Credit Archives | Page 71 of 88

Mar

2023

What Does a Credit Score of 800 Mean?

By Sarah Li Cain | Credit, credit card, Financial Independence | Comments Off

On a credit scoring scale of 300 to 850, a credit score of 800 is considered exceptional. Having an 800 credit score has the potential to open up many doors for you financially, including competitive interest rates on loans, higher chances of approval and at better loan terms, and even access to premium credit cards.

As such, when you have a credit score of 800, it’s worth taking steps to ensure you maintain it — or if you’re ambitious, even improve it. That way, you can continue unlocking the benefits that a high credit score can offer.

What It Means to Have an 800 Credit Score

Your credit score is a three-digit number that’s an indicator of your creditworthiness. The higher the number, the more likely you appear to lenders as a responsible borrower who will pay back what’s owed on time.

Credit scoring models count an 800 credit score as being excellent. For instance, a 800 FICO credit score is considered “exceptional,” and VantageScore considers it in their “superprime” range.

These scoring models use your credit history to calculate your score — having such a high score means that you most likely haven’t missed any payments and have maintained a low credit utilization. It could also mean you’ve had a relatively long credit history and held a variety of types of credit and loan accounts — in other words, you’re well past the point of a starting credit score.

To stay at this point on the credit rating scale, you’ll need to keep exhibiting the responsible financial behaviors you’ve already displayed. Further improving it could be a matter of continuing these behaviors over a longer period of time. Or, you might look into your score to see if there’s any one area you can tweak to further improve your credit behavior.

Recommended: When Are Credit Card Payments Due?

Is 800 a Perfect Credit Score?

No, 800 is not a perfect credit score. Both FICO and VantageScore scoring models have a maximum credit score of 850. That being said, an 800 credit score can be considered near-perfect.

Benefits of an 800 Credit Score

Having an excellent credit score comes with a few perks, such as increased odds of getting approved for lower interest rates and higher credit card limits, as well as offers for better loan terms.

Better Credit Offers

Lenders are more likely to approve consumers with excellent credit, and with more favorable terms, compared to someone with a minimum credit score for a credit card. If you have a high credit score, you’re a good candidate for better credit offers, such as personal loans with higher loan amounts and a wider selection of credit cards.

You also may be able to qualify for premium rewards credit cards. These cards tend to offer more benefits like airport lounge access, better earnings opportunities, and more.

Recommended: How to Avoid Interest On a Credit Card

Lower Interest Rates

Lenders generally are willing to lend to those with a credit score of 800 at lower interest rates than other applicants. That’s because people with a credit score in this range generally pose less risk to the lender. With a credit score of 800, you’ve already proven that you can handle loans responsibly.

Getting approved for lower interest rates helps you to save significant amounts of money over your lifetime. For instance, if your 800 credit score gets you a mortgage interest rate that’s 1% to 2% lower than someone with a fair credit score, that alone can save you tens of thousands of dollars over the life of your home loan.

Higher Credit Limits

Not only will you be more likely to get approved for a credit card with an 800 credit score, but credit card issuers may offer you access to higher credit limits. Having increased spending power is great for when you need to make bigger purchases. It’s also helpful for keeping a low credit utilization, which in turn can help you maintain or even boost your credit score.

Since you’re also more likely to be eligible for rewards credit cards, each purchase can help you earn more in points or cash back — meaning, you can use your credit card to maximize your purchases. That deal becomes even better if you can pay off the entire balance each month so you’re not paying any interest.

Monitoring and Managing Your Credit Score

Even if you have an excellent credit score now, it doesn’t mean it will stay that way forever. It’s important to regularly monitor your credit score so you know exactly where you stand.

There are free ways to check your credit score. Some credit cards will show you your score on your credit statements, and some banks offer this feature as well. If your score changes in any way, you can then figure out the types of financial behaviors that may have contributed to the change. Also don’t be surprised if you have different credit scores depending on where you look — this is because credit scoring models can vary in how they calculate scores.

Checking your credit report will also help you monitor and manage your credit score. That’s because the activity on your credit report affects how your credit score is calculated. You can check your credit report for free once a year through all three major credit bureaus: Experian, Equifax, and TransUnion.

By checking your credit report, you’ll be able to see if there is any information on there that may affect your score. If you spot any errors, it’s best to dispute them right away, especially if they’ll have a negative effect.

Factors That Can Damage Your 800 Credit Score

You’ve worked hard to build your credit score. To maintain it, you’ll want to avoid the following behaviors that could damage your 800 credit score. While it’s a long drop to a bad credit score from exceptional, it’s not a given that your good credit will last.

