How to Raise Your Credit Score to 850

by Amber Keefer, Demand Media
    Having good credit doesn't require a perfect credit score.

    Having good credit doesn't require a perfect credit score.

    While a highest-attainable credit score of 850 might be a goal you yearn to achieve, the realty is that reaching that high mark probably isn’t going to get you anything that a FICO score of 760 won't. If you are young and just starting out, it doesn’t matter how diligent you are about maintaining healthy money habits — that 850 number is going to elude you for a long time. Some financial advisors, including Maxine Sweet, the vice president of public education with Experian, have never seen one. Even if you don’t have a perfect credit score, with a score above 700, you are going to qualify for some low rates. With careful attention, you can increase your credit score steadily, month by month, slowly nearing that elusive perfect score.

    Step 1

    Keep credit card debt low. Personal finance expert Suze Orman points out that credit card debt is something that is completely within your control. Don’t apply for new credit if you already have plenty. Your credit score drops if you use too much of the credit available to you. Although creditors and lenders differ in how much credit they like to see you use, you should be okay if you keep your credit card balances below 25 to 35 percent of the total amount of credit available to you. However, once you start using more than 50 percent of your available credit, your score is likely to suffer.

    Step 2

    Use your credit cards in moderation. If you go for a loan, the lender will want to know that you have no problem making the monthly payments. Poor money management is one of the top reasons that people get into debt, so avoid the temptation to spend money that you don’t yet have in hand. When you use a credit card to cover the cost of an emergency or unexpected expense, try to pay off the balance within three or four months.

    Step 3

    Give your credit accounts time to age. This is one time when age translates into something better. Length of credit history can increase your credit score, although obviously it’s not going to happen overnight. Since credit-scoring models take into account the average age of all your accounts, consider that opening a new line of credit will drop the average age of your accounts. If you are trying to raise your credit score, not only should you not close any accounts that you’ve had for a while, you might not want to open any new accounts either.

    Step 4

    Pay every one of your bills on time. Your payment history makes up 35 percent of your credit scores; therefore, paying your bills on time is one of the quickest and best ways to improve your credit score. If you notice a late payment on your credit report that is listed there in error, contact the creditor or lender immediately to resolve the problem.

    About the Author

    Amber Keefer has more than 25 years of experience working in the fields of human services and health care administration. Writing professionally since 1997, she has written articles covering business and finance, health, fitness, parenting and senior living issues for both print and online publications. Keefer holds a B.A. from Bloomsburg University of Pennsylvania and an M.B.A. in health care management from Baker College.

    Photo Credits

    • Steven Errico/Digital Vision/Getty Images