Looking For Credit Score Perfection? Here's How To Get It

Online, May 23, 2011 (Newswire.com) - A credit score is the measurement of your ability to repay personal loans or business loans you have been granted. If your credit score is high, you're considered more creditworthy by credit rating bureaus than a person who gets a lower credit score. Having a higher score means lower interest rates on loans. But a perfect score isn't necessary to reap the benefits of good credit.

Credit scores are determined by the credit bureaus using the formula set forth by the Fair Isaac Corporation, which uses information from your credit report. The scale ranges from 300 to 850.

The highest credit score possible is an 850, but this score is also very rare. A score between 775 and 800 is considered top notch, and will qualify you for the best interest rates, and all the other benefits you'd get if you had a perfect score. Get a score lower than 775, however, and you will be paying more to borrow money or make big purchases.

But if you want to obtain that perfect score, here's how to do it:

• Don't make any late payments. These can hurt your credit score for up to 24 months - or longer.

• Avoid bankruptcies and judgments. They're very difficult to remove and can stay on your credit report for 10 years.

• Have only two major credit cards. Having too much credit factors in negatively when figuring your credit score.

• Have only two store or gas credit cards.

• Keep your credit card balances to 15 percent or less. High balances is a negative factor when figuring your credit score.

• Be a homeowner and have a mortgage, which show stability and a long credit history.

The main thing is to keep your debt ratio low and pay your bills. Your long credit history, coupled with the fact that you pay your bills on time, every time, will help you get closer to and achieve perfection in your credit score.