High Utilization Rate

Your credit utilization is the percentage of your available revolving credit that you’re using. The higher the percentage, the more it seems to lenders that you’re relying on too much credit, which could negatively impact your score.

To help maintain your credit score, try to keep your credit utilization to 30% or under. You can do that by paying down your balances, even making extra payments if you can. That way, your balance will be as low as possible before the credit card issuer reports it to the credit bureaus.

Late and Missed Payments

Your payment history is one of the biggest factors that affects your credit score. A late or missed payment could have a major effect on your credit score — even if you’ve paid consistently on-time beforehand.

If you’ve been a responsible borrower, you may be able to contact your creditor and ask to have the late payment removed from your credit report. That way, it won’t impact your score.

Credit Applications and New Credit Accounts

Each time you submit an application for a new loan or credit card, lenders will conduct a hard credit inquiry, which may temporarily affect your credit score. While one hard inquiry may not have major consequences, applying for multiple loan products at once could signal to lenders you’re stretched thin financially. Your score could take a dive, since it looks like you need to rely on credit.

To maintain your credit score, apply for new accounts sparingly. Or, if you’re shopping around for large loans like mortgages, applying for a few within a short span of time will typically show up as one hard inquiry on your credit report. This may prevent your applications from impacting your score as much.

Public Records Appearance

Public records such as bankruptcy can appear on your credit report. These negative remarks can damage your credit score. In some cases, you may have to explain to lenders in more detail about these public records.

Recommended: What is the Average Credit Card Limit?

The Takeaway

Having a 800 credit score means you have excellent credit. As such, lenders are more likely to offer you better rates and terms. Other benefits include saving money on interest and higher credit limits. Even with a high score, it’s still important to continually monitor your credit behavior to ensure you can maintain it.

Looking for a credit card that earns rewards? Consider the SoFi Credit Card, which offers cash-back rewards on qualifying purchases. You’ll also get access to other perks, such as the ability to lower your APR through on-time payments and cell phone protection.

FAQ

How long does it take to reach a credit score of 800?

How long it takes you to get an 800 credit score will depend on several factors, including your current credit score and how long your credit history is. You may be able to reach it faster if you exhibit responsible behavior, such as consistent on-time payments and the maintenance of a low credit utilization ratio.

What percentage of the population has a credit score of 800 and above?

According to the credit bureau Experian, 21% of consumers have a FICO score of 800 and higher, or in the “exceptional” range.

Why is it difficult to reach a credit score of 800?

It’s difficult to reach an 800 credit score because you’ll typically need a long credit history and to show responsible credit behavior consistently over a period of time.

What credit limit is possible with an 800 credit score?

The credit limit you’ll qualify for will ultimately depend on the credit card issuer. However, with an 800 credit score, you’ll generally get higher limits compared to someone with a lower score.

Photo credit: iStock/milan2099

Mar

2023

Guide to Credit Score Ranges

By Dan Miller | Credit, credit card, Financial Independence | Comments Off

Almost everyone in the U.S. (and many other countries) has a credit score, which is a three-digit number that some lenders use to evaluate whether or not to extend credit to you. In some cases, a lender will use your exact credit score as a determining factor. In other cases, they’ll group similar credit scores into a credit score range.

Different companies use different credit score ranges, but in most cases, your credit score will be grouped into one of five different categories: excellent, very good, good, fair, or poor. The better your credit score, the more likely you are to get approved for new loans and the lower your interest rate is likely to be if you are approved.

Recommended: How to Avoid Interest On a Credit Card

What Is a Credit Score?

A credit score is a three-digit number that attempts to encapsulate your total credit history, meaning your track record of repaying debt. There are a few different companies and models that are used, but credit scores typically range from 300 on the low end to 850 on the high end. Many lenders will use your credit score to determine whether or not they want to issue you new credit.

What Are Credit Score Ranges?

Credit score ranges (sometimes referred to as a credit rating scale) are a way to group together similar credit scores. Each company that makes credit scores has its own way of grouping credit scores, but they tend to follow a similar pattern. There are usually five different credit score ranges — excellent, very good, good, fair, or poor.

How Credit Scores Are Calculated

There are a few different companies that calculate credit scores, and each one does it in a slightly different way. Typically, the various credit bureaus like Experian, Equifax, and TransUnion collate all sorts of information about each individual, from their payment history to their credit usage to the age of their credit accounts. They lease this information to companies like the Fair Isaac Company (FICO), which then uses that information to calculate a FICO score.

