"If winning isn't everything, why do they keep score?” -- Vince Lombardi
After reading yesterday's column (link here) on FICO scorecards, I think we can all agree that we're in competition with one another, even if we never realized it -- and even if we don't have the mindset to beat the crap out of each other. In a perfect world, we wouldn't even have to worry about FICO; we'd just get approved for everything we applied for and we'd live happily ever after. Oh that we lived in that fairytale world. That not being the case, I suspect that a great many of you care about your credit score. I know I do. Which leads me to today's story.
I have always tried to surround myself with winners. I figured that their winning ways would rub off on me. Indeed, whenever I got a chance, I'd pick their brains so that I could see what it takes to win. I figure that same philosophy can be used to garner higher FICO scores, too. If you want to know what it takes to be a "FICO High Achiever," which is someone who has a score of 760 or better, then you should watch what they do and try to emulate it.
If you've ever pulled your FICO score through myfico.com, then you've seen these references to FICO High Achievers before. Today's column is about highlighting some of the key attributes that FICO High Achievers share. I recently pulled my own credit scores (from all three bureaus). I'm a FICO High Achiever on my TransUnion report and my Equifax report. My Experian report was slightly under 760 (753), which means I have a little work to do there.
Rather than guessing, I decided to comb FICO's Web site to see if there was a list of things that these FICO High Achievers do. I was able to find quite a bit of them. I thought my readers would be interested as well. In no particular order, here they are:
On average, FICO High Achievers have 12 accounts. Those accounts could consist of mortgages, automobiles, credit cards, and so on. A quick look at my own credit reports shows that I have well in excess of 12 accounts. This could be a reason for my sub-760 score on Experian. Unfortunately, there's nothing I can do there. Still, those accounts aren't hurting me enough to keep me from being an overachiever when it comes to my Equifax and TransUnion scores (where my scores are above 760).
FICO High Achievers carry, on average, some $5,000 in non-mortgage balances. Between my student loans and car payment, I am well above $5,000 in balances. My credit cards, though, don't hurt me at all, since I don't keep balances on credit cards. I guess that's a small victory -- but it's still not enough to keep me on par with my High-Achiever peers. This is an area where I can improve.
FICO High Achievers are rarely late on their payments. What's more, only 1% have been 60 days late. I've never been late, so this is probably an area where I get most of the points possible. Chalk one up for me.
These same High-Achievers have six accounts that are paid as agreed. All of my accounts, many more than six, are paid as agreed. I imagine that I am doing just fine here. I'll continue to pay as agreed. Enough said.
The FICO High Achiever has a credit history that averages between 6 to 12 years old. Over the past several years, I have added a slew of new accounts to my credit report. As a result, my average age is four years old. If I lay off the applications, my average age will continue to rise. This is an area where I could pick up some points.
This is one that I have struggled with during the past three years. My FICO High Achiever pals typically don't open many accounts. On average, more than half of my High-Achiever peers did not open an account during the past year. Of those who did, 27% opened just one account. Obviously, this is an area where I can improve. Given that I will be getting a new car at the turn of the year, I'll have to work on this one afterward.
Not only were my High-FICO peers not getting many new accounts during the past year, they also weren't applying for anything either. On average, 72% of them had no applications during the past 12 months. Of those who did apply for something, 20% applied for just one credit product. All I can say is that I've been having more fun. Neener neener (sticks tongue out). I'm not promising anything, but we'll see what happens after I get my car. We'll see if I can refrain from applying for a new loan product during 2009. But I wouldn't hold your breath. Wink, wink.
One thing that FICO High Achievers have in common is that they do not miss payments. Some 93% of them did not have a single missed payment on their credit report. Of those few who did have a missed payment, it occurred about four years ago. I've never missed a payment, so I'm doing well here. I don't plan on ever missing a payment, so I'm not going to worry about this category. Still, if you're taking notes at home, don't miss payments.
Another thing that sets these FICO High Achievers apart is age. On average, their oldest account is 19 years old. Doing the math, and assuming that these people got their first account when they turned 18 years old, the earliest that someone could be considered average in this group is 37 years old. For my younger readers, this message is for you: time is your friend. This is a marathon; not a sprint. As your accounts age, you'll pick up FICO points.
Meanwhile, their oldest revolving account is 19 years old as well. I guess this means that people in this group, given our previous entry, open a revolving account first. My first account was a credit card. I'm not surprised by this factoid. My oldest revolving account is 21 years old. Unfortunately, it fell off my report a few years ago. My oldest revolving account is now 19 years old. Call me average.
Our FICO High-Achiever friends have no public records. No tax liens, no bankruptcies, and no foreclosures. They avoid these like the plague. Call me average again. I've never had any of those.
On average, FICO High Achievers opened their most recent account some 27 months ago. Hell, my most recent account was opened less than 27 days ago. You could say that I have some serious work to do here. But 27 months? Let's say that it would be an ambitious goal if I said that I would not open an account for that long. In fact, let me go on the record now. I'm not interested in holding out for 27 months. I guess I won't be getting a score of 850 -- ever!
Finally, FICO High Achievers keep their utilization very low. On average, their utilization is just 7%. This is an area where I crush my competition. My utilization is always around 1%. I've noticed that when I have 0% utilization, my scores dip just a bit. That's because FICO rewards people for using their credit on a regular basis. If I had no utilization, FICO would ding me because it doesn't take much skill to refrain from using credit. Makes sense to me.
This list is not exhaustive. A search of the Internet would turn up a few more things that FICO High Achievers do. But I've hit on the major ones.
If you're interested in maximizing your FICO score, you now know how High-Achievers do it. As for me, I am fairly content with my current scores -- even if I have a long way to go before I hit 850. Still, at 760+ on two of my scores, I am given the best rates, never get turned down for credit, and have little to worry about. Quite frankly, I'm just fine with that.
You'll have to figure out where your sweet spot is. FICO High Achievers have shown you the way.