Phil's Personal Finance Tip of the Day:
Secrets of the Credit Score Superstars
It's the "white whale" of personal finance — the perfect credit score.
Get there, by reaching the ever-elusive 850 FICO score, and the world is yours. You'll enjoy the best interest rates, the choicest insurance options, the most flexibility in negotiating your debts and repayment plans.
At least that's the fantasy.
The reality is that a "perfect" score isn't really even possible, according to Rod Griffin, Experian's director of public education.
"I've personally never met someone with a perfect score," Griffin says, "and it's simply because there's always some level of risk. When you use credit there's always some risk that you won't be able to repay that debt. You may become ill or be in an accident. It's like driving a car; there's always a chance that you could be in an accident due to no fault of your own."
As a result, he says, perfect credit shouldn't be the goal. (Even defining perfection can be tricky, as each of the national credit bureaus calculates scores slightly differently, with maximums that range from 850 to 990.) But achieving an extremely high credit score — generally considered anything north of 800 points — is very much possible for everyday Americans, Griffin says, and can come with some great benefits in terms of lower interest rates and more flexible financing terms.
"Typically, the higher the score, the more favorable the interest rate," explains Heather Battison, senior director at TransUnion, who says it is in fact technically possible to achieve a perfect credit score based on her company's system. "So it is in the consumer's best interest to aim for the highest score possible."
It's all about perception.
"Lenders aren't looking for perfect scores," Griffin says. "They're looking for good lending risk, that you can manage your credit well."
We reached out to members of our Yahoo! Contributor Network who have credit scores of 800 and above to find out how they got there and how they maintain their stellar credit. A selection of their responses is below.
To read the entire article from Tim Sprinkle | The Exchange:
http://finance.yahoo.com/blogs/the-exchange/secrets-credit-score-superstars-155549627.html
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