Recommended: When Are Credit Card Payments Due?

How to Check Your Credit Score

There are a few ways you can check your credit score. You can purchase it from a provider, or your credit card company or other financial institution may provide your credit score for free. Or, you may use a free credit scoring website or other service to get your score.

Your credit score updates regularly as the underlying information that the credit bureaus report changes. Every time you open a new credit card, make a payment to one of your debts, apply for credit, or do anything else credit-related, your credit score may update.

What Is a Good Credit Score?

The various companies that calculate credit scores have different models and different ranges for what credit score is considered “good.” Roughly speaking, a credit score of 670 to 739 is considered “good”, with credit scores of 740 to 799 being “very good” and scores over 800 being considered “excellent.”

Factors That Impact Your Credit Score

Each company that calculates credit scores uses their own proprietary formula to calculate credit scores. Five of the common criteria used to calculate credit scores are:

• Payment history

• Credit usage

• Length of credit history

• Credit mix

• Recent credit inquiries

Credit Models Applied by Different Companies

You may wonder why you have different credit scores, and the answer is that there are different credit models applied by different companies. Depending on what company is doing the calculation, they may calculate your score slightly differently.

Generally speaking, each company that calculates credit scores looks at mostly the same types of information, so your different credit scores should be similar. It would be rare (if not impossible) to have a bad credit score from one credit model and excellent credit in another.

Lenders Credit Score Grouping

Some lenders may use your exact credit score to determine whether to extend credit, whereas others may group scores into a range. For instance, a particular lender might give one interest rate to people with excellent credit and a higher rate to those with very good or good credit. Meanwhile, they may choose not to extend credit at all to those with a fair credit score or lower.

Credit Score in Relation to Your Age

There is not a strict correlation between your age and your credit score. You might think that there is a specific starting credit score, but the truth is that when you are just starting out, you don’t have any credit score at all. As you get older, however, you have more chances to show that you are responsible (or not responsible) with your credit, and your credit score is adjusted accordingly.

Consequences of Having a Low Credit Score

Having a low credit score can have quite a negative impact on your financial life. If your credit score is too low and you don’t meet the minimum credit score for a credit card, you may not be able to get approved for loans, including a credit card. And if you are approved for a loan, you may have to pay significantly higher interest rates than someone with better credit.

Tips for Building Your Credit

There is no one magic way to build your credit — instead, your credit will build as you show that you’re responsible with the loans that you already have. For example, as you use your credit card responsibly by paying your monthly statement on time, your credit score may go up as compared to someone who pays late or misses payments.

Other ways that you can work toward building your credit from scratch include avoiding using too much of your available credit and keeping old accounts open to maintain the age of your accounts.

Monitor Your Credit Score

Another thing you can do to try and secure a solid financial future is to regularly monitor your credit report and credit score. Keeping an eye on the information in your credit report can help you know if there’s any inaccurate or incorrect information in it. If there is, correcting it can be one way to improve your credit score.

Additionally, keeping an eye on your credit score can clue you into what effect different behaviors have on your credit score. This can help you make more informed credit-related decisions in the future.

The Takeaway

Some lenders may use your exact credit score when deciding whether or not to extend credit to you or what interest rate to apply to your account. Others may look at credit score ranges and have different rates or programs for people whose scores fall in different ranges. There are five basic credit score ranges, which stretch from poor to excellent.

If you have a credit score that’s in the very good to excellent range, you might look at rewards credit cards like the SoFi credit card. With the SoFi credit card, you can earn cash-back rewards, which you can then use to invest, save, or pay down eligible SoFi debt.

FAQ

What is the average credit score?

As of 2021, the average credit score in the U.S. was 714, according to data from the credit bureau Experian. That marks an increase of four points from 2020. Other companies that provide credit scores may have a different average credit score.

What benefits does a good credit score provide?

Having a good credit score can have a variety of positive financial impacts. You may need a minimum credit score to get a credit card that you want to apply for, or you may qualify for a lower interest rate on some loans as compared to someone with a lower credit score.

Can my credit score affect my loan eligibility?

Yes, your credit score can absolutely affect your eligibility for certain loans. If you have a bad credit score, you may not get approved for a loan from some lenders. Or, if you are approved, you may have to pay a higher interest rate than someone with a better credit score.

Can a very poor credit rating prevent me from getting a cell phone contract?

