How I achieved 760 FICO credit score in just over 2 years
My credit journey has now lasted for 2 years and 10 months, and I’m in the mood for reflecting on the journey thus far. I did a lot of research about credit along the way, especially in the first year, to make sure I could achieve the most, credit-wise, in the shortest amount of time. And at this moment, I am about exactly where I wanted to be, and in just about the best position there could be for someone with 2 years and 10 months of credit history.
760 FICO credit score has long been considered a hallmark of excellent credit, and I hit it about 3 months ago.
I have written this guide as a balanced approach to building credit if you are starting out. It is not intended to give you the maximum credit score, since that would require that you know perfectly how to manage credit from the beginning, an unrealistic expectation. If you follow this guide, at the end of the first year you should have a solid credit history that would allow you to get approved for most credit cards and obtain reasonable interest rates on auto loans.
Even though I said that a good FICO credit score takes a long time to build, there are situations where time is against you and the last few points really matter. Many mortgage lenders have FICO score thresholds for interest rates, and you may fall a few points short of the next threshold which may mean thousands of dollars’ worth of payments. You don’t have another few years to carry your FICO score to that threshold. So what to do?
Your credit score is a number that represents your creditworthiness. It is a number calculated from your credit history based on an algorithm to predict how likely it is that you will default on your debt. While your credit score is not the only thing that determines the outcome of your mortgage or auto loan application, it is one of the most crucial factors, if not the most crucial.
Travel accident insurance is yet another travel protection benefit that many credit cards provide for free. I honestly have never paid attention to this benefit, because deep down, I really hope that nobody ever has to use it. It is what it sounds like: insurance against travel accidents. Most, if not all, travel rewards credit cards cover this, and the coverage limit is typically very high, up to $1,000,000 (1 million dollars!). Restrictions apply.
I’ve talked about risks associated with traveling in earlier posts in this series. Credit cards are amazing for protection against unfortunate events along your travels, and apparently they are helpful even if you cannot make your trip or cannot complete your trip for unforeseen reasons.
I don’t seem to have good luck with checked in baggage. For the approximately 20 one-way trips I have made with checked in bags, I have had baggage delay 3 times, all within the past 2 years. One of these times, on my flight from Seattle to Boston in December 2013, I had an opportunity to test out the baggage delay reimbursement feature of my credit card, the Barclaycard Arrival World Mastercard (later name changed to the Arrival +).
For those of us that travel and drive often, rental car insurance is a pretty big concern. You hit the road with a car that you have never driven before, and drive hundreds of miles a day to see the Grand Canyon, the Yosemite, the Hoover Dam,….
Accidents are a real risk, and can ruin your trip, especially when you are thousands of miles away from home in unfamiliar territory. Rental car agencies understand the fear, and sell product that insures you against rental car accidents. Added together, these insurance products can be more costly than the cost of renting the car itself.
One of the most popular insurance products for rental cars is collision damage waiver, a policy that releases you from the liability for any damage taken on the car during the rental period. This service usually costs around $15 plus tax a day. It’s really not a bad idea to pay $15 a day for the peace of mind. But if you travel a lot, it adds up quickly.
Have you ever bought something from a website or a store and realized a month later that the exact same thing was being sold elsewhere for much cheaper? That TV you had bought from Best Buy the week before for $600 was selling for $500 on Newegg? In my college days, I hated it every time it happened.
And then I got a credit card, and I’ve never had to feel that way again.
So it’s Halloween, and a cunning elf breaks into your house and steals your Xbox One for his early Christmas gift. You are angry because you just bought it for yourself 3 days ago as your main entertainment through the end of the year. What do you do?
Well, you’d better have used your credit card to buy the Xbox One, because then you’d benefit from purchase protection.