Score Advice

Four Top Habits of People With Stellar Credit Scores

Through April 20, 2021, Experian, TransUnion and Equifax will offer all U.S. consumers free weekly credit reports through to help you protect your financial health during the sudden and unprecedented hardship caused by COVID-19.

A top-notch credit score can open a lot of doors. With it, you can get access to the best loans at the lowest rates and most favorable terms, which can save you a lot of money. You are more likely to be approved for credit. And you can get approved for the most rewarding credit cards that allow consumers to benefit off the spending they already do.

What Is a Good Credit Score?

There are hundreds of credit scoring models out there, and you likely have multiple credit scores depending on the model being used. Many models use a scoring range between 300 and 850. In such models, a credit score of 700 or above is generally considered good. A score of 800 or above on the same range is considered excellent. Most credit scores fall between 600 and 750.

One of the most well-known types of credit scores are FICO® Scores , created by the Fair Isaac Corporation. FICO® Scores are used by many lenders, and often range from 300 to 850. Generally, a FICO® Score above 670 is considered a good credit score in these models, and a score above 800 is usually perceived to be exceptional. But in most situations, a score of 760 or above will qualify you for the best interest rates and terms on credit products.

To achieve a good or even excellent score, you must develop certain habits over time. Read on to find out what these habits are.

Habit #1: Pay Your Bills on Time

The number-one habit those with top scores exhibit is to always pay their bills on time. That means never making a late payment. Even if they don't make the full payment on a credit card bill, they always pay at least the minimum by the monthly due date. Payment history is the top credit scoring factor, and even one late or missed payment can adversely affect your scores. In fact, payment history accounts for 35% of your FICO® Scores. Payments made more than 30 days past the due date can stay on your credit reports for up to seven years.

One of the best ways to cultivate this habit is to automate your bill paying for at least the minimum amount due. That way, even if you forget to update it with the full amount you want to pay off, the minimum amount will always be covered and you'll never have to worry about being late.

Habit #2: Keep Your Credit Utilization Low

People with high credit scores keep their credit utilization ratio low. Simply put, that means they don't use much of their available credit. In general, the less available credit you use, the better your credit scores. Experts recommend keeping your ratio below 30%, and for the best scores, below 6%.

Your credit utilization ratio is calculated by adding all your credit card balances at any given time and dividing that by your total credit limit. For example, if your credit card balances total $2,000 and your total credit limit across all your cards is $10,000, your utilization ratio is 20%.

One way to keep your utilization ratio low is to pay off your credit cards before your monthly statement generates. It's the number on your monthly statement that determines the utilization, so if you pay off the card before that, you'll keep it low. You may also consider requesting credit limit increases or getting another card to increase the amount of credit available to you. Keep in mind, though, that doing so could cause a temporary dip in your scores (which typically recover quickly).

The best thing to do to keep credit utilization low is to not carry a balance on your cards. Aim to charge no more than you can afford to pay off at the end of your statement cycle.

Haibt #3: Apply for New Credit Prudently

People with good credit scores typically have a good mix of credit. That means they carry a diverse portfolio of credit accounts, which demonstrates to lenders that they know how to handle various types of debt. So it's smart to have more than one credit card and it's even beneficial to have a few other lines of credit or loans open.

However, that does not mean that you should apply for new credit constantly or open too many accounts. Every time you apply for credit, there is a hard inquiry on your credit report. Hard inquiries are recorded in your credit file each time a lender requests your credit report as part of their decision-making process. Hard inquiries remain in your credit file for up to two years and can in some cases have a negative impact on your credit scores. Typically, when you apply for a new credit card, your scores may see a brief dip, but they recover pretty quickly. That's why you want to be thoughtful and strategic when applying for new credit.

Habit #4: Check Your Credit Reports and Scores Regularly

It's important to know where you stand in terms of your credit—and to also make sure the information on your credit reports is accurate. Errors or other inaccurate information, such as misreported late payments, can damage your credit scores. That's why it's important to regularly review your credit reports. Doing so also protects you from identity theft, because you can see if there are accounts you don't recognize on your reports.

Obtain your credit reports from all three credit bureaus (Experian, TransUnion and Equifax) and review them for errors. Make sure each credit report accurately reflects your identity and credit history. Are there any accounts listed that shouldn't be there? What about late payments that may not be correct? If errors do exist, get those corrected as soon as possible because they could be dragging your scores down. You can initiate a dispute on your Experian report online for free.

You can get your free credit report from Experian. You are also entitled to one free credit report every 12 months from Experian, Equifax and TransUnion at

Also take a look at your FICO® Score (which you can get for free from Experian) to find out where you're at. When you receive your score, you will also get some information about why your score is what it is and how you can improve it. Pay close attention to those suggestions, because that's what you'll want to focus on to improve your score over the coming months.

How Good Is Your Credit Score?

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