A lot of people keep an eye on their credit score not just to help them build their way out of bad credit or maintain good credit, but because they’re working their way up to excellent credit.
There are a number of perks that come with top-notch credit, and the good news is that you don’t have to hit that perfect 850 credit score to start enjoying them. Just getting your credit score over 800, officially an excellent credit score, gives you the same advantages and benefits that come with a perfect credit score. Experian reports that 21 percent of all consumers have achieved excellent credit, compared to just 1.2 percent with a perfect score.
When you have an 800 credit score, you’ve done everything you need to do to prove that you are a creditworthy consumer. Banks and credit card issuers will be eager to loan you money, often at very favorable terms. People with 800+ credit rarely hear the word “no,” whether they’re asking for a mortgage preapproval letter or turning in a rental application.
Let’s take a close look at what it means to have a credit score over 800, how to get an 800 credit score and some of the perks associated with having an 800 credit score.
What it means to have a credit score over 800
Is 800 a good credit score? Having a credit score over 800 isn’t just good—according to the FICO credit scoring system, it’s exceptional. Although both the FICO and VantageScore credit scoring systems go all the way up to 850, you actually don’t need to hit 850 to reap the same benefits as those with a perfect credit score.
If you have an 800 FICO score, you have an extremely positive credit history. There are no missed payments or credit utilization issues to lower your credit score from its exceptional ranking. It’s likely that you have been using credit successfully for many years, and you probably have a healthy mix of credit accounts that includes both revolving credit (like credit cards) and installment credit (like a mortgage). In short, you are the ideal credit consumer—responsible, financially savvy and unlikely to default on your credit obligations.
Essentially, having a credit score over 800 means that there isn’t anything else you can do to make your credit score better. All you can do now is maintain the healthy credit habits that got you your 800+ credit score in the first place.
Perks of having an 800 credit score
In addition to receiving all of the perks that come with having good credit, there are some additional 800 credit score benefits that you should be aware of. In many cases, these are the same benefits that people with very good or excellent credit scores receive—but they might be a little bit better due to your exceptional credit score.
Better credit offers
One of the biggest perks of having an 800 credit score is access to better credit offers. With such a high credit score, you’ll be an ideal candidate for all of today’s best credit cards, including credit cards for people with excellent credit. If you travel regularly, you might want to consider a premium travel credit card like the Chase Sapphire Reserve® or The Platinum Card® from American Express®.
People with a credit score over 800 are also likely to be accepted for other lines of credit, including personal loans, car loans and mortgages. Not only will most banks and credit issuers be eager to loan money to a person with a near-perfect credit score, but the terms of the loan will often be more favorable than the terms offered to people with lower credit scores.
Lower interest rates
When you’re considering 800 credit score benefits, lower interest rates have to be near the top of the list. When you have an exceptional credit score, you’ll probably be offered interest rates that are well below the national average—and those low interest rates can save you a lot of money over time, especially if you get a low fixed interest rate on a long-term loan like a 30-year mortgage.
If you already have a loan or mortgage, consider refinancing your loan after you achieve your 800 credit score. Refinancing to a lower interest rate can be an extremely smart financial move, so don’t assume you’re stuck with the interest rate you got when your credit score was lower.
Higher credit limits
Another benefit of having an 800 credit score is access to higher credit limits. Not only do higher credit card limits increase your purchasing power, but these high limits also make it easier to maintain a low credit utilization ratio—which in turn will help you maintain your near-perfect credit score.
What if you want to use those high credit limits to fund a large purchase? As long as you pay off any outstanding balances before your current billing cycle ends, charging large amounts of money to your credit cards is unlikely to hurt your 800 credit score. Plus, every purchase you put on your credit card can help you earn rewards—and as a person with exceptional credit, you’ll be eligible for some of the best credit card rewards on the market.
How to get an 800 credit score
Want to know how to get an 800 credit score? Start by learning how to build credit—but don’t stop there. In addition to practicing responsible credit habits like making all of your payments on time and paying down your balances regularly, you’ll also want to take a few extra steps to improve your chances of earning an 800 credit score.
