Your source for the truth about credit in a world full of misinformation.
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Credit Reports and Scores
Is it possible for my credit score to be too high? What credit score do I need when applying for a home loan? What is the best way to build credit - FAST? HOPE Credit Expert, Michelle Black, answers these questions and lot more in her 20 minute, power-packed, not-to-be-missed interview with the Courtside CEO of WebTalkRadio.net. Click here to check out this great interview. Your brain and your finances will thank you! Trust us, you don't want to miss this one.
We received the following email from 2 of our recent HOPE graduates. Congrats to Wendy and Andre from the HOPE team! We could not be happier for you!
"Hello I hope you all are doing well. Just wanted to say thank you for all your help and support. Because of you all are credit is great and we purchased our dream home a few months ago! Not just a home but our dream home. Thank you so much."
~Andre A. and Wendy A.
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.
850 Credit Score
People often ask me "what is the highest credit score that it is possible to achieve?" Before I answer the question, allow me to clarify one point. First, there are consumer credit scores and FICO credit scores. FICO credit scores are used widely by lenders when deciding whether or not a consumer will qualify for a loan. In this article we will be discussing FICO credit scores only. The range of FICO credit scores is from 300 to 850. Therefore, 850 is technically the highest credit score that is possible to achieve. However, there is not a single person alive today with a credit score of 850. Achieving a credit score over 800 is a calculated effort which takes years and years of flawless credit management. Consumers with credit scores over 800 almost always study ways to achieve these astronomically high FICO scores. Scores in the 800s do not just happen on accident.
I will give you some tips below on how to achieve the ever so difficult 800+ score but, first, let me caution you. I am about to make a statement which I, myself, find to be absurd. Still, absurd as it may be, it is the truth. You can actually be turned down for loans and, especially, for credit cards if your credit score is too high! Again, I know this sounds crazy, but I have examples to back up the statement. Check back next week for all the gory details and learn why having a score of 780 may actually be better than a score of 800+. In the meantime, if your desire is still to achieve the highest scores possible here are some tips:
1. Always pay your bills on time. One single 30 day late can derail your plans to obtain the ever so difficult to obtain 800+ score.
2. Keep your credit card balances between 0% and 1%. On a $10,000 card you would want to keep your balance between $0 and $100 to stay on track for an 800+ score.
3. Have the right mix of credit. Consumers with FICO scores above 800 have proven to the credit bureaus that they manage different types of credit accounts well. Having a mixture of credit cards, mortgages, auto loans, student loans, and other installment loans can help you to move closer to the astronomical 800+ score.
4. Length of credit. To reach an 800+ score you will need to show a long track record (10+ years) of maintaining an immaculate credit report. Beware - applying for new credit can lower the average age of your credit file.
Remember, these are tips on how to achieve a credit score over 800. However, if your current credit scores are currently anywhere from poor to average then your initial plan of attack may be slightly different from some of the tips above. For example, if you do not have enough credit established then it may be beneficial for you to open some new accounts as a way to help establish healthier credit scores even though opening the new accounts would lower the average age of your credit file. Remember, striving to achieve a high credit score is great - a wise investment in your financial future. However, don't drive yourself crazy trying to reach a hard to reach score of 800. Once you have a credit score of 780 everything else is just gravy!
We are featured in the Summer Issue of Fort Mill Magazine! Click here to see the digital copy and check out page 40 for some great summer savings ideas courtesy of our very own Michelle Black. Healthy credit begins with a healthy budget. If your budget is in need of an overhaul then these fabulous tips on saving money may be exactly what you need to give your finances a kick start.
Need tips on how to sell your home ? Don't miss page 34 for "10 Tips to Sell Your Home Fast." Keller Williams Realtor, Jen Mildenberger has some wonderful - not to be missed - advice for you if you plan to put your home on the market in the near future.
So take a minute, check out the issue, and be sure to drop us a line on Facebook or Twitter to let us know what you think.
