You’ll Never Guess the Surprising Habit of Americans With Perfect Credit

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People with perfect credit share several financial habits. Learn about one surprising way they manage credit differently than everyone else. 

A high credit score is important, and most people do well in this regard. Research by The Motley Fool Ascent found that the average credit score is 714, which is considered good credit. A perfect credit score of 850, on the other hand, is extremely rare. Only 1.31% of Americans with a FICO® Score have reached the 850 mark.

Your credit score all depends on your financial habits and how you manage credit. So, it makes sense that Americans with perfect credit do a few things differently than most others. If you’re looking for ways to improve your credit score, then following the same financial habits could help.

Some of these things are what you’d expect. People with perfect credit tend to always pay on time, and they also carry lower balances on average. But there’s also one financial habit that most of us probably wouldn’t guess.

Here’s the surprising habit of Americans with perfect credit

Americans with perfect credit tend to have more credit cards. They have an average of 5.9 credit cards, compared to 3.9 credit cards for the average person.

This may seem completely upside down, especially if you ever heard the myth that having too many credit cards is bad for your credit. Your number of credit cards actually isn’t a factor used in calculating your credit score, so it doesn’t help or hurt your score. However, it does influence one of the biggest scoring criteria — your credit utilization ratio.

Your credit utilization refers to how much of your credit you use. Every month, your credit card issuer reports your card’s current balance and credit limit. For example, if your card has a $1,000 balance and a $5,000 limit, your credit utilization is 20%. It’s recommended that you keep your credit utilization below 30%.

When you have more credit cards, you have more credit limits. That helps keep your credit utilization lower. For example, if you have $5,000 in balances and $10,000 in credit limits, your utilization is 50%. If you have the same balances and $20,000 in credit limits, your utilization is 25%.

You don’t need lots of credit cards to have a high credit score

With survey data, it’s always good to remember that correlation is not causation. Americans with perfect credit tend to have more credit cards. That doesn’t mean they have perfect credit because they have more credit cards.

It might even be the opposite. They could have more credit cards because they have exceptional credit, meaning their applications are more likely to be approved. They may also be more knowledgeable about credit, including the benefits that the best credit cards can offer, and apply for more cards because of that.

Their high credit scores probably come from their other financial habits. Here are the two most important credit habits they follow that do have a clear impact:

They pay on time. Americans with perfect credit typically have no delinquent payments on their credit history, compared to 1.8 for the average American. Payment history is the biggest factor in your credit, and just one late payment can take over 100 points off your score.They have lower credit card balances. They have an average balance of $2,558, compared to $5,221 for all consumers. Credit utilization is the next biggest credit scoring criteria, and by carrying low balances, Americans with perfect credit maintain low credit utilization.

As mentioned, having more credit cards can help with your credit utilization. It’s not necessary, though. You can keep your utilization low whether you have one credit card or a half-dozen.

Get as many credit cards as you feel comfortable using. Just make sure to keep your credit utilization low, no matter how many cards you have, and always make your payments on time.

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