If you read my previous blog, The Perfect Credit Score, you may have noticed that I made a rather absurd sounding statement. The statement was, "You can actually be turned down for loans and, especially, for credit cards if your credit score is too high!" Now, before you shoot the messenger, call me names, and think that I've lost my mind take a moment to hear me out.
I already mentioned last week that there is no real, tangible value to having a FICO credit score over 780. When you have a 780+ score you are absolutely going to qualify for the best interest rates and the best terms available on any type of loan (so long as your income and job history is there to back up your excellent credit score). At 780 you can even qualify for 0% interest on an auto loan. Any credit score above 780 is just gravy.
There are many people who like to try to take their credit scores up and beyond the 780 range, just for the purpose of bragging rights. However, it is important to be very careful if you are attempting to improve an already excellent credit score. A misstep could actually send your score backwards instead of forwards.
Another potential problem you could experience is being turned down for financing (i.e. a credit card) due to a credit score that is too high. You may wonder why in the world a company would ever turn an applicant down for having a credit score that is too high. To answer that question, let me first pose a question to you. Why are credit card companies in business? The answer is simple - to make money. How do credit card companies make money? They make money through the interest and fees charged to their customers.
In order to have a credit score in the Herculean range (810 or higher) then a borrower is pretty much required to carry a $0 balance on all credit cards. When a card company sees a credit score so high that it indicates that the applicant does not carry a balance on any credit cards the company may not wish to extend credit. The reason why is because statistics show that a consumer with a 810+ credit score is not likely to use the card and, if the consumer does use the card he/she will pay off the balance in full each month. When a customer pays off a credit card balance in full then the credit card company does not make any money. Therefore, some card companies do in fact decide that it is in the best interest of the company's bottom line to deny applications from consumers with credit scores that are too high as well as those applications from consumers with credit scores that are too low.
Now, am I suggesting that you run out and do something to drop your 815 FICO score down to 780? Absolutely not. However, if you already have a FICO score of 780 or higher now is the time to kick back, relax, and maintain that healthy credit you have worked so hard to build. There is no need to try to push your credit scores up any further. Congratulations on your effort. You have arrived! Enjoy the benefits that a life with pristine credit has to offer!
If you have not yet arrived, don't worry. You are not alone. Your current credit score does not have to be your fate. You can take steps toward improving your credit today and, as long as you stay the course, you can be enjoying the benefits of a pristine credit score in the future too! Don't know where to start? Give us a call at 704-499-9696 and one of our credit specialists will point you in the right direction.