What Is an Excellent Credit Score?
One of the most important keys to financial health is managing your credit score well. An excellent credit score can save you money on interest, help you find the best loan products for you and positively influence other areas of your life. To have excellent credit, you need a FICO Score of at least 800 or a VantageScore of at least 781.
Do I have an excellent credit score?
When you check your credit score, it’s important to understand that not all credit scores are the same. Two of the most popular consumer credit scores are FICO and VantageScore. Financial institutions vary by which credit-scoring model they use.
Here’s what it takes to have excellent credit according to different credit-scoring models.
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Why is having excellent credit important?
How important is your credit score? Your credit history has a major influence on your financial life. These are a few reasons to work toward an excellent credit score.
 Better employment opportunities: While they cannot see your credit score, employers can legally use information in your credit report to decide whether to hire you. Excellent credit could give a potential employer one more reason to give you that dream job. Excellent credit can also be especially important for military members. The Department of Defense monitors the credit of service members with security clearance. Mismanaging your debts could mean the military sees you as too risky to deploy.
 Reduced security deposits for utilities: If you have poor credit, you may have to pay security deposits to turn on the lights or start phone service. People with excellent credit may avoid deposits altogether.
 Lower insurance premiums: Auto insurance companies don’t only look at your driving records, they also consider your credit history. Having excellent credit could reduce the amount you pay for auto or homeowners insurance.
 Lower credit card interest rates: People with excellent credit may qualify for lower rates or even an introductory 0% APR credit card offer, typically lasting 12 to 15 months.
 Better mortgages: With an excellent credit score, you’ll get the best deals on mortgage rates when buying a home.
What factors influence my credit score?
FICO Scores are used in over 90% of lending decisions in the United States. FICO does not publish its exact scoring algorithms, but it explains that each credit score has five major components for the general population. These include:
 Payment history: About 35% of your credit score depends on your payment history. This includes your history of paying your bills and whether you’ve had a credit account go into collections. You are unlikely to have excellent credit if you have a history of missed or late payments.
 Amount of debt FICO Scores calculate how much you owe, how many of your credit accounts have balances and the amount you owe on credit cards relative to your available credit (credit utilization ratio). This accounts for about 30% of your FICO Score.
 Length of credit history: FICO considers the age of your oldest credit account and the average age of your open credit accounts when calculating your score. Length of credit history makes up roughly 15% of your score.
 Credit mix: While it’s possible to build an excellent credit score just using credit cards, lenders prefer to see a variety of loans on your credit report. Having installment loans (like student loans or a mortgage) and revolving credit (such as a credit card) is better than just having one type of loan. Around 10% of your score depends on your credit mix.
 New credit: When you apply for new credit or open a new line of credit, your FICO credit score drops a bit. If you need to take out a new loan, limit your rate shopping to a 14- to 45-day window so all the inquiries will count as one. New credit determines about 10% of your FICO Score.
How can I improve my credit?
Improving your credit score from poor to excellent won’t happen overnight. However, you can take some steps to start improving your credit score now.
 Make payments on time: Making timely payments on your current debts builds a positive credit history. Over time, this will increase your credit score.
 Pay down credit card debt: According to FICO, most “high achievers” owe less than $3,000 in credit card debt. Paying off your credit card debt reduces your total debt load and lowers your credit utilization ratio.
 Request a limit increase: Call your credit card issuers and ask for an increased credit limit. An increased credit limit can lower your credit utilization ratio and increase your credit score.
 Keep your oldest credit card open: The longer your credit history, the better for your credit score. To help give your credit score a boost, keep your oldest credit account open, even if you don’t use it regularly.