4 Habits Stopping You From Having Perfect Credit

The average credit score for U.S. consumers is 714, reports Experian. But if you want perfect credit, you'll need to get your FICO® Score (the most commonly used scoring method) up to 850.

Now, one thing you should know is that attaining a perfect credit score isn't easy. And it also isn't really necessary.

The reality is that once your credit score gets to around the 800 mark, you're in a really good position to get approved for a credit card or personal loan, and at a pretty favorable rate. But still, perfect credit may be something you're hoping to achieve. If that's the case, though, then you'll want to steer clear of these habits.

1. Paying bills late

Of the various factors that go into calculating your credit score, your payment history carries more weight than any other. So if you have a tendency to be late with bills, it's almost guaranteed to stop you from having perfect credit. To avoid being late, set up as many bills as you can to get paid automatically.

2. Running up too high a credit card balance

Another factor that goes into calculating your credit score is your credit utilization ratio, which measures how much of your credit limit you're using at once. If that ratio gets beyond 30%, it has the potential to damage your score. So if you want perfect credit, don't run up a credit card tab equal to more than 30% of your total spending limit.

3. Closing credit cards you don't use often

The length of your credit history is another component of your credit score. The longer your accounts are open, the more of a boost your credit score might get.

But if you tend to close credit cards once you no longer find them useful, you might fail to achieve the 850 score you're hoping for. As such, make a point to hang onto old credit cards as long as they don't charge you an annual fee.

4. Chasing too many sign-up bonuses

It's somewhat common for credit cards to offer a sign-up bonus for new cardholders. Think of it as a marketing tool used to draw in more consumers.

With a sign-up bonus, you'll commonly get a lump sum of reward points or cash back for meeting a specific spending threshold within a short period of time. For example, you might score $200 cash back if you spend $2,500 on a new credit card within three months of your account being opened.

The problem is that every time you apply for a new credit card, a hard inquiry is done on your credit report. Each hard inquiry might lower your credit score by a handful of points, so a single one isn't so bad. But if you have a tendency to chase sign-up bonuses, it might easily prevent you from having perfect credit.

Perfect credit is definitely not something you need. But if it's something you're interested in having, then make sure to pay all of your bills on time, keep your credit card tab to a minimum, maintain older credit card accounts, and avoid applying for too many new credit cards in short order.