Finance/Investing

How to get an 850 credit score: 5 strategies and a secret tactic

How to get an 850 credit score 2

This guide outlines how to get an 850 credit score, and explains the factors that affect it — plus a secret way to improve it.

In this guide, we are going to divide the content into three parts. In the first part, we’ll explain what a credit score is and how it has changed the world of finance. In the second part, we’ll cover the most well-known types of credit scores.

And in the third part, we’ll discuss the five factors that influence your credit score, as well as strategies — and a secret — that can help you improve it quickly for how to get an 850 credit score (remember to speak with a financial advisor or an institution in the area before making any major financial decisions).

What is a credit score?

Imagine a close friend, someone you’ve known for over 10 years. Now, think if that friend called and asked to borrow money to fix their car, promising to pay it back with interest the following month.

You would probably have an idea if you can trust this person and if they will keep their promise. However, the scenario changes when it comes to lending money to strangers, such as banks lending to you.

Banks need assurances that you’ll pay the money back, but often, they’ll lend you without really knowing you personally. That’s where credit scoring comes in. Your credit score is a quick way for banks and lenders to gauge how likely you are to pay the money back on time and in full.

Before credit scores existed, loans and credit applications were much more complicated and relied primarily on personal relationships with bankers. His reputation played a big role in this system. Now, your credit score precedes your reputation and personal relationships, being the main factor in deciding whether or not to grant a loan.

Your credit score is a number assigned based on your credit history, i.e., your record with other loans over the past five to seven years. This registry is maintained by three independent credit bureaus: Equifax, TransUnion, and Experian.

If you have an impeccable track record, you will have a high credit score, which makes it easier to get loans with favorable terms. On the other hand, if your history is compromised, you will have a low credit score, making it more difficult to get loans. So you need to improve your credit score.

Types Of Credit Scores

There are a few types of credit scores, but the FICO Score and Vantage Score are the most well-known. Both are based on the same information contained in your credit report, but they may vary slightly in how they interpret this data. It’s similar to giving two chefs the same ingredients and asking them to make chicken parmigiana. Both dishes will be chicken parmigiana, but there may be some differences.

Additionally, both the FICO Score and Vantage Score have been refined and improved over time. Sometimes older versions are still used, especially when it comes to mortgages. It’s like giving the same ingredients to a chef on two different occasions five years apart. The cooking technique improves over time, and so do the credit scores.

Why try to get an 850 credit score?

The highest credit score you can get is 850, while the lowest is 300. If you don’t have any active accounts on your credit report, your score will be zero. Having a score of zero isn’t necessarily bad, but keeping at least one account open is good practice. This will make it easier to get loans when needed.

Simply put, a score above 650 is good, above 750 is great, and below 650 can be improved (not to call it a bad score).

5 Factors that work towards an 850 credit score

Now, let’s look at the five factors that influence your credit score:

Payment History

This is the most important factor and accounts for about 30% of your credit score, so is crucial in how to get an 850 credit score. It’s based on whether you pay your bills on time, including student loans, mortgages, car loans, and credit cards.

Amount Owing

This factor also accounts for about roughly 30% of your score. It looks at the percentage of debt to total loans and the use of your credit card limit. Keeping a low balance is key to a good score.

Credit History

This factor in how to get an 850 credit score corresponds to about 15% of your score and takes into account how long you have had your accounts active. Having a longer credit history is beneficial.

Credit Mix

This contributes approximately 10% of your score. Lenders like to see a variety of active account types, such as mortgages, student loans, and credit cards.

New Credit

This factor also accounts for about 10% of your score. It evaluates the number of times you apply for new credit. Too many orders in a short period of time can negatively affect your score.

How to get an 850 credit score

To achieve a perfect credit score of 850, you need to have a good credit history and a solid credit utilization ratio. Here are some tactics to help you get there.

Pay your bills on time

Payment history is the most important factor in determining your credit score. Late payments can have a significant negative impact on your score. Make sure you pay your bills on time every month.

Keep your credit utilization low

Credit utilization is the amount of credit you use compared to the amount of credit you have available. A good rule of thumb is to keep your credit utilization below 30%. This shows lenders that you are responsible with credit and helps you with how to get an 850 credit score.

Maintain a mix of credit

Having a mix of credit, such as credit cards, auto loans, and mortgages, can help improve your credit score. However, don’t open new accounts just to increase your credit mix.

Limit credit inquiries

Every time you apply for credit, it can have a negative impact on your credit score. Limit the number of credit inquiries you make.

Monitor your credit report

Check your credit report regularly to make sure there are no errors or fraudulent activity. You can get a free credit report from each of the three major credit bureaus once a year.

Remember, achieving a perfect credit score is not easy, but it is possible. Keep working on building your credit history and following these tips, and you’ll be on your way to an 850 credit score in no time!

Secret way to improve your credit score

Here’s a secret to raising your credit score and can vastly help with how to get an 850 credit score: Ask a close friend or family member to add you as an authorized user on one of their credit card accounts.

It is not necessary to have a separate credit card; just have your name on the account. This can boost your score in three ways: it increases credit mix, extends your credit history, and reduces the percentage of your card utilization.

Final words

Follow the strategies above for how to get an 850 credit score, and you will see your score quickly start to improve on the way to the highest numbers!

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