If Your Credit Score Is Under 800, It’s Important To Understand Why Bigger Is Better

Did you know that just 20% of Americans have an “Excellent” credit score above 800? Are you one of them? If not, you may want to reconsider how you’re utilizing your credit.

Having good credit grants you easier approval on car, apartment, and home loan applications, decreased interest rates when borrowing money, the ability to quickly request credit amount increases, and interestingly, cheaper rates on car and homeowners insurance.

In short, having a respectable 800 credit score actually saves you money in the long term. 

Whether you’re close or a bit further away from an 800 credit score, keep these tips in mind to easily yet effectively raise your credit rating. 

1. Pay Your Bills On Time

Paying bills on time is one of the most important things you can do to maintain and improve a good credit rating. When you make your payments on time, it shows that you’re a responsible borrower who is likely to repay your debts. This can help you qualify for new lines of credit, get better terms on loans, and even save money on interest.

2. Keep Credit Utilization Low

Low credit utilization is good for credit scores because it means that you are using less of your available credit. This shows lenders that you are a responsible borrower and are not going to max out your credit cards. 

Credit utilization is your credit card balances divided by your credit limits. It’s best to keep your balances below 30% of your credit limits to maintain a good credit score.

3. Age Your Credit Score

Credit history is good for credit scores because it is a record of an individual’s or business’s past borrowing and repayment activity. This history is used by lenders to help them determine an individual’s or business’s creditworthiness

4. Consider A Mix Of Credit

A mix of credit is good for your credit score because it demonstrates that you can handle different types of credit responsibly. This is important to lenders because it shows that you’re not overly reliant on any one type of credit, and that you’re capable of managing your finances in a responsible way. 

Having a mix of credit accounts also shows that you’re not new to borrowing, which can be another plus in the eyes of lenders. A mix of credit may include a home mortgage, auto loan, and credit card debt and repayment.

5. Open New Lines Of Credit

Opening a new line of credit can also be favorable to your credit score. This is because it can help to improve your credit utilization ratio, which is the amount of credit you’re using compared to the amount of credit you have available. 

With these five tips to improve your credit score in mind,  some time and effort, you will be on your way to the top 20% of Americans with an Excellent credit rating. 

With some time and effort, these five credit-building tips will help you achieve an 800 credit rating in no time.