Credit Score Experts: How To Take Your Score from ‘Good’ To ‘Exceptional’ – Technologist

Do you have a “good” credit score? And is “good” actually good enough for your financial needs?

FICO classifies a score between 670 and 739 as “good.” According to Experian, 21% of Americans have a score that falls into that bucket.

But to accomplish your financial goals and qualify for the best interest rates available, you may actually need to improve from “good” on the scale to “very good.”

Money expert Clark Howard says not to worry about chasing a perfect credit score, but he does say there’s a number you should be targeting for the best rates:

“Once you’re above 760 — and particularly 780 — you’re happy,” Clark says.

Improving an already good credit score can be a frustrating task. But not an impossible one.

We have enlisted the help of a couple of credit score experts to guide us!

Many consumers find themselves stuck in the mud when it comes to improving from “good” to “very good.” And, likewise, some people find getting into that “exceptional” tier an elusive target.

In this article, I’ll explain the two or three areas of your credit score that are likely your trouble spots and we’ll lean on the experts for some tips and tricks to improve them.

Table of Contents

• These Are the Credit Score Factors That Could Be Holding You Back
• Credit Experts Offer Tips and Tricks to Improve Your Score

These Are the Credit Score Factors That Could Be Holding You Back

Credit scores seem very complicated on the surface, but did you know that three key scoring elements account for 80% of your score?

Payment history (35%), Amounts owed/Credit utilization (30%) and Credit history length (15%) are the three largest components of your score. (Note: Click on each of those to get a detailed explanation of how the scoring works.)

And, given that you are already scoring “good” on the scale, that likely means you’re doing several basic things correctly within those components. Paying your bills on time, not maxing out credit cards, and the like are probably a given for you.

That’s great!

But it also means there’s a chance at least one of these score components could use some attention.

Rod Griffin, who is the Senior Director of Public Education and Advocacy for Experian, told me that credit card balances are most commonly the limiting factor for people with scores in the “good” credit range.

“Generally, someone who is in this situation has a payment history that is really good, but they may have high credit card balances,” Rod said. “So, most often, the fastest thing you can do to improve your credit scores is to reduce your credit card debt. If you’re in the low-to-mid 700s range, look at that first. Pay down your credit card debts, reduce your overall utilization rate on your credit cards and you will likely see scores improve.”

How To Identify Which Factor Might Be Hurting You

The best way to identify which factors may be impacting you is via your source for your free credit score.

Your credit score should be accompanied by some “risk factors” that describe why your score may be increasing or decreasing. Rod says the key to score improvement is likely in the details of these key factors that accompany your score each month.

“Typically you get four, maybe five, risk factors,” Rod said. “They are generally listed in the order of importance as they’re affecting the score you receive. If you use those risk factors to identify what it is in your credit history that you most need to work on, you will be able to improve your score.”

While credit risk factors that impact scores may differ from person to person, Rod did say there is one that people looking to go from “good to exceptional” can mostly ignore.

Credit inquiries.

This is referred to as the “fifth factor” in the industry because it is a risk factor that is always required to be listed alongside your others.

“If an inquiry affects scores at all — even a single point — we have to list that as a factor,” Rod said. “But I don’t worry about inquiries because that’s simply a record that someone has looked at your credit report. If you’re managing your credit well and have scores in the high 700s moving into the 800s, those inquiries aren’t impacting your score in any kind of meaningful way. If you have an inquiry in your report, it typically only affects scores for a matter of a couple of months and then any impact diminishes or goes away completely.”

Credit Experts Offer Tips and Tricks to Improve Your Score

Now that you know some of the credit score factors that have the for potential improvements, let’s see if we can expedite that process.

Credit score expert Beverly Harzog offers some helpful tips in her article about five sneaky ways to improve your score.

Some of her tips that could be useful for “good” credit scores looking to improve to “exceptional” scores include:

• Pay your bills before your credit card issuer reports to the bureaus. This may be an option you haven’t considered for improving your score. Contacting a card issuer to see which day they report and then intentionally paying your bill in full prior to that day (rather than waiting until the due date) will optimize your credit utilization ratio. Which, as we noted earlier, is worth 30% of your credit score.
• Keep your balances … balanced. If you’re carrying a credit card balance, you’ll want to make sure none of them are over 30% in utilization. FICO analyzes both your total credit utilization ratio and the individual ratios for each card. So, even if you have a good overall utilization ratio, you may be messing up your score by carrying one individual card with a high ratio.
• Ask for credit limit increases. Getting an increased limit on a credit card will make it easier to keep your utilization ratios in check. For example: If your card issuer increases your credit limit from $5,000 to $10,000, then your utilization ratio on a $1,000 monthly spend would drop from 20% to 10% with no change in behavior.

Do you have a “good” credit score? We’d love to hear how you’re planning to get to “very good” or “exceptional” on the FICO scale in the Clark.com community.

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