Yes, it is possible that having a low credit score might prevent you from getting a cell phone contract. Some cell phone providers look at your credit score when you’re applying for a cell phone contract. If you have a low credit score, you may not be able to qualify for some contracts, or you may have to put down a security deposit beforehand.

Will low credit impede my chances of getting a rented apartment?

There are some landlords or property managers who look at your credit score when deciding whether or not you qualify for an apartment. If that’s the case for an apartment you’re looking at, then having a low credit score may have a negative impact on your chances of qualifying.

Photo credit: iStock/anyaberkut

*Terms and conditions apply. This offer is only available to new SoFi users without existing SoFi accounts. It is non-transferable. One offer per person. To receive the rewards points offer, you must successfully complete setting up Credit Score Monitoring. Rewards points may only be redeemed towards active SoFi accounts, such as your SoFi Checking or Savings account, subject to program terms that may be found here: SoFi Member Rewards Terms and Conditions. SoFi reserves the right to modify or discontinue this offer at any time without notice.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Members earn 2 rewards points for every dollar spent on purchases. No rewards points will be earned with respect to reversed transactions, returned purchases, or other similar transactions. When you elect to redeem rewards points toward active SoFi accounts, including but not limited to, your SoFi Checking or Savings account, SoFi Money® account, SoFi Active Invest account, SoFi Credit Card account, or SoFi Personal, Private Student, Student Loan Refinance, or toward SoFi Travel purchases, your rewards points will redeem at a rate of 1 cent per every point. For more details, please visit the Rewards page. Brokerage and Active investing products offered through SoFi Securities LLC, Member FINRA/SIPC. SoFi Securities LLC is an affiliate of SoFi Bank, N.A.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

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Mar

2023

Revolving Credit vs Line of Credit: Key Differences

By Dan Miller | Credit, credit card, Financial Independence | Comments Off

Revolving credit and non-revolving lines of credit are two financial instruments that allow you to access a specific amount of money upfront.

With revolving credit, a borrower can continually access funds up to their credit limit and then, once they repay those funds, their available credit will get replenished. The line of credit remains open for use until either the borrower or lender closes it. On the other hand, a line of credit that’s non-revolving is a one-time arrangement — after the borrower spends the set credit limit and pays off the amount in full, their account will be closed.

Understanding the differences between a line of credit and revolving credit, as well as the impact of either choice, can make a big difference in your financial situation.

Understanding Revolving Credit and How It Works

Revolving credit offers the ability to use a particular sum of money over and over again. You’re usually given a credit limit, and you can spend up to that limit. As you make payments to your account, your available credit increases once again.

One example of revolving credit is a credit card. You have an initial credit limit and can continue to make charges to your card as long as your total balance stays below your credit limit. As you make payments, you can continue to use your credit card each month.

Recommended: What is a Charge Card?

Pros and Cons of Revolving Credit

The biggest upside of revolving credit is that you can use the money over and over again, as long as you continually pay down your balances. This setup can be helpful if you have short-term expenses to cover, as you’ll have a pool of money you can dip into and then quickly repay. Plus, you’ll only accrue interest charges and make payments on the amount you actually use. You can usually keep your interest at zero if you repay the full amount you borrowed every month.

There are a few cons to revolving credit though. For one, they may have higher interest rates compared to some other types of loans, such as traditional installment loans. Additionally, your revolving credit may come with annual fees. There’s also the potential to negatively impact your credit if you don’t use revolving credit responsibly, as you could drive up your credit utilization rate by using too much of your available credit limit.

Understanding a Line of Credit and How It Works

A line of credit, such as a personal line of credit, can be either revolving or non-revolving. If it’s a non-revolving line of credit, you have access to the initial sum of money, but once you spend it, you won’t be able to access it any more. Otherwise, non-revolving lines of credit function similarly to revolving credit lines.

How Is a Credit Line Determined?

The credit line that you receive through a line of credit or a credit card (such as the one offered by SoFi) is determined by the issuer. This determination is based on their evaluation of a number of different factors. Specifically, a lender may review your credit history, employment and income, and any previous credit you’ve had with them. They may also use proprietary algorithms to determine how much credit to extend.

What Credit Score Is Needed for a Credit Line?

Generally speaking, the higher your credit score, the better the chance that you’ll be approved for a credit line. You will also often get a lower interest rate the higher your credit score. This is another reason why it’s a good financial practice to work toward improving and maintaining your credit score.

Calculating Interest on a Credit Line

Most credit lines and revolving credit charge interest for any amount that remains outstanding after the statement due date. The interest rate you’re charged is determined by the card issuer and the terms of your credit line.

