FICO, the developer of the most popular credit risk score today, recently revealed some habits and behaviors of "high achievers" with FICO scores above 785:
- They keep low revolving balances relative to their available credit
- They don't max out their credit cards, and
- They consistently make payments on time.
Interestingly, these people are not necessarily debt-free.
- They have an average of seven credit cards, including open and closed accounts, and
- They carry balances on an average of four credit cards or loans.
- One-third have balances of more $8,500 on nonmortgage accounts.
More relevant, almost none — less than 1% — have an account past due. 96% have no missed payments on their credit report.
Payment history makes up 35% of how a person's FICO score is calculated. Thus, managing credit responsibly over time plays a large part towards improving one's credit score.
"Persons with high FICO scores typically have long, well-established credit histories and rarely open new accounts", FICO said. "Their balances are often low and they use only an average of 7% of their available revolving credit, i.e., $70 on a credit card with a $1,000 maximum."
FICO uses both positive and negative credit information in five general categories to calculate persons score:
- Payment history,
- Amounts owed,
- Length of credit history,
- New credit, and
- Types of credit used.
"Practicing good credit behavior consistently over time and regularly checking your credit report for errors can be instrumental for achieving a high credit score, which can lead to better loan terms and lower interest rates. Achieving good credit health is a long-distance event, not a sprint."