5 Tips to Get an Excellent Credit Score

Having an excellent credit score can save you a lot of money in interest over time. If your score is already in the 700s, you’re in good shape—but you may be wondering how to take your score from good to great. And is it worth the effort?

What is an excellent credit score?

Your credit score is a three-digit number that reflects how well you manage your money at a point in time. It’s calculated based on factors like your loan payment history and credit card balances. Multiple companies have models that calculate credit scores. FICO and VantageScore, for example, both operate on a scale from 300 to 850, with 850 being a perfect credit score.

Generally speaking, a higher credit score can translate to cost savings and perks. Your credit score is a key factor considered by lenders, and an excellent score can help you get credit at lower interest rates (which can save you hundreds or even thousands of dollars on interest over time). Landlords and employers can also check your credit score as part of their due diligence process. 

So how high should you aim? Getting a perfect credit score is extremely difficult, so many people strive for a score in the high 700s or 800+. That puts you squarely in the highest range for most credit-scoring models. VantageScore considers a score in its highest tier (781-850) to be “Superprime,” and FICO deems a score in its highest tier (800-850) to be “Exceptional”.

5 Tips to Get an Excellent Credit Score

If you’re far from having an excellent credit score, don’t worry—the tips below will help you improve your score over time. You can still reap many of the benefits listed above with a good credit score, but if “good” doesn’t cut it, follow our roadmap to getting an excellent credit score.

1. Always pay on time if you can

Payment history heavily influences your credit score. It’s one of the biggest factors for both FICO and VantageScore. Striving to make on-time payments applies to all of your bills, including utilities, rent, and loan payments. 

What happens if you can't make a payment on time? Pay it as quickly as you can, even if you’re going to miss the due date. Late payments are typically reported when they're 30 days late, and again when they're 60 days late. Late payments get progressively worse for your credit score; the later your payment, the more damaging it can be. Make late payments as quickly as you can to limit the damage it can do to your credit score. 

While late or missed payments (known as delinquencies) can stay on your credit report for seven years, the impact on your credit score decreases over time. Most negative credit events have little impact on your score after two years—be patient, keep making on-time payments, and you’ll soon be on your way to an excellent credit score.

2. Optimize your credit utilization ratio

Credit utilization is another key piece of your credit score puzzle. Credit utilization measures the balances you owe on your credit cards relative to your cards’ credit limits. It’s calculated on an overall basis (total balance on all cards divided by the sum of credit limits).

The general rule of thumb is to maintain a credit utilization below 30%. This applies to each credit card and your total credit utilization ratio. It’s important to note that your credit balances are reported to credit bureaus at a point in time. So let’s say you make a big purchase and your balance is high; if your credit balance is reported to the bureau before you pay off that big purchase, it can show a relatively high balance and potentially a high credit utilization. Strategies for improving your credit utilization ratio focus on reducing the numerator (shrinking the balances owed) and managing the denominator (maintaining or increasing the amount of credit available). Try one of these techniques to improve your credit utilization ratio:

• Pay more than the monthly minimum, if you can, to decrease your credit card balances.
• Leave cards open after paying them off. You’ll reduce your overall balance owed, but maintain the total limit—lowering your credit utilization ratio.
• Request a credit limit increase on one or more of your cards, but resist the temptation to spend more, as a result. (Note: this may result in a hard inquiry, which can temporarily lower your score.)

Refinance high-interest-rate credit cards with a personal loan with more favorable terms. Consolidating multiple credit card balances into one (ideally) lower interest rate loan can reduce the interest you owe, which means more of your payments can go toward principal, helping you  pay off your debt faster. Plus, if your credit cards remain open after transferring the balance to a personal loan, your credit utilization ratio can decrease.

3. Regularly monitor your credit scores for inaccuracies

Identity theft and reporting errors can quickly derail your journey to a great credit score. Sign up for Upgrade’s Credit Health to check your credit score for free, monitor your credit, and access credit education tools. You can also request your credit report once a year for free from each major reporting agency. 

If you catch something inaccurate on your report, follow the steps to dispute the error — like sending a written dispute letter to the major credit bureaus.

4. Be strategic about taking on new debt and closing accounts

Applying for new credit and loans can impact your score. Each time you apply for new credit, lenders will do a “hard inquiry” on your credit. Too many hard inquiries over time may indicate that you’re taking on more debt than you can handle and your score can take a hit.

However, you shouldn’t be afraid of applying for new debt—under the right circumstances. After all, you are working toward an excellent credit score to qualify for attractive financing, like a low-interest-rate mortgage, in the future. Demonstrate that you’re a responsible borrower who makes on-time payments, your score should stay strong over time.

Thinking of closing an old account? Consider why you want to close it. Having the available balance will help your credit utilization ratio. The older your credit history the better, and if the account you want to close is one of your oldest, you’ll want that account in the mix to keep your history and age of credit where it is. On the flip side, you might want to consider closing an account if you don't expect to use the account, it has an annual fee, unfavorable terms like a high interest rate, and closing it won't adversely affect your utilization ratio (or those things outweigh the utilization ratio impact).

5. Consider your credit mix

Your credit mix refers to the different types of loan products in your credit history—and it can influence your credit score. Scoring models often take into account your ability to responsibly manage different types of financing, from credit cards to personal loans. For example, lenders want to see the following:

• Credit cards: your ability to make on-time payments and keep your balances relatively low 
• Installment loans: your ability to make consistent payments over time and successfully manage long-term financial commitments. This is why it’s not helpful to open an installment loan and pay it off quickly.

If your credit mix needs diversifying, consider taking on a low-interest rate loan you know you can pay on time, every time (for example, taking out an auto loan vs. paying for a car upfront). If you’ve avoided credit cards altogether, you might think about opening one, charging a small amount each month, and paying it off immediately.

While having an attractive credit mix can help you reach an excellent credit score, you shouldn’t take on any financing that you can’t handle. Be mindful of your credit mix, but remember: credit utilization and on-time payments are paramount.

Next Steps

Ready to learn more about achieving an excellent credit score? Sign up for Upgrade’s Credit Health Monitoring to get your free credit score and use our free credit score simulator to see how different credit events can impact your score. Check out our Credit Health Insights for more tips on how to make a good credit score great.