In the United States, a quarter of the American population
has a credit score of 785 or higher. Over 50 million people have either figured
out the secret to good credit or are really, really lucky. What do these 50
million people have in common? What do they know that the millions of Americans
who have poor credit have not yet figured out? A
recent study by FICO might
hold the answer.
Looking closer at those prime credit consumers, their credit
score has nothing to do with the amount of debt they are carrying. About a
third of them have over $8,500 in nonmortgage debt. One in 9,000 has gone
through a bankruptcy or tax lien. Around 1 percent of them have a collection
account on their credit report. These customers are not necessarily perfect,
but they still have stellar credit scores.
What gave these consumers an advantage? The biggest
similarity between them was making their payments on time. Even the ones who
had higher balances still had a tendency to pay on time. 96 percent of the
group had zero missed payments listed on their credit report. If these
consumers had any missed payments in their credit history, they happened so
long ago that it is no longer listed on their report and affecting their scores.
Overall, consumers with prime credit scores also tended to use a small percentage
of their available credit, and as frequent readers will know, credit
utilization has a huge effect on a credit score.
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