Keep your credit utilization low
Keep your credit utilization as low as possible. This means paying off your balances in full on a regular basis. According to FICO, people with credit scores over 800 have a credit utilization ratio around 7 percent. This means that if your total credit limit is $10,000, you should never carry a balance larger than $700. (This doesn’t mean that you can never put more than $700 on your credit cards—it just means that you should pay off any excess balance as quickly as possible, preferably within the same billing cycle.)
Monitor your credit score
Make sure to check your credit score regularly. Many popular credit monitoring services provide you with an updated credit score every week, along with an analysis of why your score might have changed. Learn what is likely to raise your score and what is likely to lower it, and avoid anything that might bring your credit score down.
Check your credit reports
It’s also a good idea to review your credit reports with the three credit bureaus (Equifax, Experian and TransUnion). Believe it or not, millions of Americans have errors on their credit reports—and those errors could inadvertently lower your credit score. Make sure all of the information on your credit reports is accurate and learn how to dispute credit report errors with the credit bureaus.
Maintain good habits and be patient
If you feel like you’re doing everything right and your credit score hasn’t yet passed 800, you might simply have to wait. Fifteen percent of your credit score comes from the length of your credit history—which means that even if you have been practicing responsible credit habits since you opened your first credit card, it might take a while for those habits to earn you an exceptional credit score.
It might also be hard to achieve an 800 credit score until you have a mix of credit under your name. We’re not saying you should take out a mortgage or a car loan just to get your credit score over 800, but if the only credit accounts on your file are credit cards, you might struggle to reach that 800 credit score. If that’s the case, don’t worry—having excellent credit is just as good, and you’ll receive nearly all of the benefits that come with a near-perfect credit score.
What to do with an 800 credit score
Once you’ve earned your 800 credit score, continue the same good credit habits that got you there. People with exceptional credit scores never miss a payment, so stay on top of your credit card and loan payments by setting up mobile alerts or signing up for autopay. People with very high credit scores also keep their credit utilization as low as possible, so try to pay off every credit card statement balance in full before your grace period expires.
Is there anything you shouldn’t do once you earn an 800 credit score? Don’t assume you can get away with letting things slide a little just because you’ve put in the work to earn near-perfect credit. Even a single missed payment could drop you out of the exceptional score range—and it might be hard to earn your way back up to 800.
That said, as long as you are maintaining responsible credit habits you shouldn’t worry too much about day-to-day credit score fluctuations. If you apply for a new credit card and generate a hard credit inquiry, for example, your credit score might drop below 800 by a few points—but it will probably bounce back fairly quickly, especially when you factor in your new line of credit. Likewise, you might see your credit score dip below 800 after you make a large purchase, only to rise again after you pay it off.
Is 800 a good credit score? Absolutely. Is it worth it to try to earn an 850 credit score, just so you can say you have the highest credit score possible? No—since you can get all of the benefits of near-perfect credit once your FICO score passes 800, there’s no reason to put any extra effort toward earning 850 credit score points. Instead, your goal should be to maintain your exceptional credit score by making on-time credit payments, keeping your credit utilization as low as possible and practicing the same responsible credit habits that got you an 800 credit score in the first place.
Loans Bad Credit Online – Loans Bad Credit Online – Reforming India’s deposit insurance scheme | Fintech Zoom | Fintech Zoom
Loans Bad Credit Online – Loans Bad Credit Online – Reforming India’s deposit insurance scheme | Fintech Zoom
By Anusha Chari & Amiyatosh Purnanandam
The failure of the Punjab and Maharashtra Co-operative Bank (PMC) in September 2019 shone a light on the limitations of India’s deposit insurance system. With over Rs 11,000 crore in deposits, PMC bank was one of the largest co-op banks. That the Deposit Insurance and Credit Guarantee Corporation (DICGC) insurance covered depositors, provided little solace when the realisation hit that the insurance amounted to a mere Rs 1 lakh per deposit.
The predicament of PMC depositors is, unfortunately, not an anomaly. Several bank failures over the years have severely strained RBI and central government resources. While co-operative banks account for a predominant share of failures, other prime examples include the Global Trust Bank and Yes Bank failures. These failures entail a direct cost to the taxpayer—the DICGC payment or a government bailout. More importantly, bank failures impose long-term indirect costs. They erode depositor confidence and threaten financial stability, presenting an urgent need for deposit insurance reform in the country.
