There are ways to leverage your near-perfect credit score

For those who achieve an “average to excellent” FICO credit score (660 and above) or an “excellent” score (740 and above), there are many ways to take advantage of this achievement by opening new doors for opportunity and savings. As a real estate/financing professional, you can share these tips with your client base to bring value added and allow your clients to do further business with you. Here is some credit advice for those with great credit can take advantage of (but, you also must be aware of the potential downsides).

Transferring Credit Card Balances

Many credit cards can charge an exorbitant interest rate, and these rates coupled with debt can lead to large payments and wasted money. In fact, the average credit card debt in the US is currently over $6,500. Fortunately, those with great credit are eligible for a method to pay debt off rather quickly and easily. People with great credit should be eligible for a 0 percent interest rate on balance transfers, which essentially allows one to transfer credit card debt from a high interest card to a no interest account for a certain time period.

It’s important to consider few things before transferring a balance:

1. Transfer fees:

   Some of these cards will slap on a 3% fee for transferring balances, and you should make sure to find a card that doesn’t charge this fee.

2. Your average age of credit:

   Opening new credit reduces your average age of credit which will drop your credit scores. Do not open new cards if you plan on applying for a mortgage or loan within 2 years since scores may drop substantially after opening new credit. Make sure the cards you open are done strategically and not often.

Credit Card Upgrades

• High FICO scores will also make consumers eligible for the best credit card offerings. Many of the cards offered to those above a 660 score have better benefits, rewards, and perks unavailable to others. In addition, these cards often offer sign-on bonuses. Clearly if your scores are above a 740 the perks are even better. However, consumers have to make sure that they follow our tips when opening a new card in order to maintain their score (see the tips here) and should contact us with any questions.

Home Refinance

Those with great credit can also take advantage of historically low home interest rates. With a higher FICO score, many can lock in a much better rate for their mortgage. Even a small improvement in interest rates can lead to savings in the hundreds of thousands over the life of a mortgage.

Negotiating better interest rates or transfer offers with current credit cards

If you have existing cards and have excellent credit scores you can ask the creditor for lower interest rates or transfer offers on your existing cards. This is great if you don’t want to reduce your scores by opening new credit.

Requesting limit increases on current cards

The higher your credit limits the more leeway you have to charge without reducing your credit scores. Since balance-to-limit ratios on revolving credit (credit cards) must be under 10% for the best score increases, it is great to have high limits. Calling your creditor and asking for a limit increase can help your scores. The creditor will pull your credit reports and scores for approval so the scores can drop a little from the inquiry. If you have had many third party inquiries during the year it could drop scores significantly and it might be best to wait a year from the latest third party review.

Feel free to reach out to us if you have any credit questions or reports you would like reviewed!