What Do People with High Credit Scores Have In Common?

There is no question that life can be a lot easier when you have high credit scores. After all, high credit scores can help you to land some pretty amazing perks like easier loan approvals, higher credit limits, lower interest rates, the ability to save a lot of money, and better negotiating power. If your credit scores are currently less-than-stellar one of the best methods to work on improving your situation is to mimic the characteristics of people who already have the great credit scores to which you aspire. You can find out what is working well for others and in turn copy that behavior. Keep reading below to discover 5 smart habits which people with high credit scores have in common.

Habit #1: Low Credit Card Balances

High credit score earners know that it is important to keep their credit card balances low or, better yet, paid off in full every month. When you revolve a balance on your credit card accounts from month to month not only are you wasting your hard earned money in interest fees, you are also potentially damaging your credit scores in the process. You may not realize it but outstanding credit card balances can damage your credit scores even if you never make a late payment on the account.



FICO and VantageScore, the 2 most widely used credit score brands currently on the market, have both designed their credit scoring software so that it pays close attention to your credit card balances. Specifically credit scoring models are concerned with your revolving utilization ratio or, put another way, how much of your credit card limits you have tapped into. The more your revolving utilization ratio increases the worse the impact will be upon your credit scores. Rebuilding Tip: If you are currently carrying high credit card balances the good news is that if you will start to chip away at those balances your credit scores should begin to recover little by little. Of course if you can afford to pay off your credit card balances right away with one big payment, that is ever better. Also Read: 5 Common Factors that Lead to a Bad Credit Rating

Habit #2: On-Time Payments

Another common characteristic which high credit score earners share is the fact that they keep their payments on time. It goes without saying that you can never earn really great credit scores if your credit reports display a long term history of habitual late payments.



FICO and VantageScore credit scoring systems both will factor in your payment history very heavily whenever your credit scores are calculated. If late payments or more severe delinquencies (collections, charge-offs, etc.) are present on your credit reports then your scores will suffer, sometimes to the extreme. Rebuilding Tip: A late payment cannot continue to hurt your credit scores forever. The Fair Credit Reporting Act (FCRA) places time limits which restrict how long late payments are allowed to remain on your credit reports. Most late payments must be removed from your reports after no more than 7 years from the date of the occurrence. Also, credit scoring systems are designed to pay less attention to late payments as they become older. This means that as late payments age their negative impact upon your credit scores will lessen. Also Read: How to Identify Credit Repair Scams

Habit #3: Limited New Applications for Credit

Most high credit score earners make a habit of not applying for new credit accounts too frequently. When you apply for a new loan or a new credit card account a lender will access or “pull” your credit report(s) as part of the application process. A record of that credit pull will appear on your credit reports. This record of the access to your credit reports is known as an inquiry, specifically a “hard” inquiry if your credit was pulled by a lender. Hard inquiries have the potential to harm your credit scores for up to 12 months.



Rebuilding Tip: You do not have to be afraid to apply for credit when you really need it. However, you should probably eliminate the practice of frequently applying for new credit (especially credit cards) simply to chase rewards or discounts. Additionally, you never have to worry about hurting your credit scores when you want to check your credit reports yourself. This type of inquiry is “soft” and will never impact your credit scores in any way.

Habit #4: Lengthy Credit Histories

Another habit or trait which people who earn higher credit scores have in common is the fact that they tend to have lengthier credit histories. In other words, most high score earners have been successfully managing credit obligations for a long period of time. Credit scoring models consider the age of the oldest account on your credit reports and the average age of the accounts on your credit reports when calculating your credit scores. When it comes to account age, the older the better. Rebuilding Tip: If you have “young” credit reports you might consider asking a loved one for a favor. If a friend or family member is willing to add you as an authorized user onto an older, existing credit card account this could potentially impact your credit scores for the positive. You should, however, be sure to avoid the “piggybacking” scam where you pay a stranger to add you onto an account as an authorized user. Piggybacking onto a strangers account may be considered loan fraud (once you apply for any new credit after the fact), and could land you in some serious trouble.

Habit #5: Routine Credit Reviews

Most high credit score earners pay close attention to their credit reports. They know that they cannot sit back and simply expect the information contained in their credit reports to be accurate. Credit reporting errors happen quite frequently and it is actually up to you alone to verify the accuracy of the information on your credit reports. Rebuilding Tip: If you have not checked your credit reports recently remember that you are entitled to a free copy of all 3 of your credit reports each year online at www.AnnualCreditReport.com. Remember, if you do discover mistakes on your credit reports you can dispute them with the credit bureaus – either on your own or with professional help from a Credit Pro.