Imperfect Scores for the Imperfect Consumer
Who doesn’t want to be perfect at something? Our society stresses the need to do our best whenever we can. And some of us are actually able to do our best when it comes to our credit – at least most of the time.
Credit card and loan applications are approved or denied on the basis of your credit score. This number can seem to be all-important because of affect it has on your ability to borrow money. You may wish that your credit score was higher, but the truth is that it’s not really necessary to pursue an unattainable perfect score, especially if your credit score is already good.
In the first place, a perfect scores on anything is very rare, and in some cases never even seen. This is definitely true with credit scores. Credit scores generally range from a very bad 300 all the way up to a perfect score of 850. The fact is that the majority of high scores only reach about 825. Even if a perfect score was an attainable goal, it really is not necessarily going to make that much difference, especially if you are trying to go from excellent to perfect. A move from a score of 775, for example to an 850 is actually not going to make much difference in your interest rates.
The bottom line is that if you are able to get a fair interest rate and enough credit when you apply for credit cards, there are probably many other things that it would benefit you more to put your energy into instead of trying to get your credit score even higher. There are, on the other hand, people who would truly benefit from raising their credit score. If, for example, you have been denied a credit card or loan, you may need to put some time and thought into improving your credit score. Generally if your credit score is below the high 700s, it may be worth taking the time to raise your score. There are some basic strategies that can help you to do this.
- Don’t apply for too much credit. Even if you pay off your credit card balance every month, you will still show debt on the day your credit history gets pulled if it is before your payment has been processed
- Try to use only 25% or less of your total available credit. This includes all credit cards and original loan amounts.
- Apply for only a few credit cards. Those people with the highest credit scores apply for credit less often than twice a year.
- Always pay your bills on time. A timely payment history has one of the biggest impacts on overall credit score.
- Check all of your bills and monthly statements. If you are mistakenly charged with a fee for late payment, be sure to call and get this corrected quickly.
- Check your credit report at least once a year. Purchasing or taking the yearly free look at your credit history can help your credit score if you use the information to correct any mistakes in the report and improve your credit use.
Keep in mind that almost no one can achieve a perfect credit score, and it is not even a goal that it is necessary to have. The important thing is to know that your credit score is the best that it can be.