According to latest FICO estimates, about 1.6% of the U.S. scorable population has a perfect 850 FICO score. Those who make up that small percentage are experts when it comes to managing their credit — and maintaining it.
Jim Droske, 55, is president of Illinois Credit Services, but credit counseling is more than just a job; it's his lifestyle.
A recent Wells Fargo credit rating that Droske pulled in March uses the FICO 9 model and shows he has had a perfect 850 credit score for five consecutive months. Below, CNBC Select reveals how he uses his credit to get to this magic number and how you can, too.
Droske's No. 1 rule
Carrying a balance is not something Droske recommends doing. "I almost always pay it off in full at the end," he says. His best advice to credit users is to not charge something if you can't pay for it in full.
An exception to the rule is if you are charging something pricey; for this, Droske keeps a handful of credit cards around.
"If it's something that's going to be a bigger ticket item that I know I'm going to have to pay over time, I'll actually put it on one of my other cards and just keep pounding that away," Droske says.
And there's a reason for this plan of attack: Until these big-ticket balances are paid off, Droske knows they are incurring interest. That's why he chooses this option selectively.
His everyday credit card
Of Droske's six active credit cards, he uses only one daily: The Bank of America® Customized Cash Rewards credit card, which offers cardmembers 3% cash back in the category of their choice (gas, online shopping, dining, travel, drugstores or home improvement/furnishings), 2% at grocery stores and wholesale clubs (up to $2,500 in combined choice category/grocery store/wholesale club quarterly purchases, then earn unlimited 1% thereafter.)
How he uses his six credit cards
Droske will either use this Bank of America® Customized Cash Rewards credit card or cash, and he doesn't even carry his other five credit cards with him. Periodically, though, he'll dust them off so they don't go dormant.
"Every six or eight months, I'll go have lunch with them or I'll use them a little bit so that they stay open and active," Droske says.
The credit cards Droske uses the most often are to redeem cash-back rewards on everyday expenses, like groceries, but also monthly bills when there is not a processing fee. "Any utility bills or anything I can pay with a card, I run it through the points and then I make one transaction with my checking account to pay off that credit card in full." He rarely ever uses debit cards because of their security risk.
Why he doesn't have a travel credit card
Droske doesn't travel enough to really justify having a travel rewards card. And, despite their popularity, he is also wary to recommend them for everyone.
"There are a lot of different types of offers; you have to find the one that fits your lifestyle and fits your needs the most," Droske says. "If you travel a lot, then that totally makes sense. But if you don't, there may be other rewards cards that you're going to benefit from more just by the way you use it."
The Citi Double Cash® Card is a great example of something that is easy to use while also rewarding you for spending and paying your bill on-time. As a flat-rate card with no annual fee, cardmembers earn 2% on every purchase with unlimited 1% cash back when you buy, plus an additional 1% as you pay for those purchases. Plus, for a limited time, earn 5% total cash back on hotel, car rentals and attractions booked on the Citi Travel℠ portal through 12/31/24. (see rates and fees.)
His advice for your credit score
When it comes to building credit and achieving a good credit score, know that it's smart to apply for credit but make sure you use your common sense when doing so.
"If you don't have enough credit, it doesn't mean you should go out and apply for five credit cards tomorrow," Droske says. "You want to consume things slowly, and it's OK to have inquiries periodically."
To hit the pinnacle of an 850 score, or even just a good credit score in general, you don't need to open up new cards very often, but when you do, make sure you are looking for the best rewards at that time.
Droske, who maintains a mortgage and two car loans in addition to his six credit cards, says, "It isn't good to continue to chase the latest and greatest offer because then you'll have a continued flow of opening and closing cards, and that's not good for scores.
"The plan is to get a good, healthy mix of credit and maintain it over a long period of time."
Information about the Bank of America® Customized Cash Rewards credit card and Capital One® Venture® Rewards Credit Card has been collected independently by CNBC and has not been reviewed or provided by the issuer of the cards prior to publication.
