Dear Experian,
I have an 805 Experian credit score. I know that's a good score; however, I am a competitive person and would like a higher score. I have the financial means to do whatever is necessary. For example, I could pay off my mortgage, but I don't because I think it helps your score to have one. I pay my credit cards off monthly, but your systems show a balance, so should I send a $10,000 or $20,000 advance payment each month to the credit card companies so there will never be a balance, just activity? Would that help? I really don't need credit, but find it challenging to raise my score.
- PSZ
Dear PSZ,
The best way to increase your credit scores is to pay attention to the risk factors that are listed when you get your score. Keep in mind that when your scores are already excellent, there may be less room for improvement than there would be if you were rehabilitating poor credit—but there may still be small changes you can make to make your stellar credit even better.
What Credit Score Do I Need for the Best Offers?
The first thing to understand is that your credit scores are not being compared with anyone else's credit scores. Every lender sets its own threshold for credit risk, which is represented by a specific credit score model that the lender chooses.
You don't get a two-slot toaster if your score is 20 points above the threshold but a bagel-capable toaster if your score is 100 points above the threshold. Once you are above that threshold, you will get the credit you want at the best terms the lender offers. It doesn't matter if you are 30 points above the threshold score or 200 points above it.
Simply having credit means there is some risk, however small, that you won't repay as agreed. Because of that small risk it is very difficult to get a perfect credit score, and if you do, to keep it.
What Are the Most Important Factors in a Credit Score?
Having said all that, I have to admit that I am a competitive person, too, so I understand your desire to excel. For most people who already have good credit I have two primary pieces of advice: Reduce your total balances as compared to your credit limits by paying down your revolving debt, and be patient.
Your total balances compared to your total credit limits is referred to as "credit utilization," and is represented by your balance-to-limit ratio, also known as credit utilization ratio or rate. Your credit utilization is the second most important factor in your scores, right behind your payment history. Credit scores consider payment behavior over time, so being patient and letting that long, positive payment history grow will eventually lead to score improvement.
But, I get the strong impression that you don't revolve, or carry balances from month to month. You simply use your cards heavily each month and pay them in full. The result, however, is that the amount you charge each month appears as your balance owing when your lenders send their monthly update to the credit reporting companies, and scoring models will count that toward your utilization rate.
So, very likely the only thing you can do to improve your very high score is to pay down your balances in advance as you suggested so that only a small balance is owed at the end of each payment cycle. But, there may be other issues that aren't evident from the information you provide in your question.
Credit scores are very specific to the individual. It is possible for two people to have the same credit scores, but for very different reasons. The only way to know what you need to do to maximize your credit score is to identify the specific items from your personal credit history that are most affecting your credit score. There are many ways to get reports and scores. One is to enroll in Experian's free credit monitoring service. When you get a score, you should get the risk factors that go with it.
Once you see the risk factors affecting your credit score, you can review your credit report to get a closer look at the things from your credit history that are having the most negative impact on your credit score. The risk factors will give you insight into whether you need to pay down your mortgage, reduce your credit card balances or take some other action. By addressing those factors over time, you may be able to improve your credit scores.
Be aware, though, that the higher your credit score is, the harder it becomes to improve it simply because there is very little room for it to get better. The nearer you are to perfection, the harder it becomes to get closer to it.
But, for people like us who like to excel, it never hurts to try.
Thanks for asking.
Rod Griffin, Senior Director of Public Education