If you pay off your credit line in full by the statement due date, you may not owe any interest at all. But if you have an outstanding balance, you’ll likely be charged interest on the total balance that remains.

Recommended: How to Avoid Interest On a Credit Card

Pros and Cons of Line of Credit

One pro of a line of credit is that you may be able to have multiple lines of credit. These may be with different banks or through different products that are issued by the same bank. Another upside is that non-revolving lines of credit tend to have lower interest rates, and they’re often for higher amounts compared to revolving credit.

However, a downside of a non-revolving line of credit is that you’re only able to access your credit line once. Even if you make payments toward your balance, you won’t be able to access your money again, like you would with revolving credit. If for whatever reason you decide you’d like to borrow additional funds, you’ll have to go through the hassle of another application and approval process.

Recommended: When Are Credit Card Payments Due?

Similarities Between Revolving Credit and Lines of Credit

It’s important to note that a line of credit may either be revolving debt or non-revolving. So it’s possible that a particular line of credit will also be revolving credit and share all of its similarities.

Another similarity between revolving credit and a line of credit is that they both allow you to access a specific amount of money (your credit limit) upfront.

Recommended: What is the Average Credit Card Limit?

Differences Between Revolving Credit and Lines of Credit

The biggest difference between revolving credit and a non-revolving line of credit lies in how often you can access it. With revolving credit, you can access the money in your credit line as often as you need, as long as your total balance remains below your available credit limit. With a non-revolving line of credit, however, you can only access your available credit one time.

Lines of Credit vs Traditional Loans

Lines of credit differ from traditional loans in a few key areas, and it’s important to understand the differences.

With a line of credit, you have control over when and how you access your money — you don’t have to take it all at once. If your line of credit is a revolving line, you can even access your money repeatedly, as long as your total balance is below your credit limit.

Meanwhile, with a traditional installment loan, you get all of your money in one lump sum, usually at or near the date of closing. You’ll then pay a fixed amount each month until your loan is completely paid off. Mortgages and many personal loans are often considered traditional loans.

The Takeaway

Both revolving credit and non-revolving lines of credit offer access to funds, though there are key differences between revolving credit and a line of credit. With a non-revolving line of credit, you can only access the total amount of money once. In contrast, revolving credit allows you to access the money multiple times, as long as the outstanding amount is less than your total available credit amount.

A credit card is considered one form of revolving credit, since you can continue to make purchases as long as your outstanding balance is below your credit limit. If you’re in the market for a credit card, you might look at rewards credit cards like the SoFi Credit Card. With the SoFi Credit Card, you can earn cash-back rewards, which you can then use to invest, save, or pay down eligible SoFi debt.

FAQ

What’s the difference between an installment loan and a revolving line of credit?

A revolving line of credit and an installment loan are different ways to access money. With an installment loan, you get all your money upfront and then make fixed monthly payments for the term of the loan. With a revolving line of credit, you’re given a credit limit and can then choose to access however much of that limit you need, only paying interest on your outstanding balance.

Can mismanagement of my revolving credit damage my credit score?

Yes, it is possible to damage your credit if you don’t manage your revolving credit responsibly. For example, missing payments or keeping a high balance on a revolving line of credit can both have negative effects.

What is the duration of a revolving line of credit?

Your revolving line of credit typically will remain open until either you or the lender decides to close it. There are several reasons a lender may close a revolving line of credit without a borrower’s permission, including a prolonged period of inactivity, a history of late or missed payments, breached terms of the agreement, or repeated spending over the credit limit.

How does interest work for revolving credit?

Typically, borrowers will only pay interest on the amount they’ve accessed from their line of credit. Interest charges generally only apply to any balance that remains after the statement due date.

Photo credit: iStock/GCShutter

Mar

2023

Guide to Blocked Credit Cards

By Jamie Cattanach | Credit, credit card | Comments Off

When people talk about a blocked credit card, they can mean a couple different things. The first is a hold placed on your card for a certain amount of money, such as the security deposit when you rent a car. Or, they could be referring to the card being declined at the point of sale, sometimes as the result of a temporary “freeze” placed on the card due suspected fraudulent activities.

Each of these instances has an effect on how much credit you can access for future purchase — or whether you can use your card in the first place. But fortunately, all of them can be fixed once you know how to unblock a credit card.

What Is a Credit Card Block?

As discussed, a “credit card block” can refer to a couple different types of credit card disruptions:

• A declined credit card transaction, sometimes caused by a temporary freeze.

