being between 600 and 750.  But what do these numbers mean?  According to Experian, one of the three credit bureaus, the scores break down like this:

• POOR, 350-579
• FAIR, 580-669
• GOOD, 670- 739
• VERY GOOD, 740-799
• EXCELLENT (EXCEPTIONAL), 800-850

The lower your credit score, the higher your risk is of defaulting on a loan.  Low scores indicate a high risk factor.  This is due to either a lack of credit history or a poor payment history, with payments being made late, or even defaulting on a loan.  The higher your credit score, the lower your risk factor to a potential lender.  A high credit score shows that you have a history of paying back previous loan obligations, and doing so in a timely manner.

Steps to increase your credit score

Because your credit score determines the loan program and rate for which you qualify, and possibly even if you will qualify for a new job, it is important to make sure your credit report is accurate and that your credit score is as high as possible.  Here are some steps to take to get your credit score above 800 and keep it there:

Make your payments on time

The first step to increasing your credit score is making your payments in a timely manner.  Keep in mind that any credit card or loan that you have probably is reporting to the credit bureau on you each month—so make sure the information they have to report is positive!  It doesn’t matter if you pay your entire credit card balance off each month, as long as you are making your minimum payment on-time.  There are other financial reasons that you may want to pay that credit card off each month, however, for the purposes of increasing your credit score to 800 and keeping it there, only an on-time, minimum payment needs to be made.

Don’t max out your credit limits

Any time that you have a credit card that has a balance that is maxed out at the credit limit, it is probably dragging down your credit score.  This can be an indicator that you may not be good at managing your money if you spend to the credit limit.  And if this is the case with several credit cards that you have, then it may drag your score down even further.  To improve in this area, pay down each credit card to below 50 percent of your credit limit.  So, if you have a credit card that has a $5000 limit, you don’t want to carry a balance over $2500 on that particular credit card. 

It can also be an indicator that you are likely to default in the near future.  Why?  Unless your current spending habits change, you may find that you not only max out your credit cards, but are in a cycle of over-spending each month.  If you get to the point that you have no open lines of credit to turn to, you might find it hard to meet your monthly obligations.  Additionally, interest on credit cards can add up fast, so you may find it hard to pay down those debts if you are in too deep.

Clean up your credit report

Do you have old accounts, inaccuracies, or collection accounts showing up on your credit report?  If so, they may be damaging your credit score.  It is important to know what is on your credit report at all times.  When something is showing up inaccurately or if you suspect fraudulent activity, report it right away and take steps to get it resolved.  If you have collection accounts showing on your credit, work with credit professionals to get those items settled and removed.  Or if old accounts are still showing as open or haven’t updated recently, work with those creditors to get the updated information sent over to the credit bureaus.    

Once you know that you have your credit report in good shape, you will want to regularly check on it to make sure that everything reporting is still accurate.  Keeping apprised of what is going on with your credit can help to ensure that you keep your credit score high once you get to that level.

Avoid too many credit inquiries within a short period of time

If you are shopping around for a new car or looking to buy a home, don’t apply for a loan at several places.  Each time you have your credit pulled, it impacts your score.  Too many of those in a short amount of time can lower your score, and even effect that rate and program for which you qualify. 

It is also good to remember that even after you have pre-qualified for a loan with a specific lender, you want to keep your new credit inquiries to a minimum.  If it takes longer than you think to find the right home or get your loan completed, the lender will pull your credit report again and all new credit inquiries and updated reporting will show up… and so will your updated credit score.

It will take time to build a credit history

Even if you are doing everything exactly the right way, your credit score will not reach 800 overnight.  It will take time—months, or even years, especially if you are just starting out.  Building a solid credit history and being able to reach a score of 800 is more of a marathon than a sprint.  Obtaining, and then keeping, your credit score above 800 is something that you must always be working toward.