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How To Have A Perfect Credit Score

What Is The Highest Credit Score Can You Get A Perfect Score

How To Get A PERFECT Credit Score For $0

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The highest credit score you can have on the most widely used scales is an 850. For common versions of FICO and VantageScore, the scale ranges from 300 to 850 and lenders typically consider anything above 720 excellent credit.

Even if you succeed in getting the highest credit score possible, you’re unlikely to keep it month after month. Scores fluctuate because they are a snapshot of your credit profile, which changes over time.

The widely-used FICO 8 scoring model and the VantageScore 3.0 are both on a 300-850 scale. Credit scoring company FICO says about 1% of its scores reach 850. VantageScore spokesman Jeff Richardson says fewer than 1% of its credit scores are perfect.

The way people get perfect scores is by practicing good credit habits consistently and for a long time. As you might expect, older consumers are more likely to have high scores than younger ones.

But scores fluctuate because they are a snapshot of your credit profile. Even if you succeed in getting the highest credit score, youre unlikely to keep it month after month.

What Do Credit Score High Achievers Have In Common And What Can We Learn From The Credit Behavioral Characteristics In These Populations

Scoring Solutions

Some of the more frequent credit score related questions people ask are around the subject of a perfect FICO® Score:

  • What is the perfect FICO® Score?
  • How can I get a perfect FICO® Score?
  • Does anyone have a perfect FICO® Score?
  • Whats the typical credit profile of someone who has a perfect FICO® Score?

FICO® Scores are a sequence of three-digit numbers ranging from 300-850*. Each lender determines the score cutoff they require to approve a request for credit and to help them set the terms of the credit being extended. Typically, most lenders do not require an individual to have the highest credit score possible to secure the best loan features. Instead, they set a high-end cutoff where those applicants scoring above that cutoff qualify as a good credit score and get these most favorable terms.

In other words, dont sweat it if you are only an 800 as most lenders are likely to treat you the same if you score in the 800-850 range because your risk of not paying as agreed is very low in these highest FICO® Score ranges.

The percent of the population with an 850 credit score is relatively small, but has been increasing. As of April 2019, about 1.6% of the U.S. scorable population had an 850 FICO® Score. That compares to 0.98% in April 2014 and 0.85% in April 2009. This slight uptick is not surprising as we have been seeing the average FICO® Score on the national population increasing as time since the great recession ages.

What Qualifies As A Perfect Credit Score

Pinning down a perfect credit score ultimately depends on which scoring model you use.

FICO scores, which are issued by the Fair Isaac Corporation, range from 300 to 850, with 850 being the highest score you can attain.

According to Fair Isaacs internal data, approximately 19.9% of the population has a FICO score in the 800 to 850 range.

At the other end of the spectrum, just under 5% of consumers have a score of 499 or less.

The majority of Americans, 58.1% to be precise, have scores ranging from 600 to 800.

Overall, the national average FICO score comes in at 695, which according to Fair Isaac is an all-time high since the company began tracking it.

So how are FICO scores calculated? While Fair Isaac doesnt disclose a specific formula to the public, its common knowledge that the following five factors play a part in how your score adds up:

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Key Characteristics Of Consumers With The Highest Credit Score

Although theres no defined formula for a perfect credit score, heres what the highest credit score consumers have in common:

  • Long credit histories. Most people with perfect credit scores have a long credit history. According to a 2019 FICO report, their average oldest credit account was 30 years.
  • Perfect payment history. A person who has perfect credit typically has a perfect payment history. This means they have no collections, late payments or other negative information listed on their credit reports.
  • Low credit utilization ratio. The majority of people with scores of 850 dont use much of their available credit. According to the same FICO report, their average credit utilization ratio was 4.1%.
  • A low number of recent credit inquiries. Although some open new credit accounts, the majority of them dont. When you apply for a new account, it typically requires a hard credit inquiry, which can damage your score between one and five points.

Experts Consider A Score Above 780 To Be Excellent

excellent credit score 800 980438

The two primary reasons that a perfect credit score is overrated is that reaching the 850 level provides little benefit to the individual, and attempting to take advantage knocks you from the lofty perch, said Kevin Haney president of Growing Family Benefitsand previously an executive with Experian. An 850 score gains no advantage over someone at the 800 level 50 points lower. Experts consider a credit score above 780 to be excellent. Most consumers with ratings in this range garner the best borrowing terms and cheapest insurance premiums .

In other words, most lenders and insurance companies do not differentiate offers in a meaningful way to people with excellent scores the top 20%.