• A hold on credit card funds that will be released, but which locks away a certain amount of your credit in the short term.

As a customer, either of these types of credit card blocks can be frustrating and confusing. Learning what’s behind them makes it easier to solve the problem so your credit card works as expected again.

Recommended: Credit Freeze vs. Credit Lock

How Credit Card Blocks Work

Let’s start with credit card “holds,” which are placed by certain merchants as a kind of insurance policy.

For example, if you’ve ever rented a car, you’ve probably experienced this kind of credit card block. Rental car companies put a hold on your car for the total rental charge, and then some extra — a security deposit that can be used to cover accidental damages, late return fees, or fuel charges.

If you don’t encounter any of those contingencies, the company will only charge the rental cost (which is to say, less than the amount that was placed on hold). But still, the hold amount will impact your total available credit until it’s released, which can sometimes take a few days after the final transaction is processed.

You may also encounter a credit card hold when checking into the hotel room, usually for an amount beyond the reservation price to cover incidentals. (Hello, mini bar.) Either way, the good news is that a credit card hold is temporary and will clear on its own once the hold is released.

The other type of credit card block — a declined transaction — may occur for a variety of reasons. Let’s take a closer look at this kind of blocked card next.

Common Reasons Your Credit Card May Be Blocked

Having a credit card declined is no fun, no matter the circumstances. But understanding the cause can help you unblock your card as quickly as possible.

Here are some of the most common reasons why credit cards get declined.

Incorrect Card Information

These days, most of us type our credit card information into online systems just as often as — if not more often than — we actually swipe plastic. If you’re buying something online, one of the primary reasons a credit card might get declined is because you’ve put in the wrong information. Always take a second look at your card number, billing address, expiration date, and security code to prevent this occurrence.

Expiration

Another common reason for a declined credit card: it’s past its expiration date! Just as you clean out your cabinets and fridge from time to time, be sure to take a peek through your wallet and ensure all your cards are still “good.” (Usually, card issuers will send a new one just before your card expires. Always take care to dispose of your old card properly.)

Defense Against Fraud

It’s simultaneously frustrating and awesome to find your credit card unexpectedly blocked as a fraud defense mechanism. While the disruption can catch you by surprise, it’s for good reason.

These temporary blocks are placed when issuers suspect fraudulent credit card activity — which can translate to a declined transaction at a critical time. (These blocks often happen when you’re making a larger-than-usual purchase or traveling overseas.)

The good news? This type of blocked credit card situation can be unblocked with a simple phone call — or for some issuers, even by text message. You may also be able to avoid the problem in the first place by letting your card issuer know your travel plans ahead of time.

Hitting Your Credit Limit

For all but the luckiest and most credit-worthy borrowers, credit cards come with a credit limit, which is the maximum amount of money you can borrow using the card. If you’re close to the limit and attempt a transaction that surpasses it, you shouldn’t be surprised if the credit card is declined.

It is possible, however, to ask your credit card issuer for a higher credit limit, especially if you have a good, strong credit history and score to bring to the negotiation.

Card Damage

If your card is physically damaged, a card reader may not be able to read it correctly. The good news is that most point-of-sale systems can use either the magnetic strip or the EMV chip, so even if one part of your card is damaged, you may be able to rely on another. And as long as all the information on your credit card is legible, you’ll still be able to use it to make online purchases.

Closed Account

Sometimes, if you don’t use your credit card very often, the issuer may close the account due to inactivity — and it’s very easy to overlook the letter they send to let you know. It’s possible to see a declined transaction if you miss the memo and attempt to use a card that’s attached to a closed account.

Slow Payments

Being behind on payments doesn’t just lead to late fees and knocks to your credit — it can also lead to your card being blocked from further usage. Paying on time is important for keeping a healthy credit score, as well as for keeping your card usable in the first place.

Recommended: When Are Credit Card Payments Due?

Pros and Cons of Credit Card Blocks

They might seem purely like an annoyance, but hear us out: there are some benefits of credit card blocks!

Pros	Cons
Reduces the risk of fraudulent credit card activity and helps ensure you’re not liable for any money spent fraudulently	A declined transaction can be embarrassing and inconvenient
Can alert you to important financial information like an expired card, closed account, or surpassed credit limit	Credit card holds can temporarily tie up money you’d otherwise be able to spend elsewhere
Many types of credit card blocks are temporary — and credit card holds automatically clear	A credit card block may indicate a negative financial scenario, such as a maxed-out credit card

Preventing a Credit Card Block From Your Issuer

Even better than fixing a credit card block after the fact? Preventing it in the first place. Here are a few tips for avoiding this inconvenient scenario:

• Ensure your credit accounts are open, under their limit, and that your cards have not expired. All of these reasons for blocked credit cards can be avoided by doing some regular financial housekeeping.

