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Habits of People With Excellent Credit Scores

Written by: Kristy Welsh

Last Updated: September 25, 2017

We all know them, people who have an excellent credit score and can get a credit card or low interest loan without batting an eye. These are the types of people we are all envious of because they can apply for a loan with little to no stress knowing they will be getting a great deal on an interest rate. As they say, imitation is the ultimate form of flattery and this can be true for people with good credit. In order to be like them, we need to know what kind of spending, saving, borrowing habits they have and then we can be just like them. Wouldn't you love to be able to walk into a car dealer and walk out with the best deal, or being able to buy a home with the lowest possible interest rate? You can and we will let you in on these habits so you will have more choices in financial providers and lenders - making it easier for you to get a deal on your next loan or credit card.

Maintain a Budget and Record Your Expenses

Did you know that over 60 percent of Americans DO NOT maintain a budget and/or track their expenses? No wonder there are so many people in debt! If you are monitoring your budget, you are more apt to not miss a payment or find yourself short of money when a bill is due. The first step in preparing a budget is to take a look at your monthly income and regular expenses, such as rent/mortgage, car payment, food, utilities, health care, and keep a monthly report on a spreadsheet. After a few months, you will be able to see where you might be able to cut back or maybe spend more. Having all of your expenses clearly written out will give you the info you need to know where your money is going each month and if you have any extra at the end of the month. Doing this will help you pay your bills on time which helps to increase your credit score.

Have a System in Place to Pay Bills on Time

Setting up automatic payments for your reoccurring bills is a logical next step after monitoring your budget and expenses. This is very important since 35 percent of your FICO score is based on payment history — late payments equal lower credit score.  Just about every bank account lets you set up automatic bill payments through an account. But, if you are not comfortable with that, you could always set reminders on your smart phone or calendar. There are also a lot of companies that will offer automatic bill pay and will even offer perks to use it — such as bonus offers or lower payments. In this age of high tech gadgets and Internet access, there really is no reason why you should not take advantage of this technology and make sure you have a fail-proof system in place to pay your bills on time each and every month.

Monitor Your Debit and Credit Card Balances

This is a great transition from the previous habit as this can also be done electronically. Keeping on top of how much you put on your debit and credit card is important if you want to keep your credit score high. Make sure you go through your credit card statements and look for any inaccurate or outstanding charges. All banks allow you to do this over the Internet so you don't have to wait for a paper statement to do this — you can pretty much do it daily, if you wanted. This is a great habit to get in to so you can monitor what you are spending your money on and if it looks like your spending is getting out of hand, you can put that card somewhere where you won't use it.

Minimize Use of Available Credit

Along with paying your bills on time, your FICO score takes into consideration how much credit you have available — this is called your credit utilization ratio. According to, people with credit scores of 800 and above use on average only 7 percent of their available credit. That means, if you've got credit cards with a combined total limit of $20,000, you need to maintain a balance of $1,400 or less on them.

If your credit utilization is higher, then this will drag down your credit score and maxing out credit cards is a sure sign that you are at risk of missing a payment or being over extended. To improve your credit score quickly, pay off the outstanding balances on your credit cards or other loans to increase your amount of available credit.

Think Twice Before Applying for New Credit

Applying for a new credit card because your current one is maxed out is NOT the right reason for getting new credit. Each time you apply for new credit, the lender is going to perform a credit check, which is considered a "hard" inquiry. Too many hard inquiries can have a negative effect on your credit score. So, unless you really need that new line of credit, think twice before applying for a new credit card or loan.

Regularly Check Your Credit Reports

In order to improve your credit score, you need to know what your score is and what problems you might need to fix. The only way to find this out is to check your credit reports regularly — something people with great credit scores do once a year. You can get a free copy of your credit report every 12 months from This report will show your credit and loan providers, amounts owed, and your payment history. If there are any problems or discrepancies, you need to contact the credit reporting agency right away and dispute these errors.

Taking the above habits to heart will lead you down the road to a higher credit score and better credit. A few of these habits may be hard to get used to at first, but stick with it because the overall rewards will outweigh the struggle. Once you get into a good habit of budgeting, spending, and reviewing your finances, it will all seem like second nature. You will wonder how you ever got along without these habits.