How to get the perfect credit rating
According to the popular FICO credit rating system, the ideal number is 850, which is difficult but not impossible to achieve. Unfortunately, the specific formula that would allow reaching the maximum is kept secret, but experts know its main criteria, the newspaper writes. T.
Top Fico 5 criteria:
- Payment history (35% rating) - the most important category and, at the same time, the most obvious; you must pay your bills on time every month.
- Amount of debt (30% rating) - it is a question of debt not in dollar equivalent, but in comparison with the original amount; for example, a person who owes another $ 400 thousand on a mortgage of $ 1 million will receive more points than someone who owes $ 100 thousand with $ 110 thousand received.
- Duration of credit history (15% rating) - this category takes into account a combination of various factors, including the age of the client, as well as the time during which your credit accounts are used.
- Number of credit accounts (10% rating) - it is important for credit organizations to understand that you are able to cope not with one but with several loans; for example, a person who has a mortgage, car loan and credit card open at the same time will be in a better position than the holder of a single credit card.
- New loans (10% rating) - this category takes into account the number of your applications for loans in the last year, as well as open new accounts.
It should also be understood that FICO is not the only scoring system, but approximately 90% of credit institutions use this particular rating or its variations, so it is important to stick to it in your credit history.
In addition, the FICO rating itself has different versions. The last one, FICO Score 9, contains several innovations at once in comparison with the previous ones, for example, in relation to medical services arrears.
Even if it seems to you that the credit history looks great, your rating may not reach the cherished mark of 850 points. According to David Howe, President of SubscriberWise, who achieved it in 2014 in the year of all three credit bureaus, the right combination of credit strategy and life circumstances is necessary.
Paying bills and keeping a balance is not always enough. For example, Howe had no new credit cards for 850 years at the time of his 10 rating and had only two accounts in total — one credit card and one mortgage.
Practical solutions include raising your credit limit by calling your bank, which will add you extra points in the "Amount of debts" category.
However, the ideal rating is not so necessary. He can make an impression on the person who checks him, but he will not allow you to receive an interest rate or other opportunities that, say, a person with a rating below 800 does not have.
In order to be in a privileged position (the so-called "major league"), it is enough to have a rating above 760.
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