Like many, Lisa Ndiaye filled out an application for her first Visa credit card in college. Unlike most, she paid her bills on time, kept the balances low, and 20 years later, she still has the account. While this may seem like common sense, these actions, coupled with Ndiaye’s diligent payment history on all of her credit accounts, lands her a near perfect credit score of 843–a distinction that only a marginal percent of the U.S. population boasts.
“A perfect score is pretty rare,” says Ryan Sjoblad, a spokesperson for Myfico.com, a division of Fair Isaac. “Less than 1% has an 850.” Fair Issac Corp. created the FICO score to help lenders determine individuals’ credit risk profile. The score ranges from 300 to 850; the higher the score, the lower the risk to creditors.
To buy just about anything on credit in America, one needs a respectable credit score, which ranges from 620 to 680. To buy anything on credit at a good price, one needs a great credit score, which is 700 and above. A select few, like Ndiaye, have reached the highest level and are reaping financial benefits because of it. To find out how to take your credit score from mediocre to great, read on. Higher credit scores mean better interest rates and top-tier treatment from all lenders–from mortgage to credit card companies
LIVING THE LIFE OF LISA
“I never had a bout with bad credit and if I were to in the future, I’d have a fit,” says Ndiaye with conviction. The former anti-money-laundering compliance officer at Bank of New York is used to getting what she wants from lenders. When the 39-year-old purchased her Newark, New Jersey, condo 10 years ago, she not only landed a decent rate for that period, but she also got some other perks. Her rate was fixed at 7.25% on a 15-year mortgage, and she paid no points and put only 3% down. By comparison, the 1994 BankRate.com National Index averaged 7.63%, with rates as high as 8.75%. “Depending upon the point in the year that she got the rate, 7.25% was right on target because anytime after March, rates were much higher,” says Greg McBride, senior financial analyst for BankRate.com. Today, the Index hovers around 5.24%, therefore, if Ndiaye decides to refinance or chooses to go into another home, she would be in a position to receive prime rates. “The higher the score, the more benefits are offered to buyers,” says Darrolyn I. Sharp, a senior loan officer at CU Mortgage in Merrillville, Indiana.
Some of the benefits or options available to high credit score holders are no money down, 100% financing, low interest rates, or even ‘no document’ loans. “With a 700 credit score, I can do a no-income, no-asset loan [for the client]. The underwriter doesn’t have to verify assets or income because everything is based on the credit score,” explains Sharp.
When Ndiaye calls, credit card companies listen. “I wanted to increase my line of credit, and in five minutes, my