Most Americans likely strive for good credit scores, but others take special care to achieve great ones. Meet some credit score superstars -- and learn why and how they keep those precious three digits so high.
Good scores are key to financial health
Credit scores were developed as tools to help banks and businesses make objective decisions. To generate them, a mathematical formula pulls credit report data and transforms it into a numerical rating. FICO scores range from a low of 300 to a high of 850, and, according Fair Isaac, the creator of the scoring system, mortgage lenders consider anything above 760 as ideal.Though it is the dominant score used, FICO isn't the sole scoring model. For example, the three major credit reporting bureaus -- TransUnion, Experian and Equifax -- produce the VantageScore, with a scale ranging from 501 to 990.
Despite differences in each ranking system, they have one thing in common: A higher score indicates less risk. And having high credit scores makes you more appealing to lenders, employers and landlords.
Consequently, focusing on your credit scores is only natural. "People are drawn to this subject because it allows them to measure something that they equate to financial health," says Jose Rivas, the national education manager for Consumer Credit Counseling Service of San Francisco.
"One article states that consumers should close their unused accounts," says Rivas, and "another states that consumers should never close their accounts." For this reason, getting the facts from reliable sources is essential. Like the following high achievers, you can create terrific credit scores with real knowledge and a specific sense of purpose.
Credit score vigilante
Dan Nainan, a comedian who frequently travels between New York and Los Angeles, has carefully built an 830 FICO score. Doing so enabled him to negotiate preferential terms with his premium reward card."I was able to drop the annual fee for my $450-per-year American Express card to $150!" Nainan also cites the "feel good" factor: "It's a comfort to know that wherever I go and whatever I apply for, I can get it."
Vigilance is Nainan's strategy. "If there's anything at all that might affect my score, I ask a ton of questions and go to the Internet and do as much research as possible. If I test-drive a car or sign up for a health club, I look at the fine print very carefully to see if they have a right to hit my credit file with an inquiry."
Nainan has programmed everything online "so that all of the bills pay themselves, and any and all credit card balances are paid off immediately."
Protecting a long history of timely payments
Want the very best vehicle loan available? Let your numbers do the talking. When Brenda Avadian, the founder of The Caregivers Voice, out of Pearblossom, Calif., was applying for a car loan, her 849 score helped her secure top financing."Saving thousands on interest charges is a tremendous motivator," says Avadian, who locked in 0% interest for five years. A loan with a 4% rate would have cost her an additional $3,200 on the same vehicle.
Avadian attributes her impressive score to a long history of timely payments. "And on those rare moments when a bill sneaks under some paperwork and it's either late or due that day," Avadian says, "I call and take care of it."
She believes her loyalty to the same banks (three credit accounts -- not too many, not too few) also helps. "Instead of constantly shifting to capture the best deal, discount rate, rebate points, etc., I've stuck with the same folks for years."
Continued: Regular charges, zero balances
