How to Get a Near Perfect Credit Score

Having a high credit score is essential for many aspects of your financial life, including getting approved for loans, credit cards, and even rental applications. A good credit score can also lead to lower interest rates, which can save you thousands of dollars over the life of a loan. While a perfect credit score of 850 is rare, it is possible to increase your credit score to almost perfect levels.

The first step in increasing your credit score is to understand what goes into your credit score. Your credit score is determined by a number of factors, including your payment history, the amount of debt you have, the length of your credit history, and the types of credit you have. Payment history is the most important factor, making up 35% of your credit score, so it's important to make sure you pay your bills on time every month.

One of the most effective ways to improve your credit score is to pay off your debts. High levels of debt can negatively impact your credit score, so it's important to pay down your debts as much as possible. Start by focusing on your credit card balances, as these are typically the most damaging to your credit score. You can also consider consolidating your debts into one loan to make it easier to manage your payments.

Another important aspect of your credit score is the length of your credit history. The longer your credit history, the better your score will be. If you have a short credit history, you can build it up by getting a credit card and using it responsibly. Make sure you pay your bills on time and keep your balances low to avoid damaging your credit score.

It's also important to have a mix of credit types, such as a mix of credit cards, a mortgage, and a car loan. This shows that you can handle different types of credit responsibly.

Another way to boost your credit score is to challenge any errors on your credit report. It's not uncommon for credit reports to contain errors, and these can have a negative impact on your credit score. You can request a free credit report from each of the three major credit bureaus once a year, and review it for any errors. If you find any mistakes, you can dispute them with the credit bureau and have them removed.

You can also consider working with a credit counseling agency, especially if you're struggling with debt or credit card payments. A credit counselor can help you develop a budget and a plan to pay off your debts.

Steps you Can Take to Improve your Credit Score

  • Check your credit report: Obtain a copy of your credit report from the three major credit bureaus (Equifax, TransUnion, and Experian) to check for errors or inaccuracies. Dispute any errors that you find with the credit bureau.
  • Pay your bills on time: Payment history makes up 35% of your credit score, so it is important to pay all of your bills on time every month. This will help improve your credit score over time.
  • Reduce your credit card balances: High levels of debt can negatively impact your credit score, so it's important to pay down your credit card balances as much as possible. Aim to keep your credit card balances below 30% of your credit limit.
  • Maintain a long credit history: The longer your credit history, the better your score will be. If you have a short credit history, you can build it up by getting a credit card and using it responsibly.
  • Have a mix of credit types: Having a mix of credit types, such as credit cards, a mortgage, and a car loan, shows that you can handle different types of credit responsibly.
  • Limit new credit applications: Every time you apply for credit, it can have a negative impact on your credit score. Try to limit the number of new credit applications you make.
  • Consider a credit counseling agency: If you're struggling with debt or credit card payments, a credit counseling agency can help you develop a budget and a plan to pay off your debts.
  • Keep an eye on your credit score: Regularly monitor your credit score to see the progress you're making and to detect any suspicious activity.
  • Lastly, you should be aware of your credit utilization ratio which is the amount of credit you're using compared to the amount of credit available to you. It's recommended to keep your credit utilization ratio below 30%. This means that if you have a credit card with a $5,000 limit, you should try to keep your balance below $1,500.

    In conclusion, increasing your credit score to almost perfect levels takes time and effort. By understanding what goes into your credit score, paying off your debts, building a long credit history, having a mix of credit types, challenging any errors on your credit report, working with a credit counseling agency and keeping your credit utilization ratio low, you can improve your credit score and enjoy the many benefits that come with it. Remember, good credit takes time to build, so be patient and consistent with your efforts.

     
    Author: Brian McKay
    January 22nd, 2023