Sadly, there’s no one secret way to get a perfect credit score. The key, rather, is to be a good spender, pay your bills on time, and keep this up for as long as possible.
Building perfect credit takes a whole lotta precious time, and the only way to achieve this goal is to create good smaller habits and stick with them. That being said, however, here are my 17 expert hacks to help you reach that perfect 850.
1. Keep an eye on your reports and dispute errors immediately
According to the Federal Trade Commission, as many as 5% of consumers have errors on their credit reports. It’s your responsibility to make sure these get addressed because believe me, nobody else will.
You can request free copies of your credit report from Equifax, TransUnion, and Experian. Check each one over carefully for mistakes, including purchases you didn’t make, unpaid balances, and multiple entries for the same item. Report errors straight away.
You can also get a free copy of your credit report by signing up for Experian Boost. The service is free and is among the fastest ways to increase your score. You’ll simply provide bank account information and start getting credit for paying bills like your electricity, gas, and water on time each month. On average, customers see a 13-point FICO score boost with Experian Boost.
2. Rate shop all at once if you need a loan
When you apply for a car loan, student loan, or mortgage, lenders will be looking into your score. Luckily, you can minimize the impact this has on your credit score, and it’s all about taking advantage of the FICO 30-day grace period with credit inquiries.
When your credit score is pulled, it doesn’t count any inquiry that’s happened in the 30 days prior. If you’re rate shopping, get all your loan applications done within a two-week period, and none of the credit inquiries will impact your score when it’s pulled.
3. Keep your credit utilization below 7%
Credit utilization is a fancy way of saying how much available credit you have. For example, if you have one credit card and it’s maxed out, then your credit utilization is high, and this will have a negative impact on your credit score.
The magic number seems to be about 30% if you want excellent credit. However, according to John Ulzheimer, a credit expert at Credit Sesame, that number plummets to 7% if you want perfect credit. On a card with a $10,000 limit, you shouldn’t charge more than $700.
4. Use a retirement savings plan to lower your credit utilization
This is a great option because retirement plan loans aren’t reported to the credit bureaus. This hack comes with a caveat, however, because retirement plan loans are deducted from your paycheck, so this is only a viable option if you can manage the lower salary.
5. Keep all of your credit accounts open, even if you don’t use them
Another way you can lower your credit utilization is by keeping old credit cards open. You don’t even have to use them. Heck, you can even cut up the physical card. But keep the card active and the account open so you have the available credit.
6. Reduce the number of debts you have
This may sound obvious, but it’s important. Even if you keep small balances, if you have an overwhelming number of debts, this could reflect poorly on your credit score. John Ulzheimer says your best bet is to consolidate these nuisance balances into fewer loans.
7. And reduce your debt-to-income ratio as well
Debt-to-income ratio is a pretty basic concept: it’s the amount of debt you have versus the income you’ve got coming in. The higher the ratio, the lower your score will go.
To figure this number out, combine all your monthly debt payments and divide the sum by your gross monthly income. When it comes to a mortgage, the max you can have is 43%, because anything above that and you won’t get approved.
8. Keep up your good habits for a long, long time
Jeremy Greenfield is one of the talented 1% who’s managed to achieve perfect credit. According to him, getting an 850 is “actually quite simple, and anyone can do it: Don’t borrow too much money too often and pay all your bills on time, for a long time,” he says.
But just how long is a long time? Well, to break 800 you need at least 10 years of positive credit history, and the longer you go, the higher your score will be.
9. Pay off your student loans ASAP, and don’t miss payments
Unpaid student loans that go into arrears are never removed from your credit history. This means no matter how long a life you live, a delinquent student loan from your 20s could still haunt your credit history many years down the road, and be a major roadblock to perfect credit.
Here’s how to pay off your student loans quickly.
10. Use timing to your advantage
If a lender pulls your credit score at a time when there’s a high balance on your card because it’s near the end of your billing period, it doesn’t matter to the lender that you plan to pay the balance in a few days.
Instead, what is important is that there’s a huge chunk of debt on your credit report. Whenever possible, time credit inquiries appropriately so that all your payments have been made for the month, because this will show a lower debt-to-income ratio and lower credit utilization.
11. Seek out new credit as infrequently as possible
Any time you apply for new credit, the lender will pull your credit history. Every time this happens, your score will go down.
Seeking new credit accounts for about 10% of your score, so only open new accounts when you have to—no matter how tempting that new super points credit card is.
12. Don’t be afraid to use the credit you already have
It’s important to point out that having credit and not using it isn’t a wise approach. Your credit history is based on your pattern of using credit and paying it back, so if you don’t use any credit, you won’t have a score to speak of.
Using credit cards and paying back small loans quickly can actually improve your credit score. Having both revolving and tradeline debt is something called mixed credit, and it’s good to have.
The idea behind this is that lenders want to know that you can handle different types of debts and payments, which is why mixed credit is a good thing that can improve your score.
13. Don’t panic over an imperfect score
Aside from the intense feeling of satisfaction you’ll get, there’s no prize or special club for achieving a perfect credit score.
John Ulzheimer explains: “No bank has a product or offering that is exclusive to someone with an 850,” he says. In fact, “Most banks will offer someone with a 760 or higher the best-published interest rates.”
Trying to micromanage your credit and always stressing about it could cause you to make bad decisions that might ultimately take you in the wrong direction. Instead, be aware of your score and keep up with good habits, but don’t panic if you haven’t yet achieved perfection.
14. Avoid playing the debt transfer game
It is possible to use balance transfers wisely, but for the most part, it’s best to avoid this trap if you’re trying to improve your credit score.
A balance transfer will just move your debt from one location to another: it won’t hide it, make it go away, or wipe it from the credit bureau records.
15. Focus on buying things that appreciate in value when you buy on credit
Credit cards can be dangerous because if you don’t pay off the full balance each month, everything you buy automatically costs more. Similarly, things like cars almost always have interest strings attached, once again resulting in you paying more than what the item is worth.
Stacy Johnson is another determined and savvy money-maker who’s managed to achieve a perfect credit score. His advice is never to use a loan or credit to pay for items that depreciate in value.
Despite borrowing over a million dollars over the years, he’s never used credit for things that don’t pay him back. “What I’ve skipped for the most part, however, is borrowing money to buy depreciating assets, like vacations, cars and clothes,” he says.
If you only use credit and loans to buy things that don’t depreciate, then you’ll never pay more than you have to for something, you’ll keep your credit utilization low, and you’ll avoid making purchases that you can’t pay back right away.
16. Ask for good-will adjustments to forgive mistakes
Even people with near-perfect credit are fallible, and sometimes that means a black mark on your credit history. Don’t be afraid to contact the credit bureau or lender and ask them to remove it. Be prepared to explain yourself and make a case for how good a customer you’ve been otherwise.
17. Say yes to credit limit hikes
Anytime your credit card company offers you a limit increase, smile and say, “why yes, please!” This is like a freebie: You reduce your credit utilization without having to do a single thing. Plus, you have more room in case of emergencies. A higher limit isn’t dangerous as long as you use your credit wisely.
There are tons of ways you can improve your credit score, even if you already have excellent credit and are aiming for the elusive 850.
The important things to remember are building your good habits and sticking with them for a long time because most of the people with perfect credit have one thing in common: Lengthy credit histories.
Have you achieved credit perfection and have a tipping-point solution to share?