How to get an excellent credit score?

Credit score is a number provided to a person by the credit bureaus based on multiple factors. In the US, FICO credit score is one of the most well known credit scores. For the general public, FICO credit score has a range between 300 and 850. The higher the number, the less likely the person will default or delinquent on a loan. According to a study, about 21.8% of the consumers have FICO score equal or higher than 800 in April 2018. These are the group of people who demonstrate high level of financial discipline..

Benefits of having excellent credit

With a high credit score, banks are willing to offer better rate when the person applies for mortgages, car loans and etc. For example, for a 30-year fixed mortgage, he/she could get an APR of 4.0% while another person with lower credit score may only get an APR of 4.5%. This translates to more than $10,000 savings in interest for a $100,000 loan over 30 years.

In addition, credit card companies usually provide 0% introductory interest rate and other perks to their very best customers. On the other hand, a person with poor credit may be rejected when they apply for credit cards and loans.

How to get excellent credit?

I have been using Chase’s credit card for almost two decades. One of the free services they offer is to give you weekly update of your credit score.

Free credit score update from Chase

Not only you can check your current score, but it also shows how you score over time.

In addition, it shows the key factors that affect your credit score. They also provide a simulator that enables you to understand how your actions, like applying for a loan, change your score.

Factors affecting your credit score

Always pay on time

Your payment history is one of the key factors affecting your credit score. Delinquent on payments damage your credit worthiness and as a result lenders are less likely to lend you money or give you best deals. To improve your credit score, always pay before the due date. Luckily, nowadays you can set up auto payment to pay off your credit card balance from your checking or savings accounts.

Keep your oldest account

It is tempting to apply for new credit cards to get their bonus points or cash rewards. However, keeping one of your oldest cards around is a great idea. You don’t need to use it as your primary card. The reason to do so is that lenders like to see that you have a long credit history. It takes time to build trust. In addition, when evaluating the score, they also take into account the mix of accounts you have. For example, do you have a car loan, credit card, student loan and etc. Having more than one type of accounts will help your score.

Don’t max out your credit

Credit usage also plays a key role in your score. For example, if the credit limit of all your cards is $10,000 and you normally use up 80% of the limit, you are considered having a high usage. To improve your credit score, try to keep the usage below 30%.

Don’t apply for too many cards

When you apply for a loan or a new credit card, the lenders query your credit report. It is a bad sign when there are too many queries in the recent past, say 2 years. If you are planing to buy a house in the near future, it is very important to improve your score by not applying for too many cards. Fewer queries help you get a better mortgage rate.

Reduce your total balances

The total balances refer to the balances on your recurrent loans (e.g. mortgages, car loans) as well as credit cards. Although this factor here is not as important as the aforementioned one, it is still a good idea to reduce the total balances over time. Your credit score will improve as a result.

Available Credit

According to Chase, this is a low impact factor relative to others. Available credit refers to the credit that you can access. For example, this could be the unused credit of your credit cards or HELOC.


Having excellent credit score reduces your cost of borrowing. In this article, several key factors that affect your credit score are explained. Please visit my blog ( for more money saving tips.

About the Author: Thomas Lee is an Engineer by trade. He is also a real estate investor. In his spare time, he writes blog posts on his website,, related to personal finance, investing, money saving tips to his journey seeking Financial Independence .

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