If you’re $8,000 or $9,000 in non-mortgage debt, you might think you have a very bad or low credit score. The good news is that you might not. The credit ratings giant FICO recently took a long, hard look at what makes for a very high credit score. What it found is that consumers who have a credit score of 785 (the “gold standard”) or higher actually have a fair amount of debt. The difference is that these consumers are masterful at managing it.
More than $8.000
Myfico.com is the consumer division of FICO, which was formerly known as Fair Isaac Corporation. It recently reported that many consumers who have the highest credit scores have more than $8,500 on their non-mortgage accounts. And that these are usually debts from multiple credit cards. Myfico.com has found that 50 million Americans are on its “FICO High Achiever” level in that they have credit scores of 785 or better, which is about one-quater of American adults that have a credit score.
What they do differently
These high achievers generally share three traits in their financial planning that earn them excellent credit regardless of their tax bracket or background. These traits are:
1. They routinely keep small revolving credit balances on their credit cards.
2. They never max out their credit cards; and
3. They make their payments when due – always
The Myfico report contained some other interesting information. For example, the company found that consumers who had great credit scores typically have seven credit cards. They also have balances outstanding but almost 100% of them have never missed a payment. Furthermore, only about 1% of high-achieving credit users have a credit report that lists any kind of collection and that, on the average, they only use about 7% of their available card’s revolving credit. Finally, and this will probably come as no surprise, almost all of these high credit score achievers have a spot free record of paying at least the minimum balance on their credit cards every month.
Myfico pointed out that this last tendency – to have a spotless record – is huge. It noted that you can build a better credit score by creating a steady track record for paying your credit card bills on time. One spokesman for MyFico reportedly said that missing payments will definitely lower your FICO score but if you establish or reestablish a good record for making payments on time, your score will definitely improve. As the spokesperson also noted, rebuilding credit is not a sprint. It’s a marathon.
The best way to rebuild credit if you’re having a problem with debt is to take your time. You need to focus on making every loan payment and credit card payment on time. It will also help if you reduce your card spending activity and make sure that you check your credit report on a regular basis so if there are errors that could hurt your credit score, you would be able to fix them. This is what the high-achievers do.
Debt consolidation could be a good first step
Many people who have had problems with their credit scores have found that debt consolidation can help. Our debt consolidation providers have a simple 100% satisfaction guarantee. We are so confident that we can help you become debt free in a reasonable amount of time that if you are ever unsatisfied with our recommended debt relief programs you can cancel at anytime without any penalties or fees.
Call us today so we can explain how we could consolidate your debts and save you thousands of dollars to boot.