• Make credit card payments on time. Along with keeping your card usable, this step is critical for ensuring the health of your credit score.

• If you’re planning to travel overseas or make a big purchase, let your card issuer know ahead of time. Many credit card issuers make it easy to set travel dates and locations online, sometimes without even placing a phone call. But even waiting through a phone tree is better than facing a declined card in a foreign country.

Tips for Unblocking a Blocked Credit Card

Already experiencing a credit card block? Here’s how to get it sorted as quickly as possible.

• Communicate with your credit card issuer. If you’re still not sure exactly what’s causing the credit card block, calling the card company is the best way to get the scoop — and fast.

• Make a payment. If your card is being blocked because of late payments, you’ll need to catch up with what you already owe before borrowing more.

• Double-check your card information. If you’re having issues getting a card to go through online, ensure you’ve typed all of your card information and personal contact information correctly.

The Takeaway

There are a few different types of credit card blocks to look out for — but many of them are temporary, and all of them can be fixed with the right attention and effort. You can also often avoid a credit card block in the first place by communicating with your card issuer ahead of travel or major purchases.

Looking for a new addition to your wallet? The SoFi credit card offers cash-back rewards as well as sign-up bonuses. Plus, after 12 monthly on-time payments of at least the minimum due, your annual percentage rate (APR) will go down by 1%.The application just takes a few minutes.

FAQ

Can I stop a payment on my blocked credit card?

If you need to stop a payment on your credit card, whether it’s blocked or not, the first step is to reach out to the issuer. Let them know which transaction you want to stop and why. You may also be able to ask the vendor itself to stop or reverse the transaction.

How long is a credit card blocked for?

The length of a credit card block will depend on why it’s blocked in the first place. For example, if your issuer has locked your card due to late payments, you likely won’t be able to make any more transactions until you pay the minimum due. But if your credit card is locked due to suspected fraudulent activity, you may be able to get it unlocked as soon as you respond to the issuer’s email or text message.

Can charges be deducted from a blocked credit card?

If a temporary hold is placed on your credit card, you should still be able to make additional charges up to the credit limit. If you’re close to the limit, however, a hold may lead to a declined transaction.

Do payments stop when a credit card is blocked?

Unless you are otherwise informed by your credit card issuer, you should always make payments on time and in at least the minimum amount due — whether or not you’re experiencing a credit card block.

How long does it take to reactivate a blocked card?

Once you’ve resolved the issue that caused the card block in the first place, your credit card should be reactivated quickly.

Photo credit: iStock/Daniel de la Hoz

Mar

2023

What Is the Highest Credit Score?

By Dan Miller | Credit, credit card | Comments Off

Both FICO and VantageScore, two of the most commonly used credit scoring models, set the maximum credit score at 850. Essentially, your credit score is an attempt to place a numeric value on how likely you are to repay any debt obligations that you have. While there are a few different credit scoring models, they generally measure the same sorts of things, like payment history and credit utilization.

A higher credit score is generally better than a low credit score, though there are diminishing returns the higher your score is. In other words, while there may be a real financial impact to raising your credit score from 650 to 700, you won’t see as much of an impact by boosting your score from 800 to 850. Even though it’s not the highest credit score possible, a credit score of 800 is likely high enough that you stand a good shot at qualifying for most loans at the lowest available interest rate.

Recommended: When Are Credit Card Payments Due?

How Do Credit Ratings Work?

The different companies that calculate credit scores have different minimum credit score and credit rating scales. These scales generally divide credit scores into five different categories: poor, fair, good, very good, and excellent. Each of these ranges spans a number of different credit scores, and can be a good way to understand your credit at a glance.

What Factors Affect Credit Scores?

Different companies use different factors (and in different proportions) when calculating credit scores, which is why you have different credit scores. Generally, the following five factors affect credit scores:

• Payment history

• Credit utilization ratio

• Length of credit history

• Credit mix

• Recent credit inquiries

How to Check Your Credit Score

While you can check your credit report for free from the major credit bureaus, your credit report usually won’t contain your actual credit score. Instead, there are a number of different ways to check your FICO score or other types of credit score:

• Through your credit company or other financial institution, such as on a loan statement

• By purchasing it from one of the major credit bureaus or other providers

• On a free credit scoring website or other credit score service

Why Should You Have a High Credit Score?

