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5 Habits of FICO Overachievers

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By Eva Norlyk Smith, Ph.D.
February 18, 2011

Everyone wants to know how they can raise their credit score. But what’s the real difference between someone with great credit and someone with superior credit? What are the secrets of FICO overachievers with credit scores above 760?

FICO, the company behind the credit scoring system, offers general guidelines about the credit behaviors that make up great credit scores. But the company is mum about specifics. They have to be — if they made it clear how the FICO scoring formula works, it would be too easy to game the system.

FICO scores range from 350 for poor credit to 850 for excellent credit. Any score above 720 is generally considered great credit and will qualify you for some of the best loan terms. However, to get the very best terms — and to qualify as a FICO overachiever — a score of 760 is typically recommended.

Here are five simple habits that FICO overachievers use to push their scores over the top. (Note: This information was shared by consumers on myFICO.com.)

1. They keep their credit utilization ratio low. They may have easy access to credit; but FICO high achievers don’t use it that much. Most use only about 7 percent of the credit available across their credit cards. This helps their scores a lot because a debtor’s credit utilization ratio weighs in for about 30 percent of a FICO score. For non-credit card installment loans, it appears that only about 12 percent of FICO high achievers have a consumer finance account, and they tend to have paid down the balance to less than 35 percent of the original loan. It is worth noting that installment loans tend to impact utilization scores less than credit card utilization.

2. They pay their bills on time. Not surprisingly, FICO high scorers have virtually no late payments and no public records or collections listed on their credit reports. 93 percent of high scorers have never missed a payment. And among the 7 percent who have, the late payment occurred, on average, more than 4 years ago. Payment history — which includes payments more than 30 days late, as well as collections or judgments — is important. It make up about 35 percent of FICO scores. This means that  even just one missed credit card payment can negatively impact your score.

3. They start early. The average age of credit cards and other credit accounts of FICO overachievers is about 6 to 12 years. Credit users with high but not superior scores also tend to have a long credit history: the average age of the oldest revolving and non-revolving accounts is 19 years. The average age of the newest account is just over two years.  For the most part, FICO high achievers don’t apply for new credit very often. And when they do, they only apply once within a year.

4. They open several different kinds of credit accounts — and they keep them current. FICO scorers view many different types of credit — including mortgages and car loans — as a net positive because it demonstrates that a debtor can manage credit responsibly. However, people who have lots of credit lines and accounts of the same kind — such as multiple credit cards — are generally considered riskier than those with a “moderate” number of accounts. So, while diversity among the different types of credit is viewed positively, an abundance of credit accounts is not. Accordingly, it appears that most FICO overachievers have an average of only 6 credit accounts currently being paid as agreed, with 3 of them carrying a balance.

5. They apply for and use a moderate amount of cards — and rarely run up high credit card balances. FICO high scorers have an average of 4 to 5 credit cards, which include both open and closed credit cards, as well as bank and department store cards. And while most FICO high achievers have used their credit cards recently; they also tend to owe less than $600 on their cards.