The majority of Americans have credit that would either be considered "good" or "excellent", but in order to have a top score, even excellent money management and paying all of your bills on time might not be enough.
What is excellent credit, and how can you jump to the next level?
The most widely used type of credit score, known as the FICO score, ranges from 300-850 with higher scores being better. Anything over 750 is generally considered to be excellent credit, and scores between 700 and 750 are considered "good".
However, a FICO score of 800 or more can be very tough to attain even for very responsible consumers. And the perfect 850 is extremely elusive, with only 0.5% of consumers even capable of achieving it. If you want to take the leap to the top of the credit rating spectrum, here are some characteristics of "high achievers" according to myFICO.com.
Keep your oldest accounts open
This may seem counterintuitive, especially if you opened some "starter cards" to help establish your credit.
Starter credit cards generally have high interest rates, annual fees, and little or no opportunities to earn rewards. They are simply bad deals, as far as credit cards for consumers with solid FICO scores.
Still, if you are hoping to jump into the upper echelon of FICO scores, don't be so quick to close them out. The average age of your open accounts and the overall length of your credit history play a significant role in calculating your score.
The length of your credit history makes up 15% of your FICO score. On average, those with 800's and above have an average account age of 11 years, and their oldest account was opened 25 years ago. Closing your old accounts can greatly reduce both of these numbers, but if you leave them open, the length of your credit history will only improve with time.
Use your credit cards, but carefully
Many people think that in order to achieve the highest credit scores, all of your credit cards should be paid in full every month.
In reality, the average high achiever carries a credit card balance of around $3,500. The most important factor is the ratio of the debt to your total credit line, as this contributes 30% of your FICO score.
That $3,500 balance represents just 7% of the average high achiever's available credit, which implies they have an average total available credit line of $50,000. Creditors want to see you're willing to borrow money. They just want to know you do it responsibly and don't rely too much on your available credit.
Rarely open new accounts
The average high achiever's newest account is 28 months old, so jumping at credit card offers is probably a bad idea if you want a very high score, no matter how sweet the offers may sound.
This goes hand-in-hand with the reasons for keeping old account open. Every time you open a new credit card or loan account, the average age of your credit accounts drops.
Since high achievers tend to have a lot of available credit, call your current card issuers and ask for a limit increase if you feel you deserve it and can use it responsibly. The worst they can say is no, so it's worth a shot before opening new accounts.
These rules only apply for those with the highest ambitions
Look, if you're happy with a credit score in the mid-to-high 700's, most of these guidelines do not need to be strictly adhered to. Generally a score above 760 will qualify you for the best rates on whatever purchases you want to make.
Opening new accounts probably won't drop you too far as long as you use common sense and don't open too many at once. Responding to 14 credit card offers at the same time could make you look desperate for credit and could raise red flags for lenders.
Closing your starter card might initially drop your score by a few points, but probably not by enough to make a real difference in your ability to obtain credit.
And if you use, say, 20% of your available credit, it's entirely possible to maintain an excellent credit rating. These rules mainly apply to those who want the highest scores, and for whom every point counts.
Above a certain point, and definitely when you get into the 800s, higher credit scores are pretty much just good for bragging rights and to provide peace of mind.
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