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Age Of Credit History

Next down the line in terms of credit score importance is the age of your credit history, which accounts for roughly 15% of the points in your scores. Neither FICO nor VantageScore considers your actual age thanks in part to restrictions set forth in the Equal Credit Opportunity Act or ECOA, but the age of the accounts on your credit reports does matter.

In terms of credit scoring, the older the accounts on your credit reports, the better. If you have a young credit report you wont be able to earn an 850 score until the accounts become more seasoned.

Additionally, opening new accounts too frequently can stall your quest for the perfect 850 score as both FICO and VantageScore consider the average age of the accounts on your reports. Every time you open a new account, the average age of your accounts goes down.

Its Not Necessary To Have A Perfect Score

Ulzheimer says his FICO credit score has hit 850 off and on for the past five to seven years. That achievement became easier once his credit history passed the 20-year milestone, he says. Yet Ulzheimer notes he hasnt been striving for perfection with his credit score he just knows the right behaviors for managing his credit well.

Unlike Ulzheimer, Stevens says racking up a perfect FICO credit score of 850 has been his goal for a few decades.

As many do in their 20s, I experienced financial instability and suffered some setbacks that greatly impacted my credit scores. That credit also limited my economic flexibility, says Stevens, managing partner of a private car service in Austin.

He adds: As I grew older, I became more aware of how good credit opened opportunities for advancing and enhancing my life. So I continued to work on getting an ever-better score. After a while, it not only became a goal but a total obsession.

But Ulzheimer says obsessing over how close your FICO credit score is to 850 doesnt necessarily pay off. Why?

Ulzheimer says an 850 FICO score isnt needed to gain the best interest rates or APRs on credit cards and loans. In fact, he adds, theres not much difference in that regard between, say, 800 and 850. More than anything else, arriving at 850 merely gives you bragging rights, Ulzheimer says.

As long as your scores are above 760, you are likely going to get the best deals, Ulzheimer says.

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Increase Your Available Credit

Work to increase your available credit over time by applying for new lines of credit. Consider applying for a mix of credit that includes both revolving debt and installment debt . Dont apply for too much credit at once, because that could lower your credit score due to the hard credit inquiries associated with each application. Instead, wait between three and six months before adding another line of credit to your account.

Check Your Credit Regularly

How To Get A PERFECT Credit Score For $0

Checking your credit reports and scores yourself won’t hurt your score. And it’s a good idea to review your reports regularly. There may be errors or inaccuracies in your reports that are hurting your score. If you spot them, you can have them corrected or removed.

That, along with the other tips outlined here, can be a simple and effective way to grow your score to 850.

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Once You Take Out A New Loan Your Credit Ceases To Be Perfect Anyway

If you do manage to obtain a perfect credit score of 850, bear in mind that your perfection may not last very long.

If a person with an 850 score takes out a new loan, they stop being perfect immediately, Haney said. First, a hard inquiry will knock about 5 points off their score right away at the bureau furnishing the credit report used by the lender. Then the extra account reported by the lender will hurt two sub-factors at all three agencies:

  • The average length of history will be shorter.

  • The new credit activity will be higher.

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    Keep Your Credit Utilization Rate Low

    The second largest credit score indicator can be your percentage of utilizationit is responsible for 30 percent of your credit score. The credit utilization ratio is the credit utilization youve used compared to the available amount. Although its generally advised to keep your credit utilization ratio under 30 percent, a ratio that is closer to 0% can help increase the credit rating more.

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    Tips For Building A Perfect Credit Score

    The process of perfecting your credit score is very similar to simply building a good credit score from scratch. You need positive information flowing into your credit reports on a monthly basis. And the easiest way to accomplish that is to use a credit card responsibly.

    But there are a few things you can do to push your credit score into perfect territory once youve reached good or excellent credit.

  • Pay twice a month Paying monthly loan and credit card bills on time every month is one of the easiest ways to help your credit score. And failing to do so is one of the easiest ways to hamper credit-improvement efforts. So one on-time payment per month should already be in your plans. But doubling up can pay big dividends by helping to reduce your .Credit utilization is calculated for each of your credit card accounts, based on the spending limit and the balance listed on your monthly statement. Paying your bill early enables you to reduce your statement balance and thus your credit utilization. And paying again ensures you wont be charged interest for purchases made between your first payment and the end of the billing period.
  • For more tips and tricks, check out WalletHubs complete guide on How to Improve Your Credit Score.

