Over the weekend I happen to be talking with a friend about credit
scores when he proudly stated to me that he and his wife both have
scores over 800. I responded how fantastic that was and that they must
feel terrific about being in this elite credit score super club.
He went on to tell me how careful they are about their spending and
paying habits. For example, they make sure that, as much as possible,
bills are automatically withdrawn from their bank account. Then the few
other bills that need to be sent by regular post are always sent
certified express in order to minimize the possibility that they might
not arrive on time or not at all.
See related article: 7 SMALL MISTAKES THAT WILL HURT YOUR CREDIT SCORE BIG TIME
Then they strategically use their credit cards on just a few major
items. According to their research, credit scores go up when
items purchased at about the credit limit of the card are paid off
quickly. This was something that I didn’t know but he explained to me
that the credit score algorithms favor this kind of credit card use. All
other daily expenses such as gas, food, and minor medical expenses are
paid in cash or by check.
I asked him, “What specific benefits do you have with a credit score
over 800? Have you been able to substantially save on the interest rate
on your mortgage?” I explained that most banks will already give you a
their best interest rate when your credit score is over 750, and that an
800 credit score may constrict your lifestyle to the extent that you
are putting unnecessary pressure on yourselves.
His response was, “since it’s a system we have to live with, we’re
going to do our best to make sure we are as ‘credit’ squeaky clean as
possible.” My response to him was, “yes, you’re absolutely right, our
lives have devolved into an evaluation process based upon our credit
scores. Regretfully, one mistake and that score could take a nose dive.”
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