How to develop a ‘goldballs’ credit score

Your FICO score is as important to you today as air and water. Here, in the States, it follows you around from your first days as a responsible adult to your death, like taxes. Unfortunately, for many, building an excellent FICO score is not something our parents sat down with us and told us how to do properly. Hell, most of our parents either didn’t understand it themselves or didn’t apply the proper techniques in order to get a high FICO score. Many people just don’t manage their finances correctly. They fail to live within their means and properly coordinate cash flow in their daily lives. With heavy-handed advertising and the ‘live for today, worry about it tomorrow’ attitude so prevalent in our Western society, it’s easy to see how the sense of entitlement has corrupted our ability to take control of our impulse to spend money, even before we have it. We have become slaves to our every whim.

To be clear, credit has its advantages. The world operates on debt. Debt, properly used, can help build empires and personal fortunes. It gets infrastructure built, jobs created and helps advance technology and new businesses that do make our lives a far cry better than the days our grandparents or great-grandparents had to work from sunup to sundown to squeeze out a meager existence. Yes, the debt theorem has gotten way out of control on an international level but that is a topic for another day.

Today, I want to share the habits of people who are considered FICO High Achievers. Why should you care? Because at some point you will have to borrow money in order to stop driving that 15-year-old car that has to be repaired every other month. You most likely will want to buy a house or condo/apartment/land or invest in commercial property or income producing real estate. You can unplug all you want; paying cash for everything or just using your bank debit cards to pay living expenses. Good luck when you bring in that pile of receipts to your accountant and he tells you could have earned enough mileage points from your expenses and flown roundtrip to Brazil for free if you used a proper credit card.

Anyway, here are the facts:

  • FICO High Achievers (HA) have credit scores of 760 or above. (850 being the theoretical ceiling score)
  • FICO HA opened their most recent account 27 months ago.
  • Around 72% of FICO HA did not apply for credit in the past year. Of these who did, about 20% applied for credit just once.
  • 1% of FICO HA have a 60 day late payment or worse listed on their credit report.
  • 93% of FICO HA have no missed payments at all. But of those who did miss a payment, it happened nearly 4 years ago.
  • FICO HA opened their oldest account 19 years ago.
  • Most FICO HA have an average age of accounts between 6 and 12 years.
  • The ratio of revolving balances to credit limits is 7%, on average.
  • Virtually no FICO HA have a public record or a collection listed on their credit report.

As you can see, you should emulate how these people treated their credit files.

Here are some additional tips on improving your FICO score:

  1. Stop buying new phones or switching carriers. All carriers are virtually the same in call quality and rate plans. Find one you like and stick with them. Every time you buy a brand new phone, they do a soft or hard credit check which affects your FICO score (lowers it). Buy a used phone from eBay and keep that for a couple years. Why pay $800 over the lifetime of a phone contract for a phone? You could buy a used MacAir for the same money and that is actually a device you can use for many things. Also, switch to a pay as you go plan. No contracts and no pings on your credit report.
  2. Issue a security freeze on the three credit bureaus to prevent ID/ credit fraud.
  3. Schedule your due dates for your credit cards in your laptop/Gmail calendar with a reminder. Pay your cards a day early online (or if you mail checks, account for weekend days where mail may not be delivered.)
  4. Check your cards daily for any irregular charges that could stem from fraud. More so now than ever, cards are being cloned and used within hours if you used them at shady stores or ATM’s that aren’t actual bank ATM’s.
  5. Using a debit card will NOT raise your score. Using a credit card for your tax deductible expenses will. Find out whether your CC gives you points and whether you can use them for travel, like airfare.
  6. Never charge more than 30% of your credit limit, even if you pay off the balance in full every month. Credit companies want to see that you manage your issued line of credit reasonably. If you miss one payment on time you can catastrophically lower your FICO score by 100 points if your card is maxed.
  7. If you owe more than 30% on the total credit limit you have across all cards, your priority is to PAY THEM DOWN AS FAST AS YOU CAN! 
  8. Don’t apply for any credit for the next two years. No store cards, no new phones, no dental loans for new veneers, nothing!
  9. Lastly, if your dating someone seriously and thinking of marrying (which you really shouldn’t) ask what their FICO score is. If they can’t tell you, don’t know OR have a bad one (without a clear explanation as to why it is so low/bad), immediately end the relationship/engagement.
  10. I’m fucking serious. END IT IMMEDIATELY.

Good luck and let me know how you do with these tips.

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