    The Algorithm Determining Perfect Credit Is Antiquated

    What Is Considered A Perfect Credit Score

    An out-of-date algorithm is used to calculate credit scores, said Cameron Miller, a real estate expert. They arent very good indicators of a persons level of risk. If you make a mistake when youre 18, youll have to pay for it when youre 25. Getting a new credit line will hurt you more than it will help you. A single late payment will leave a permanent blemish on your record. It is far too difficult for young people to obtain credit. Its not a perfect system by any means. It has flaws and is unjust.

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    Benefits Of A Perfect Credit Score

    The benefits of a perfect credit score are more or less the same benefits you get from having excellent credit. When you have a perfect credit score, you become eligible for nearly all of todays best credit cards, including premium credit cards like the Chase Sapphire Reserve®, the Citi Prestige® Card and The Platinum Card® from American Express. Your credit card application could still get declined if you fall on the wrong side of something like the Chase 5/24 rule , but in most cases lenders will be eager to loan you money.

    Plus, your perfect credit should score you some of the best interest rates on the marketwhether youre applying for a , shopping for a car loan or taking out a mortgage. In fact, if you took out your mortgage before you earned your perfect credit score, you might be able to save a lot of money by refinancing your mortgage and lowering your interest rates.

    Having a perfect credit score can also make it easier to rent an apartment since landlords often perform a credit check after you turn in your application. Perfect credit might even help you during a job search if your employer checks your credit history during the interview process.

    Be Patient Or Ask A Loved One For A Favor

    Another 15% of your FICO score is based on the age of your credit including the average age of your accounts. Having older accounts on your credit reports can help you in this department. If your credit is relatively young, you can consider asking a loved one to add you as an authorized user to an older, well-managed credit card account.

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    Use All Your Credit Cards From Time To Time

    One thing that can mess up a really good running is closing an old credit card. Since your age of credit contributes about 15% of your credit score Karma you don’t want to accidentally end up closing an old credit card.

    Banks and lenders close good standing accounts if they aren’t being used. So always make sure to pull out that old credit card and occasionally use it.

    Will Paying The Minimum On My Cards Improve My Credit Score

    How To Get The Perfect Credit Score

    No. This is a widespread myth. You need to pay at least the minimum payment due on your credit card every month so that your cards have an on-time payment history. You do not have to pay a single cent in interest to improve your credit score. In fact, paying your credit card balances in full every month will have the greatest positive impact on your score, because it will improve your credit utilization percentage.

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    Better Chances For Approval

    Many businesses use credit scores to determine whether to approve your application. When you have a poor credit score, there’s a greater chance your applications will be denied because creditors may consider you to be a risky borrower. You have a much better chance of being approved with an excellent credit score, since your credit history shows that you’ve borrowed responsibly in the past.

    Outside those circumstances, you’ll find that it’s much easier to apply for credit cards and loans when you have an excellent credit score. However, you can quickly ruin an excellent credit score by making too many credit applications, especially in a short period of time.

    Factors Considered To Achieve Credit Score Perfection

    Earning a perfect 850 credit score is rare, but not impossible. The first step is to understand how credit scores are calculated and how to earn the maximum number of points.

    Both FICO and VantageScore credit scores are widely used, but theyre not the same because theyre created by competing companies. Both scores consider the information on your credit report at the time the scores are calculated. Both scores are designed to do the same thing, which is to indicate the probability that you will become 90 days past due, or more, on any credit obligation within the next 24 months.

    All credit scores are calculated from the same information contained within your credit reports. Both FICO and VantageScore dilute your credit report into different categories when calculating your score and assigns a different value to each.

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    Why Does A Good Credit Score Matter

    A good or excellent credit score will save most people hundreds of thousands of dollars over the course of their lifetime. Someone with excellent credit gets better rates on mortgages, auto loans, and everything that involves financing. Individuals with better credit ratings are considered lower-risk borrowers, with more banks competing for their business and offering better rates, fees, and perks. Conversely, those with poor credit ratings are considered higher-risk borrowers, with fewer lenders competing for them and more businesses getting away with high annual percentage rates because of it. Additionally, a poor credit score can affect your ability to find rental housing, rent a car, and even get life insurance because your credit score affects your insurance score.

    Check Your Credit Report Annually

    What Is the Highest Credit Score? Max Score, Tips &  More

    Last but certainly not least, make use of the fact that you can check your credit report once annually for free from each of the three credit bureaus. Far too many consumers fail to check their credit reports annually, and it’s more likely than you probably realize that one or more of the three credit-reporting bureaus has an error on your report. Head to AnnualCreditReport.com right now if you haven’t done so yet this year and ensure that your credit report is accurate.

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