Having a high credit score can have a positive impact on your overall financial situation. In fact, a good credit score is one of the most important assets you have in life. If you have a bad credit score, you may not be able to get approved for credit cards or other loans. And even if you are approved, you may have to pay higher interest rates than borrowers with better credit scores.

Tips for Trying to Achieve a Perfect Credit Score

Here are a few tips if you want to try to achieve a perfect credit score.

Never Miss Payments

One of the best things you can do to positively affect your credit score is to always pay your bills on time, each and every month. Having delinquent or past-due accounts can have a big negative impact on your credit score.

Keep Your Credit Utilization Rate Low

Your credit utilization ratio is defined as the percentage of your available credit that you are actively using. So if you have a single credit card with a $10,000 limit, and you’re carrying a balance of $1,000, your credit utilization ratio is 10%.

Your credit utilization ratio is one of the largest factors that makes up your credit score. Generally aim to keep it at 30% or lower.

Avoid Applying for Credit Too Often

Another factor that makes up your credit score is how often you apply for new credit. Because of this, you’ll want to be judicious when applying for a new credit card (like the SoFi credit card) or any other form of loan. Too many applications within a short window of time can raise a red flag for lenders.

Review Your Credit Reports

It’s also a good idea to regularly review your credit reports, especially if you have a starting credit score you’re trying to build. That way, you can make sure there isn’t any inaccurate or incorrect information on your report. If you do find missing or inaccurate information, contact the credit bureau to have it corrected.

Get a Secured Credit Card

If you don’t have the minimum credit score for a credit card, you might consider applying for a secured credit card. With a secured credit card, you put down a refundable security deposit upfront, which then serves as your credit limit.

As you use your secured card responsibly, building up to a fair credit score or even a good one, you might be able to later upgrade it to an unsecured credit card.

Become an Authorized User

Another way to work towards a perfect credit score, especially if you are starting out in your credit journey, is to become an authorized user on a credit account of a trusted friend or family member. As long as your friend or family member is responsible with their credit usage, it can help build your credit score as well.

Pay Your Bills Regularly

Again, one of the best things that you can do for your credit score is to pay your bills regularly. This means setting up a budget and making sure that your income exceeds your expenses, with a little left over each month to stash in savings. That way, you can always make sure to pay your bills while having an emergency fund to cover any unexpected financial situations.

The Takeaway

There are a few different companies that generate credit scores, and the methodology that each one uses varies slightly. In the most popular credit score models, the highest credit score possible is 850. While it’s generally advisable to work toward improving your credit score, it may not be worth it to overly focus on getting a perfect credit score.

If you already have an excellent credit score, you might consider applying for a credit card that gives you rewards with each purchase. One option you might consider is the SoFi credit card. With the SoFi credit card, you can earn cash-back rewards, which you can then use to invest, save, or pay down eligible SoFi debt.

FAQ

What effect does an 850 credit score have?

If you have an 850 credit score, you are much more likely to get approved for any new loans or credit cards that you apply for. You’ll also likely be eligible for the lowest possible interest rates. These are a few of the reasons it’s beneficial to have a good credit score.

Which credit scores are most widely used?

Two of the most popular companies and credit scores are VantageScore and your FICO Score. However, there are several companies that have their own methodologies and credit scores. This is why you have different credit scores.

Which credit score do banks use?

Different banks, lenders, and credit card companies may use different credit scores, depending on their geographic location and other factors. Each different credit score company uses information from the three most popular credit bureaus — Experian, Equifax, and TransUnion. If you’re not sure which credit score your bank uses, you might be able to ask their customer service department or look for an answer online.

Photo credit: iStock/anyaberkut

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Members earn 2 rewards points for every dollar spent on purchases. No rewards points will be earned with respect to reversed transactions, returned purchases, or other similar transactions. When you elect to redeem rewards points toward active SoFi accounts, including but not limited to, your SoFi Checking or Savings account, SoFi Money® account, SoFi Active Invest account, SoFi Credit Card account, or SoFi Personal, Private Student, Student Loan Refinance, or toward SoFi Travel purchases, your rewards points will redeem at a rate of 1 cent per every point. For more details, please visit the Rewards page. Brokerage and Active investing products offered through SoFi Securities LLC, Member FINRA/SIPC. SoFi Securities LLC is an affiliate of SoFi Bank, N.A.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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