5 Proven Habits of Individuals With Stellar Credit Scores

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A higher credit score can do wonders for your finances. Learn how to cultivate your own by stealing habits from folks with great credit. 

We discuss credit scores a lot around here. And honestly, this isn’t all that surprising. The better your credit score, the cheaper it will be for you to borrow money, be it in the form of a credit card, an auto loan, or even a mortgage. So having good credit saves you money.

If you’ve decided that 2024 is the year you want to see better credit (and reap the rewards), you might wonder how you should approach increasing your score. The good news is that there are plenty of people out there who’ve taken the steps to build excellent credit, and you can steal their habits.

According to credit score data amassed by The Ascent’s research team, 23% of Americans have credit scores between 800 and 850. I am one of them; I boosted my score by 100 points in less than a year, and even prior to that, I leaned hard on a few of these habits and was maintaining a credit score in the 700s despite being in debt.

The following five habits of people with stellar credit scores are all based on the FICO credit scoring model, which is made up of five factors that have different weights on your FICO® Score. Embrace them and watch your credit score rise.

1. They pay all their bills on time

The biggest piece of the FICO® Score pie is your payment history — it accounts for a whopping 35% of your score! This makes a great deal of sense if you think about it. Let’s say you want to borrow money in the form of a personal loan. A lender will want to know that you’ll pay back the loan, and your existing payment history is a likely indicator of just that. Hence, its importance to your credit score as a whole.

Thankfully, this habit is pretty easy to adopt. If you’ve been a bit lax about paying your creditors on time every month, vow to pay on time, every time. You can even set up autopay — that’ll ensure you never miss a payment.

2. They keep high-interest debt to a minimum

Your amounts owed on credit accounts is the next largest factor in your FICO® Score, representing 30% of it. Credit utilization ratio is a big part of this for revolving credit accounts, like credit cards. Folks with stellar credit scores keep their credit card balances low; it’s recommended that you don’t use more than 30% of your available credit at any given time.

Paying down your existing balances can absolutely help your credit score climb, so it’s worth focusing on if you want a higher score. Consider picking up additional income in the form of a side hustle or extra hours at your main job — since the money you earn isn’t already earmarked for bills, you can roll it right toward your debt.

3. They keep old accounts open

This is one rule I’ve broken, but I did it for good reasons (namely, I’m not willing to pay an annual fee for a credit card I’m not using). I closed my oldest credit card, and I saw a very small credit score hit as a result. I am maintaining another very old credit card account (that has a much higher credit limit and no annual fee, so it’s not costing me anything to keep it open), and it’s adding to my average account age.

Length of credit history represents 15% of your FICO® Score; this factor shows lenders how you’ve managed credit in the past, to help them predict how you’ll handle it in the future. Keep your old accounts open if you can, especially if doing so isn’t costing you money in the form of a pesky annual fee.

4. They maintain a healthy credit mix

The types of credit you have in your name (loans, credit cards, and so on) forms 10% of your FICO® Score. Depending on your age and financial situation, you might or might not be able to influence this factor right now. If you’re in your 20s and new to credit, you might only have a credit card or two for the time being. But wait a few years, and you might be ready to get an auto or mortgage loan. Keeping up with payments on a car or house will improve your credit mix, boosting your credit score.

5. They wait between credit applications

Finally, we come to new credit, which makes up 10% of your FICO® Score. People with high credit scores apply for new credit judiciously. There are a few flashy travel credit cards I’d love to add to my wallet, but I restrain myself for the benefit of my credit score. Plus, many of these cards have hefty annual fees, so I’m also saving myself a checking account hit.

If you want to join the 23% of Americans with 800-plus credit scores, it’s best to wait a while between new credit applications. A hard credit inquiry dings your score by a few points, plus applying for a lot of new loans or credit cards in short order could look to lenders as if you’re preparing to make some unwise financial moves (like running up debt you can’t afford to pay off).

A stellar credit score can do a lot for your finances. Embrace these habits and watch your credit score improve.

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