A sound deposit insurance system requires balancing two opposing forces: maintaining depositor confidence while minimising deposit insurance’s direct and indirect costs. At one extreme, the regulator can insure all the deposits, which will undoubtedly strengthen depositor confidence. But such a system would be very expensive.
A bank with full deposit insurance has minimal incentive to be prudent while making loans. Taxpayers bear the losses in the eventuality that risky loans go bad. Depositors also have little incentive to be careful. They can simply make deposits in the banks offering high interest rates regardless of the risks these banks take on the lending side.
Boosting depositor confidence and reducing direct and indirect costs require careful structuring of both the quantity and pricing of deposit insurance. Some relatively quick and straightforward fixes could help alleviate the public’s mistrust while improving the deposit insurance framework’s efficiency.
India has made some progress on this front over the last couple of years. First, the insurance limit increased to `5 lakh in 2020. Second, the 2021 Union Budget amended the DICGC Act of 1961, allowing the immediate withdrawal of insured deposits without waiting for complete resolution. These are very welcome moves. Several additional steps could bring India’s deposit insurance system in line with best practices around the world. Even with the increased coverage limit, India remains an outlier, as the accompanying graphic shows.
The government’s incentive to step in and bail out depositors when banks fail is clear from past experience. However, these ex-post bailouts are costly. The bailout process also tends to be long, complicated, and uncertain, further eroding depositor confidence in the banking system. A better alternative would be to increase the deposit insurance limit substantially and, at the same time, charge the insured banks a risk-based premium for this insurance. Under the current flat-fee based system, the SBI pays144 the same premium to the DICGC—12 paise per 100 rupees of insured deposits—as does any other bank!
A risk-based approach will achieve two objectives. First, it will ensure that the deposit insurance fund of the DICGC has sufficient funds to make quick and timely repayments to depositors. Second, the risk-based premia will curb excessive risk-taking by banks, given that they will be required to pay a higher cost for taking on risk.
India is not alone in trying to address the issue of improving the efficiency of deposit insurance. The Federal Deposit Insurance Corporation (FDIC) recognizes that the regulatory framework governing deposit insurance is far from perfect and the United States is moving towards risk-based premia. The concept is similar to pricing car insurance premia according to the risk profile of the driver. The FDIC computes deposit insurance premia based on factors such as the bank’s capital position, asset quality, earnings, liquidity positions, and the types of deposits.
In India, too, banks can be placed into buckets or tiers along these different dimensions. The deposit premium can depend on these factors. It is easy to see that a bank with a worsening capital position and a high NPA ratio should pay a higher deposit insurance premium than a well-capitalized bank with a healthy lending portfolio. The idea is not dissimilar to a risky driver paying more for car insurance than a safe driver.
Risk-sensitive pricing can go hand-in-hand with the increase in the insured deposit coverage limits bringing India in line with its emerging market peers. In a credit-hungry country like India, these moves would build depositor confidence, possibly increasing the volume of deposits and achieving the happy result of the banking system channeling more savings to productive use.
Chari is professor of economics and finance, and director of the Modern Indian Studies Initiative, University of North Carolina at Chapel Hill and Purnanandam is the Michael Stark Professor of Finance at the Ross School of Business, University of Michigan
Loans Bad Credit Online – Reforming India’s deposit insurance scheme | Fintech Zoom
By Anusha Chari & Amiyatosh Purnanandam
5 Signs You’re Not Ready to Own a Home, According to a CFP
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The housing market has boomed over the last year, despite a global pandemic and millions of Americans struggling to make ends meet.
Many people are spending less on entertainment, clothing, travel, and other discretionary purchases during COVID. Federal student loan borrowers have seen temporary relief from their loan payments. These expenses will most likely rise again after the pandemic, and many people who committed to a new home with a large mortgage will struggle to keep up.
I often speak with clients and prospective clients who want to buy a home before they have a strong financial foundation. Buying a home is not only one of the largest purchases you’ll make in your lifetime, but it’s also a huge commitment that’s extremely hard to undo if you have buyer’s remorse.
It’s important to make a thoughtful, informed decision when it comes to a home purchase. Before you take the plunge into homeownership, check for these signs that you’re not quite ready to buy.
