How to Get a Near-Perfect FICO 8 Bankcard Score

Having great credit means that you’re more likely to qualify for loans and lower interest rates.

May 18, 2014 at 9:00AM

There are advantages to maintaining a pristine credit profile. Primarily, having great credit means that you're more likely to qualify for loans and lower interest rates. There's also bragging rights. However, the path to achieving an excellent credit profile is not clear-cut — credit-scoring agencies never reveal their scoring formulas.

Fortunately for us, one woman — Nancy, 39 — was kind enough to share her credit report with us to see how she got a stellar FICO 8 Bankcard Score (score range of 250 to 900) of 873.

*Just to be clear: the FICO 8 Bankcard Score is not the standard FICO score that many lenders use for assessing credit risk. It places greater emphasis on one's behavior with credit cards. Nevertheless, it still tells a large amount of information about creditworthiness. The standard FICO score range is 300 to 850.

Today, Nancy holds 16 active credit accounts. While the large number of credit lines may seem alarming, she's been managing her accounts diligently with the help of Quicken's money management software.

Here's a quick rundown of the key data points from Nancy's credit report:

  • Active accounts: 16 (13 credit cards, 2 student loans, 1 auto loan)
  • Delinquencies: 0, never late on any payments
  • Total combined credit limit: $143,253 (current total balance: $13,198)
  • Debt utilization: 9.21%
  • Total combined credit card limit: $110,850 (current total card balance: $446)
  • Debt utilization of credit cards: 0.40%
  • Average age of accounts: 48.2 months (28 total trade lines)
  • Age of oldest account: 74 months
  • Age of newest account: 20 months

Nancy's credit behavior displays many of the marks of a great credit profile, according to the factors that FICO consider in its scoring models.

The FICO 8 Bankcard Score is not publicly available but here is the breakdown of the standard FICO credit score:

  • Payment history (35%): Looks at on-time payments, late payments and defaults
  • Amounts owed (30%): Looks how much you owe and on what accounts
  • Length of credit history (15%): Looks at how long you've had your credit accounts
  • New credit (10%): Looks for new credit accounts in a short period of time
  • Types of credit used (10%): Looks for experience with different types of credit

Nancy has never been late with a payment, has a low debt utilization ratio, has a lengthy credit history, carries a mix of loans and doesn't have any new credit accounts.

How to be like Nancy
Because of the large number of accounts that Nancy has open, she makes it a habit to review her accounts on a daily basis with the help of Quicken.

She still has some student loan debt, which she did not eliminate as soon as possible. It has helped to increase her average age of accounts.

Although having 13 credit cards may appear to be a debt trap, Nancy only carries two credit cards — a Southwest Airlines card and an American Express card. And, most of them have a $0 balance, and all card balances are paid off every month. She does have seven store-branded credit cards, all of which were opened to take advantage of sign-up discounts and ongoing rewards. Generally, financial pundits warn against store credit cards, but Nancy shows that it is OK to have them.

In addition, having a large number of credit card accounts contributes to an extremely high combined credit card limit, and Nancy notes that she received automatic credit line increases and actively requested credit line increases over the years.

When it comes to closing card accounts, Nancy said that she always thinks about how this affect her credit. However, if she seldom uses a card, she'll just close it.

Stay tuned for part three — what is Nancy's actual credit score? That's next....

This How to Get a Near-Perfect FICO 8 Bankcard Score article originally appeared on My Bank Tracker.

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4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

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KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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