While I don’t maintain an active subscription to any credit score monitoring service, on occasion I will signup for a free trial so I can check my FICO score (and then cancel the subscription before the free trial is up).
I did this last night and low and behold, the number came back about 10-15 points lower than I was expecting – I now have a 790 credit score.
Is 790 a good credit score? Absolutely. It *should* qualify you for the best on everything, from mortgage rates to credit card APRs.
However, a credit score of 790 can still stand improvement. Why? Because many years ago when the economy was in a tailspin I heard from many on the forum with scores of 10 to 25 points higher than that, who were getting approved with (a) pitiful toy credit limits, and/or (b) getting denied outright. However, that was due less to their credit scores and more because of the state of shock big banks were in following the near collapse of capitalism. Sure, they got billions in free money from the fed to lend out to consumers but rather than doing that they paid themselves huge bonuses and invested the funds in other ways (like buying back their own stock). I digress, but that whole episode in our history still makes me mad.
Conclusion? A credit score of 790 is good enough for now, but if the economy ever takes a nosedive again you may need to be prepared to forgo the best interest rates and credit limits.
So what’s holding my scores down? Well this is what MyFICO is showing me…
I typically apply for several credit cards per year, but have been slowing that down in anticipation of buying a house soon. I only applied for 2 new ones so far this year and apparently, that was enough to weigh me down a bit. Underneath in the details it says:
“FICO High Achievers opened their most recent account 27 months ago, on average”
Now there’s no way I can go that long without applying for a new credit card, but it appears having one recently within the past 6-9 months might have an impact if you have a relatively high 790 credit score. Interestingly enough, the Citi card I applied for 10 months ago is apparently not an issue, only the ones which were within 6 or so months ago.
That being said, there are some other factors which are weighing me down too, which unfortunately, I have little control over…
- Payment History: Paying bills on time is something I can control, which is why it’s ranked as “Great.”
- Amount of Debt: My credit utilization rate (ratio of your revolving balances to credit limits) is great at 6%, which is right in line with their “High Achievers” average. However my guess is what’s hurting me is that I only have one installment loan and it’s for a very low amount. Two years ago I took the loan out on a used car purchase for the sole reason of getting an installment loan on my credit report. Being that I don’t have a mortgage or any other installment loans, low installment debt is likely impeding my FICO score.
- Length of Credit History: This is the only category that’s just “Good” and is completely outside of my control. MyFICO tells me that the so called high achievers “opened their oldest account 19 years ago, on average.” If you do the math that means I would have to be 37 years old to hit that average, assuming I applied for credit as soon as I hit 18 (which I did). So I have quite a ways to go to build my length up to that and unfortunately, there’s nothing I can do to speed up the process.
- Amount of New Credit: Notice that even with my new credit cards (2 this spring plus 1 last winter) I still come in at “very good” for this category. So opening an account here and there won’t kill you, but it’s probably best to limit this to a few per year.
If you plan on applying for a mortgage within the next six to nine months, it’s probably not advisable to be applying for new cards or other forms of credit.
That being said, if your goal is to surpass a 790 FICO score within the next 12+ months, then it might make sense to open a card or two now if you don’t currently have many on your account. That way the accounts will begin aging and in the future, they will help your average age of accounts (your so-called AAoA). I have numerous credit cards and I know for a fact that definitely helps me – it keeps my total utilization low and all the accounts with perfect payment histories look good. But the key is to not have all your cards be recent acquisitions, but rather accumulating them over time and keeping them open.
Last but not least, if you get a triple credit score report, make sure the 3 credit score companies are providing you with real FICO scores (and not the VantageScore which runs on a 501-990 scale). I checked through the MyFico.com credit monitoring service to ensure I was getting the real deal. But whoever you choose, just make sure you are getting a FICO and not a FAKO.
Written or last edited on February 11, 2015