Tier One Credit - The Best Credit Rating You Can Get

Do You Have an "A" or Tier One Credit Rating?

Last Updated: May 24, 2011

Tier one credit, or "A" type credit, is one of the highest rankings issued by the nation's credit rating services. It is applied to a consumer with an average FICO score of 770 or above, and allows this person to obtain a lower interest loan.

A top credit score can open many doors for a consumer, as well as save them money on interest and fees. A tier one rating offers many perks. Excellent credit holders can obtain low-interest loans with favorable terms, for instance. Ever see those car commercials that speak about "well-qualified buyers"? Chances are they are speaking about a tier one scorer. Credit tiers are commonly used when negotiating car lease or loan terms. Excellent credit is seen as a positive indicator of the ability to pay obligations on time and live within one's means.

Criteria For a Tier One Credit Rating

Tier one credit has different meanings across various credit rating services. Fair Isaac considers its highest tier a credit score of 700 or above. Mortgage lender Freddie Mac rates 770 or above an A+. SmartMoney.com and PBS's "Frontline" show reports 770 or above as excellent.

Benefits to Tier One Credit

Having high credit brings many benefits, not the least of which are discounts and savings on loans. Tier one credit holders have almost limitless access to credit, so there's little that they can't obtain. However, with increased credit comes increased risk. Excellent credit holders know that a key to keeping a good credit score is on-time payment of debts and a good debt-to-income ratio. As long as financial commitments are met, there are many opportunities to use the increased mobility to grow personal fortunes and invest for the future.

What Goes Into Your Credit Rating

There are four types of credit items on your report: Mortgages/rent, auto loans, credit card and other non-secured loans, and collections/judgments. Here is an explanation of each.

Mortgages/Rent	Mortgages are considered secured loans. A secured loan is guaranteed through an asset (in this case, a piece of real estate). When you are applying for a mortgage, the lender needs to be sure that paying your mortgage or rent payments is important to you. You should not have any lates in the last two years.
Auto loans	Auto loans are another type of secured loan. Lenders consider your payment history on auto loans almost as important as mortgages. You should not have any late payments in the last two years.
Credit cards and other unsecured debt	When it comes to these loans, lenders are much more forgiving. If you were late on making one of these payments-- more than 30 days late, but less than 60 days late-- you should still be okay. If you have a lot of credit lines showing up on your credit report, and you have two 30-day late payments, you should still be all right.
Judgments and collections	Judgments are usually an automatic loan turn down unless you have a really good explanation and proof to back it up. Collections are generally regarded the same way, unless it is a medical collection. Mortgage companies are extremely sympathetic about medical collections. They know that the medical profession often turns over unpaid accounts to a collection agency immediately, and often without notifying you.
If you have a bankruptcy	You may be considered to have "A" credit, even with a bankruptcy if: You have a good explanation for why you filed bankruptcy; You have reestablished at least three new lines of credit since the dismissal of bankruptcy; Your bankruptcy was at least three and preferably four years ago; and You have perfect credit since the discharge of bankruptcy (no exceptions!)