3 Things People With Perfect Credit Scores Have in Common

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Perfect credit requires a certain mindset and certain habits. Read on to see what makes it possible. [[{“value”:”

Your credit score is a number that lenders rely on when they’re trying to figure out if you’re eligible for a personal loan or line of credit. The higher your credit score, the more likely you are to get approved and snag a competitive interest rate on the sum you’re borrowing. So you may be eager to get your credit score as high as possible. And you may even have the goal of getting a perfect credit score.

In the context of FICO, the most commonly used credit-scoring formula, that means attaining a score of 850. And that’s no easy feat. But a small percentage of consumers — 1.54%, according to Experian — do have perfect credit. And chances are, these are the things they do to maintain it.

1. They make more than their minimum monthly credit card payments

Your payment history carries more weight than any other factor when calculating your credit score. So if you pay your credit card bills on time every month, that’s very helpful.

But it’s not enough to make your minimum monthly payments and call it a day. People with perfect credit keep their utilization very low, which means they don’t carry large balances forward and instead generally pay their bills in full.

If you want perfect credit, you should get into the habit of doing the same — paying your entire balance each month instead of just the minimum. This could not only help your credit score but also save you money on interest.

2. They keep accounts open in good standing for years

The length of your credit history is another big factor in calculating your credit score. People with perfect credit tend to keep accounts in good standing open for many years.

This doesn’t mean you should refinance an installment loan you’re almost done paying to keep that account open on your record. If you have a five-year auto loan with one payment left, you should make it and move on. But you should keep credit card accounts open as long as possible, provided there’s no drawback to doing so.

If you have a credit card with a costly annual fee that you don’t use, that’s reason alone to cancel. But if you have a no-annual-fee card that simply doesn’t have the best rewards program, then it pays to keep it if it’s older and in good standing (meaning, you’re current on your payments). In that case, you may want to set up a small recurring charge, like your Netflix bill, so the account is used, and then make the bulk of your purchases on a card with better perks.

3. They keep tabs on their credit reports regularly

You’re entitled to a free copy of your credit report from each reporting bureau — Experian, Equifax, and TransUnion — every week. People with perfect credit don’t necessarily review their credit reports on a weekly basis. But they probably do so on a regular basis, such as once every three months or so.

Checking your credit report periodically is a great way to keep your score in great shape. If you spot a harmful error and get it corrected, your score could get a nice lift. Plus, it’s important to check your credit report for fraudulent activity.

If you see an open loan or credit card on your report that you don’t recognize, it could be a mistake — or a sign that a criminal has created an account in your name. That’s something to investigate ASAP. But you won’t know to do that digging if you don’t check your credit report in the first place. And the sooner you spot fraud, the less damage it might cause.

Bottom line

Perfect credit is not easy to attain. And the reality is that you don’t need perfect credit to get approved for loans or credit cards. If you’re able to keep your score in the upper 700s or somewhere in the 800s, you’re in great shape, so there’s no need to stress over that hard-to-get 850.

But it definitely pays to adopt the habits of people who have perfect credit to boost your score and keep it strong.

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The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Maurie Backman has positions in Netflix. The Motley Fool has positions in and recommends Netflix. The Motley Fool has a disclosure policy.

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