If you have or are looking to achieve an excellent credit score, this post is for you. Roughly 20% of people in the U.S. have a credit score that is considered “excellent”. Over the past few weeks I discussed ways to improve a poor and average scores. This post will tell you what to do to make sure you protect your score if it is already where you want it to be. Your credit score is how lenders determine whether or not they should do business with you. Here are the ranges according to Experian:
- Excellent 800+
- Very Good 740-799
- Good 670-739
- Fair 580-669
- Poor > 579
If you have a score above 800 you want to keep it that way. This gives you an incredible advantage over others when it comes to getting access to financing at the best rates when you need it. It also means big purchases will be less expensive for you in the long run. Here are a few ways to keep up the good work.
Tip #1: Keep less than “excellent” cards open
So maybe your first credit card was given to you in college with a super high interest rate in exchange for a t-shirt. While this may have seemed like a fair trade at the time this probably isn’t your go to card now that you are in a different spot financially. It turns out closing that card and moving on is a mistake.
Your first credit card is what helps establish a long credit history. If you have had one since you were young keep it open. It shows other lenders that banks you’ve been in a long term relationship already and that makes you more attractive as a borrower.
Think of it like a new relationship. If you find out that they have only been able to date others for a few weeks or months before moving on it’s a little concerning. However, if someone has been in a relationship for a few years and it doesn’t work out but they are still friends well maybe you can feel a bit more comfortable. The bank is evaluating you and they don’t have much to go on. Just don’t close the old card – and throw a purchase on it every once in awhile to keep it active. Also, if you are doing everything right and still can’t break 800 you might not be old enough. Keep doing what you are doing and follow the next steps and soon your credit history will be long enough to get you the rest of the way there.
Tip #2: Protect your identity
I spent a long time working in a compliance department and let me tell you identity theft has come a long way. Don’t get me wrong Nigerian Princes still need a hand getting their fortunes out of the country but there are plenty of other attacks coming at people that are far tougher to recognize. Check out this interactive map to see how many are happening right now. It’s alarming and you are susceptible. It is a problem for everyone and if you have great credit it could get destroyed by a hack.
Your personal liability limits are different for credit cards and debit cards. With credit cards you are only liable for the first $50 of fraudulent charges. With debit cards it is $500 or more depending on how long it takes you to notice and report it. If you have excellent credit – use your credit cards for all transactions.
Chances are if you have excellent credit you pay your cards off regularly and don’t need to worry as much about the interest accruing. For that reason making purchases with it provides you more protection with less downside than say someone who overspends or carries a large balance month to month. Cleaning up a hack is a nightmare but it is worse when your bank account is wiped out in the process.
Tip #3: Throw your weight around
You, my dear are the fairest of them all when it comes to lending. Your lenders want to keep you and your business right where it is – with them. So if you have seen a card around that has a better interest rate call your company and let them know you are considering switching if they can’t compete. If they can great, this means you stay put with a lower interest rate. Even if you don’t carry a balance there is always a chance that someday you will need to and having it low is better for you.
If you have a card that had no annual fee for the first year call to see if they can waive that for you in subsequent years. Sure it is annoying to call anyone but make time to negotiate when it can save you money.
Maybe there are cards with better perks and benefits out there. Figure out which one makes the most sense for you based on your spending. If you like to go out to eat find one with extra points on those purchases. Same goes if you travel on the same airline or frequent a hotel chain to rack up some miles. Hell, I don’t care if you are in it for the Kohl’s cash and have a ridiculously high APR but save hundreds with coupons and pay it off monthly. Do what works for you because you have the financial power to make it work in your favor.
My last tip for you rock stars is don’t obsess about your score. Sure you can check it periodically (as you should) but looking at it everyday is just going to cause you more anxiety than needed. Sign up for fraud alerts with your cards and they will let you know ASAP if you need to be concerned.