The Two Golden Rules of Excellent Credit

If you currently have good credit, then you're getting some pretty good offers for credit cards, personal loans, and mortgage rates. With good credit, your FICO score is around 700 to 749. If you decide to boost your credit into the excellent range, which is 750-plus, then you'll qualify for even better credit cards and interest rates.

You can't make the jump from good to great credit overnight, but if you follow a few simple rules, you'll get there. All it takes is responsible card use and patience, and maybe a little help from LendingTree.

The path to excellent credit

If you already have good credit, then you are probably doing a nice job with the basics. There are two golden rules to follow if you want to achieve excellent credit. The first rule is to pay all of your bills on time, not just your credit card bills. Payment history is 35 percent of your FICO score. So pay your bills on time and you're on your way to bumping up your score.

This isn't always as easy as it sounds, though. So think about how you'll stay on top of your bills and the due dates. Some folks set up automatic payments so nothing falls through the cracks. Others pay bills on a particular day. Pick a routine and be diligent about this.

The second rule is to maintain a low balance on each of your credit cards. You have a "credit utilization ratio" and it's the amount of credit you've used compared to the amount of credit you have available. This is important to know because 30 percent of your FICO score is your credit utilization.

The most common advice is to maintain a ratio of less than 30 percent. You want to keep the ratio below 30 percent across the board, but also on each of your cards. The score algorithm considers both the total credit utilization ratio as well as the ratio for each credit card. So keep that in mind before you run up the balance on one card.

Here's an insider tip if you want to increase your score quickly: Instead of 30 percent, keep your utilization ratio under 10 percent. And again, that's 10 percent for the overall ratio as well as for each credit card.

How excellent credit saves you money

Many consumers often wonder if there's much of a difference between good and excellent credit. Yes, there's a big difference, especially when it comes to saving money.

For one thing, you'll have access to the best credit cards and get offered terrific interest rates. Hopefully, you won't carry a balance, but if you have a financial emergency, it's good to know you have access to a card with a low rate. Also, the elite credit cards come with some fantastic rewards. Play your cards right (pun intended) and you can make a profit from your rewards credit cards.

Perhaps the best way you'll benefit is from the savings you'll receive in other areas of your financial life. It might not sound fair, but those with excellent credit scores get better rates for health insurance. These days, that's a very big deal. You'll also get better rates on a mortgage, auto insurance, life insurance, and more. The rationale for this is that those with excellent credit are more responsible and make better decisions in other areas of their life.

Another good reason to have excellent credit? Your future employer might decide to check your credit reports. This is happening more often and it's to your advantage to have a squeaky clean report. Now, the employer won't be pulling your FICO score, but they don't need to. You can tell a lot about a person's credit health by looking at their credit reports. Get your reports for free at AnnualCreditReport.com. This is the official site authorized by federal law.

Keep tabs on your credit score for free

Now, you can pay for a FICO score and it's about $20. You don't need to do this very often unless something has happened to significantly impact your score and you're worried about it dropping a lot.

On the other hand, it will be exciting to see your FICO score once you're in the excellent credit range, so when you think you've made a lot of progress, you can buy a FICO score. But be careful about what you purchase on the myFICO.com site. You want the score and not credit monitoring, which comes with a monthly fee.

In the meantime, to keep tabs on your credit health, you can use LendingTree's Free Credit Score, which pulls your credit history from TransUnion every month. In addition, you'll have a comprehensive credit file analysis to identify savings and steps to improve your credit. It's completely free, always free, and forever free! VantageScore 3.0, a comparable credit scoring model created by the three major credit reporting bureaus, is the credit score that you'll receive. Asking for your free score has no impact on your score, by the way. It's a "soft inquiry" and you'll also get helpful information about where your credit excels and what factors you need to work on.

Get loan offers customized for you today.