How to get your credit score above 800 and keep it there

How Credit Scores Can Both Help and Hurt Americans

In general, the higher your credit rating, the better you are at lending.

FICO scores, the most popular scoring model, range from 300 to 850. A “good” score is generally above 670, a “very good” score is above 740, and anything above 800 is considered “exceptional.”

Once you hit that 800 threshold, you’ll most likely be approved for a loan and may qualify for the lowest interest rate, according to Matt Schulz, LendingTree’s chief credit analyst.

More from Personal Finance:
Here’s the best way to pay off high-interest debt
63% of Americans live paycheck to paycheck
“Risky behaviors” cause creditworthiness to level off

There’s no doubt consumers are turning to credit cards these days as they’re having a harder time keeping up with their spending and there are many factors at play, he added, including inflation. Exceptional credit, however, largely depends on how well you manage debt and for how long.

Reaching an 800+ credit score isn’t easy, he said, but “it’s definitely achievable.”

Why a good credit rating is important

According to a recent report by FICO, the national average credit score is at an all-time high of 716.

While this is considered “good,” an “extraordinary” result can unlock even better terms and potentially save thousands of dollars in interest costs.

For example, borrowers with a credit score between 800 and 850 could secure a 30-year fixed-rate mortgage rate of 6.13%, but for credit scores between 700 and 750 it jumps up to $19,000 to 6.36%, according to data from LendingTree -dollars extra.

4 Key Factors for Excellent Credit

Here’s a breakdown of four factors that affect your credit score and ways you can improve that number.

1. Timely Payments

The best way to get your credit score above 800 is to pay your bills on time every month, even if it’s the minimum payment due. According to LendingTree analysis of 100,000 credit reports, 100% of borrowers with a credit score of 800 or higher paid their bills on time, every time.

On-time payments are the most important factor and account for about 35% of credit scores.

To get there, set up autopay or reminders so you’re never late, Schulz advised.

2. Amounts Owed

From mortgages to car payments, an exceptional score doesn’t mean zero debt, but a proven track record of managing a mix of outstanding loans. In fact, consumers with the highest scores owe an average of $150,270, including mortgages, LendingTree found.

The total amount of credit and loans you use compared to your total credit limit, also known as your utilization rate, is the second most important aspect of great credit — it accounts for about 30%.

As a general rule, it is important to keep revolving debt below 30% of available credit to limit the impact that high balances can have. However, according to LendingTree, the average utilization rate for people with a credit score of 800 or higher was only 6.1%.

“While the best way to improve it is to reduce your debt, you can also change the other side of the equation by requiring a higher credit limit,” Schulz said.

3. Credit History

A longer credit history also helps improve your score because lenders have better insight into your background when it comes to repayments.

The length of your credit history is the third most important factor in a credit score, accounting for about 15%.

Keeping accounts open and in good working order, as well as limiting new credit card requests, will work to your advantage. “The lenders want to see that you have been responsible for a long time,” said Schulz. “I always compare it to a kid borrowing the car keys.”

4. Types of Accounts and Credit Activity

Having a diversified mix of accounts, but also limiting the number of new accounts you open, will further improve your score as each accounts for approximately 10% of your total.

“Your credit mix should include more than just having multiple credit cards,” Schulz said. “The ideal loan mix is ​​a mix of installment loans, such as auto loans, student loans, and home loans, with revolving credit, such as bank credit cards.”

“However, it’s very, very important to know that you shouldn’t take on new credit just to improve your credit mix,” he added. “Debt is a really serious thing and should only be taken on when necessary.”

Subscribe to CNBC on YouTube.