💸 Unlock the Power of an 800+ Credit Score

☕Good morning!

We’re back with another edition of Making Sense of Your Money, where we’re turning nitty gritty personal finance tips into something you actually look forward to reading. 

This week, we’re talking credit scores.

But, Dan, does a credit score really matter if I’m making boatloads of money already? 

Well, a healthy credit score in the 800+ range isn’t just about bragging rights.

It’s about access to the best interest rates, the most rewarding credit cards, and favorable terms for virtually any large financial decision you make– even for that actual boat you want to buy. 

Regardless of where you are on the financial spectrum, a credit score is a VIP pass to a lower cost of living– erasing hundreds (or thousands) of dollars in monthly premiums on large loans like mortgages.

Even employers are paying attention—a high credit score can tip the scales in your favor during the hiring process, especially for roles involving financial responsibility.

Let’s get into it!

🧮 Credit Score Basics

Think of your credit score as a behind-the-scenes player in your financial life.

It’s your financial reputation boiled down into three digits, ranging from 💩300 to ⭐ 850. 

Generally, here are the ranges of how credit scores are categorized: 

• Excellent: 800–850

• Very Good: 740–799

• Good: 670–739

• Fair: 580–669

• Poor: 300–579

Our goal is to get as close to 850 as possible. 

However, as many folks have learned the hard way, having a high salary doesn’t always translate into having a high credit score.

Sometimes, life moves fast—bills and loans get missed, credit cards are opened too close together, or we inadvertently spend too much on a single card. 

Your credit score is tracked by the big three credit bureaus, Equifax, Experian, and TransUnion, who aggregate the following components to show lenders who is worth lending money to: payment history, debt utilization, credit age, credit mix, and any new credit. 

Let’s review each and see what levers we can pull to ensure our credit stays high and tight. 

🦴 Your payment history is your score's backbone (35% of your score!). 

 Timely payments build trust with lenders. 

But here's something not everyone knows—missing one payment on a small bill, like a medical co-pay, can have the same impact as missing a large loan payment.

It’s not exactly fair, but I don’t make the rules; I just write about em. 

Most people know to pay their bills on time, but did you know that the timing of your payments can also impact your score? 

If you pay your balance before the statement closing date, your credit report will show a lower balance, which can boost your score.

🎉 Credit utilization (30% of your score!) is also very important.

This is the amount of credit you use relative to your available limits. 

Keeping this ratio low signals to lenders that you’re not over-reliant on credit. 

While keeping your utilization below 30% is commonly advised, it’s recommended to have a credit utilization of 10%. For example, if your credit cards sum up to a $20,000 credit limit, using up to $2,000 at any given time will reflect favorably. 

A little-known fact: Even if you pay your balance in full each month, if your balance is high on the statement date, it can negatively affect your score.

Again, I don’t make the rules.

📱Here’s a twist: if you know you’ll make a large purchase, request a credit limit increase beforehand.

It’s usually just a phone call away, and it can help keep your utilization low without changing your spending habits.

🧓 The longer your age of credit (15% of your score), the better. 

But here's a hack: If you’re new to credit, becoming an authorized user on a family member's old credit card can instantly add years to your credit history.

If that ship has sailed for you, perhaps keep it in mind for your kids down the line! 

On that note, your credit score doesn’t just affect you—it can also impact your family. For example, if you’re co-signing a college loan for your child, your credit score could determine the terms they receive. 

🦓 Your credit mix (10% of your score!) also matters.

A mix of revolving credit (like credit cards) and installment loans (like car payments) shows lenders you can manage different types of debt. 

But don’t overcomplicate it—having a few well-managed accounts is better than juggling many and letting payment dates slip by.

 While having various credit types is essential, focus on adding credit that aligns with your financial goals. For instance, taking out a small auto loan can diversify your credit mix, but only if it makes sense within your broader financial plan. Remember, quality over quantity is key here.

Also, many people think closing old accounts they don’t use will improve their score, but it can hurt you by reducing your overall credit history length. 

Keep those old accounts open unless there’s an annual fee or another downside. Even if they do have an annual fee, you can usually “downgrade” to a free version without impacting your credit. Just call your credit card company to confirm. 

👶 New Credit (10% of your score!) is tricky and easy to miss. 

This one is tricky: opening several new accounts simultaneously can signal risk, but spreading them over time can demonstrate responsible growth in your credit portfolio.

🥊 Credit scores are much more fun on offense rather than defense.

It’s easy to pinhole your credit score, as this number idly changes in the background as you go through the necessary financial motions of living your life and planning for larger purchases.

However, doing so simply just leaves value on the table. You can turn your credit score into a competitive edge and stack the odds in your favor.

A high credit score gives you leverage when buying a car or negotiating rent. 

For something like rent, which often requires your credit score for leasing, you could, in theory, and if applicable, revisit the negotiation as your credit score increases.

Don’t be afraid to ask for better terms– lenders and landlords know that a high credit score means you’re less of a risk. If possible and within your means, you could pair this with a pre-payment to get you even better terms. 

Further, exclusive credit cards with premium rewards are often reserved for those with excellent credit, but the rewards programs are constantly changing. 

These reward programs aren’t just for travel—some cards offer perks like extended warranties, purchase protection, airport lounge access, VIP event access, and incredibly competitive points programs. 

🎟️ Making Sense of Credit Scores

Your credit score is like your financial passport. 

While some passports (good and great credit scores 740 - 850) will get you into virtually anywhere you want to go, others won't; the difference in the upper echelon may determine how long you have to wait in the metaphorical customs line. 

Having an excellent credit score just takes some consistency and, at times, rolling with the financial punches. 

Maintaining a stellar credit score is more accessible than fixing a damaged one, but the good news is that you can climb to the top no matter where you start, with consistent effort and smart strategies. 

🌹 Just like keeping a garden, your credit score requires regular care—prune the weeds (bad habits), water the plants (make timely payments), and watch it grow.

Your score benefits most from reliable, consistent financial behavior. Paying your bills on time every time is the simplest, most effective way to build or maintain a high score.

You should regularly check your credit report from all three bureaus to catch and correct any errors that could lower your score. Discover Financial offers free FICO score access, as does Credit Sesame. 

Whether you pay down debt to lower your credit utilization, wisely diversify your credit mix, or simply keep old accounts open, each move can help push your score higher.

A high credit score isn’t just for bragging rights—use it as a tool to negotiate better terms, secure premium credit card rewards, and save money in the long run.

Building a top-tier credit score is a marathon, not a sprint—though a financial planner can help you get there much faster. Focus on the long game, and the rewards will follow.

Finally, keep this in mind: Your credit score doesn’t define you, but it can certainly define your financial opportunities. Treat it like an asset, nurture it, and watch as it opens doors.

 Stay savvy, stay proactive, and keep your financial future bright. Until next week!

Dan Pascone

P.S. Follow me on LinkedIn for more tax gems to save you money.

This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.

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