1. You have credit card debt
Credit card debt can be a drain on your monthly budget, and when combined with student loans and a car loan, it can lead to high levels of stress.
Generally, more debt means higher fixed expenses and little opportunity to save for long-term financial goals. Your financial situation will only get worse with the addition of a mortgage. I always recommend that clients be free of credit card or other high-interest debt before they consider buying a home.
To rid yourself of credit card debt, take some time to get a good handle on your cash flow. Take an inventory of your spending over the last six to 12 months and see where you can cut back. From there, develop a realistic budget that includes aggressive payments to your credit cards.
There are several strategies to help you knock out credit card debt fast. Regardless of the method you choose, stick with the plan and track your progress along the way. Once you pay off your credit cards, you can allocate your debt payments to savings, which can help you avoid this situation in the future.
2. You have bad credit
Bad credit is not only a sign that you may not be ready to take on a mortgage, it can also signal a high risk to
. A high-risk status results in higher interest rates and more strict requirements to qualify for a loan. A mortgage is one of the largest loans you’ll take out in your lifetime, and if you get behind on payments, you could lose your home.
Just as with credit card debt, bad credit could be a result of past financial mistakes. Dedicating the time to repair bad credit and improve your credit score will help you beyond purchasing your dream home.
Start by pulling a recent credit report from each of the three credit bureaus so you can review it for errors. Dispute any errors, address past-due accounts, and bring your overall debt balances down. It’s helpful to learn what has a negative effect on your credit score so you can avoid these mistakes in the future.
3. You don’t have an emergency fund (or an inadequate one)
If you’re unable to save for a rainy day, you probably don’t have enough money to buy a house. Owning a home is a big responsibility, and unexpected expenses pop up all the time. In addition, you could lose your job, have a medical emergency, or another unexpected expense unrelated to the home. Maintaining an emergency fund is a good sign that you have discipline and are prepared for the responsibility of homeownership.
Many financial experts recommend saving at least six months of living expenses in an emergency fund. If you have variable income, own a business, or own a house, you should save more. To build an emergency fund, set money aside from each paycheck and automate transfers to make the process easier. Give your emergency fund a boost when you receive lump sums such as bonuses or tax refunds. Start by saving one month of living expenses and build from there.
4. You don’t have separate savings for your home
I always advise clients to set aside savings for a home in addition to an emergency fund. It’s a bad idea to start homeownership with no savings. Whether you have unexpected expenses related or unrelated to the home, having no emergency fund after a home purchase will lead to unnecessary stress — and possibly more debt.
When purchasing a home, you’re responsible for a down payment and closing costs. While a 20% down payment is ideal to avoid private mortgage insurance, a down payment of at least 3.5% is typically required. Closing costs can range from 2 to 5% of the home’s value.
Also, you will have moving costs, costs to spruce up your new place (like new furniture or light cosmetic updates), and any initial maintenance and repairs. Be sure to budget for these items to know how much to save on top of your emergency fund. It doesn’t hurt to boost your emergency fund, too, in preparation for homeownership.
5. You have a low savings rate
It’s much easier to develop good savings habits before you have a lot of responsibilities. To get on track for financial independence, several studies show that you should save at least 15% of your income. The longer you wait, the more you’ll need to save.
If your savings rate is low before you purchase a home, it will most likely worsen after becoming a homeowner. Even if your mortgage is similar to your rent, ongoing maintenance and repairs, higher utilities, and homeowners association fees can wreak havoc on your budget.
Take a look at your current savings rate and see if you’re on track for financial independence. If you’re saving less than 15 to 20% of your income, work to improve your savings rate before you consider buying a home. A strong savings habit can help you build your home savings fund faster and ensure that a home purchase doesn’t impede your long-term financial goals. Finally, understand how much house you can afford so you can avoid being house poor.
Buying a home can be rewarding, and when done the right way, it’s a way to build wealth. Before you decide to buy a home, it’s important to understand your numbers and ensure that you’re ready for the commitment. Without preparation, your dream home could be detrimental to your long-term financial goals.
Chloe A. Moore, CFP, is the founder of Financial Staples, a virtual, fee-only financial planning firm based in Atlanta, Georgia and serving clients nationwide.
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