Why you don't need that 800 credit score.

Cat’s out the bag, I have an 800+ credit score and I’m under 30. How did I get here? What did I do? How long did it take me? How can you join the 800 credit club? My answer might shock you.

You stop worrying about it. Seriously, it’s like trying to watch a pot boil.

Don’t get me wrong, I’m not telling you not to worry about credit, just not to worry about achieving the 800 credit score. What you should be focusing on are these 5 things.

• Credit Utilization or how much credit you are using vs. how much credit you have access to in revolving lines (credit cards). You should be under 30 % total utilization.
• Credit Mix or the different types of credit you have like installment (car loans, mortgages, personal loans, etc) vs revolving.
• Accuracy of credit reporting or what’s on your credit report and how accurate it is (If there are inaccuracies, you need to remove them ASAP).
• Payment history or the percentage of on time payments vs late payments. (Here’s a secret: a payment isn’t technically “late” until 30 days after it’s due date. Sure, you might be charged a late fee, but it doesn’t hurt your credit until it’s been reported as 30 days’ delinquent)
• Strategic use of inquiries or hard credit pulls

Of course I should mention that these are very high level and basic tips that would include a strong discipline around not abusing credit and patience in waiting for the pay off of these consistent behaviors having been used, but that is the secret sauce. When I started my journey to credit awareness at 21 years old I was approved for a credit card with a $300 limit. I won’t tell you the limit on that same card today, but I will say that it’s been a slow build over close to 10 years that has landed me where I am today. The first step is often the hardest and that is simply getting educated. The next step is putting it all into practice. The high 700’s is considered excellent credit and can get you most everything an 800 credit score can. This is a long game, if you understand how credit works you’ll understand that fluctuations over time happen and you can weather the storms by implementing the above practices.

Here’s a reminder:

• Don’t (ab)use credit to fund your lifestyle or to pay for things you won’t see a return on.
• Don’t only pay the minimum required payment.
• Don’t apply for the store card just to get the 20% discount. (Can someone repeat that last statement so EVERYONE can hear it!).
• Don't close out your old credit accounts even if you don't use them.

Sometimes, the old school idea of budgeting until you have enough to buy it (or buy it twice according to Jay-Z) is the best way to acquire a liability you may or may not NEED.


Here are a few free (because everyone loves free) resources to get you started on your education.

www.creditkarma.com
www.bettermoneyhabits.com
www.annualcreditreport.com

Follow me: 

Twitter: @RahkimSabree
​Instagram: @RahkimSabree

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