This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

How to Have $8,500 in Credit Card Debt -- and a Great Credit Score

NEW YORK ( TheStreet) -- What do U.S. consumers with a sterling FICO credit rating know that the rest of the country doesn't?

MyFICO, the consumer division of the credit ratings giant FICO, takes a good whack at that question, with data out today examining what formula makes for a sky-high credit score.

What the company found is that consumers with a credit score of more than 785 -- the "gold standard," according to MyFICO -- actually have debt. It's just that those high-end consumers manage that debt masterfully.

In fact, MyFICO says that "many individuals with the highest credit scores owe more than $8,500 on nonmortgage accounts" -- usually debts accumulated from multiple credit cards.

The firm says 50 million American adults meet the standard for its "FICO High Achiever" level, meaning their credit scores are 785 or higher. That's about 25% of all U.S. adults who have earned a credit score, FICO says.

Typically, those high achievers share some financial planning traits that earn them great credit, no matter what their background or tax bracket.

What are the three that FICO says matter the most? Try these on for size:
  • Consumers with great credit ratings routinely keep low revolving credit balances, mostly on their credit cards.
  • They don't max out their credit cards.
  • They always make payments on time.

Of course, that means those high credit achievers do have debt. "High credit achievers are not debt-free. They typically have multiple credit cards with balances," MyFICO says in a press release. "They also tend to manage their accounts responsibly even if they have had mishaps along the way."

FICO notes that . . .
  • Consumers with great credit scores typically own seven credit cards.
  • They have an average of four credit cards with balances outstanding.
  • Almost 100% of those high achievers (96%) have zero missed payments on their credit reports.
  • About one in 100 high-achieving credit consumers have a collection listed on their credit report.
  • High credit score consumers typically use only 7% of their available card's revolving credit.
  • Virtually all high achievers have a spotless record of at least paying the minimum balance on their credit cards every month.

That last tendency of high-credit score consumers is huge, FICO says. Even if you have a spotty record, building a steady track record of paying those bills on time can help a consumer catch up eventually and build a better credit score.

"Missing payments will lower a person's FICO score, but if that happens establishing or re-establishing a good track record of making payments on time will generally improve a person's score," says Anthony Sprauve, credit score adviser for myFICO.

But rebuilding credit is, as Sprauve puts it, "a marathon and not a sprint."

Consequently, it's a better idea to take your time, focus on making every credit and loan payment on time; tone down your card-spending activity; and keep checking your credit report for errors that could hurt your credit score.

That's what high-achievers do.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $95.03 0.21%
FB $116.73 0.00%
GOOG $691.02 0.00%
TSLA $247.54 -0.07%
YHOO $36.59 0.00%


Chart of I:DJI
DOW 17,830.76 -210.79 -1.17%
S&P 500 2,075.81 -19.34 -0.92%
NASDAQ 4,805.2910 -57.85 -1.19%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs