Habits of The 800 Club — The Path to Perfect Credit

The credit score elite are known as The 800 Club, a group of Americans whose financial prowess ranks among the top 18 percent in the nation. For consumers who boast a credit score of 800 or greater, the financial rewards are abundant. Low interest rates are offered, doors are opened, and each member of the club can expect to save more money than their average counterparts. So, what are some of the go-to habits of the credit-savvy? Read on to learn more.

1. Zero balances.

Compounding debt is among the top reasons for credit repair. On the other hand, The 800 Club knows that credit cards are an asset, not a liability. Allow consumer credit to raise your score by adhering to proper usage. Keep your credit utilization ration below 25 percent and pay off balances at the end of each month. A zero balance means zero interest and complete debt control.

2. Diversity.

Healthy credit involves a diverse mixture of accounts. The 800 Club members have extensive experience with all types of debt. Keep your credit report sharp by incorporating an equal mix of revolving (e.g., credit cards) and installment debt (e.g., student loans, mortgages, personal loans, etc.)

3. Discernment.

The fine print is sometimes the difference between good and spectacular credit. Signing up for every department store card or rewards program will read like graffiti on a credit report. The result could make you less attractive to lenders and could potentially damage your creditworthiness. Allow good taste to control the types of credit you choose. Work with reliable creditors who offer cards with low interest and no annual fees. Find a card that boasts frequent flyer miles or cash back rewards as well. Smart credit helps you spend and save.

4. Isolationism/stinginess.

You may be thinking, “What is isolationist about credit?” The short answer: cosigning. Assuming responsibility for another person’s debt is a dangerous endeavor, one that many of The 800 Club members avoid. If your friend fails to pay, the bottom line rests on your shoulders. Think twice about putting your creditworthiness into the hands of another person.

5. Savings and frugality.

Income carries no weight in the world of credit scoring; however, resource allocation has everything to do with financial stability. Members of The 800 Club often live well beneath their means. The reason? Greater resources equal greater opportunity for investment. It also means limited risk and responsibility. Consider the following example:

James earns $200,000 per year. Despite his large paycheck, his mortgage, car payments, and miscellaneous expenses take up most of his net income. The recent unemployment surge forced him out of a job, resulting in a mountain of overdue bills. James was able to find another job with a $145,000 base salary. Despite job security, his existing expenses exceed his new income. Ironically, James is among the top 5 percent of wage earners in the United States—and he cannot pay his mortgage.

Take a lesson from James and opt to save rather than spend. While you cannot control the future, the way you plan for it is another story.