What’s a Perfect Credit Score?
According to the Fair Issac Corp (FICO) scale that ranges from 300 to 850, a perfect credit score is 850.
Does anyone actually achieve a perfect credit score?
While it is rare, the fact is that 1 percent of people in the United States do indeed have a perfect credit score of 850.
This is equivalent to about 1 million U.S. citizens.
Most people have never heard about individuals with a perfect credit score.
Craig Watts, a spokesman for FICO, said:
“They tend to be more conservative and a little older. We don’t get too many of them in our forums. They aren’t the type of people who stand up on a bus and tell everyone they scored an 850.”
The Benefits of a Perfect Credit Score, or Just About Any High Credit Score
Having a perfect credit score has its advantages.
These benefits include:
- Instant approval for just about any type of loan
- The lowest annual percentage rates possible
- Entry into the most beneficial credit card rewards programs
Is a Perfect Credit Score Necessary to Attain the Most Benefits?
It will probably come as a relief to most people that a perfect credit score is not necessary to take advantage of superb benefits.
In general, scores that are above 720 are considered excellent, and individuals with scores above 760 are likely to receive the same benefits as those with perfect credit scores.
So don’t worry about a perfect credit score so much 😉
Reaching the Top Tier Credit Score
While you don’t have to have a perfect credit score of 850 to achieve the best benefits, even achieving above 760 isn’t an easy task.
In other words, simply having a low debt-to-credit ratio and positive payment history are not the only things you will need to reach that top tier.
If you’d like to work toward attaining a top tier credit score, it is imperative to consider the following:
#1 Maintain a Clean Record
Those with a perfect credit score do not have any history of bankruptcy, liens, settlements, or bank repossessions.
Their records are 100 percent clean.
For some people, it is too late to attempt to achieve a perfect credit score.
However, a credit score can be improved over time by avoiding such things as tax liens, bankruptcy, and settlements.
#2 Work Toward a Long and Positive Payment History
Individuals with a perfect credit score always pay their bills on time.
In fact,
35 percent of your credit score is determined by your payment history.
To improve this part of your credit score, always pay your bills on or before their due date.
Never let bills go beyond the grace period set up by the lending company.
#3 Age of Credit Accounts
The reason why most of the U.S. citizens that have a perfect credit score are older is because they have had more time to develop a positive credit report.
A person who is 30 and has similar credit habits as a person who is 60 is less likely to have as high a credit rating as the older individual.
That said, it is important to realize that credit scores are not based on a person’s age but on the age of their oldest credit account.
This is why it is a good idea to keep older credit accounts open so that you have a longer credit history.
#4 Credit Account Diversity
Top tier credit scorers have a more diverse set of accounts.
This doesn’t mean that they have 10 credit cards from different companies.
In order to create account diversity, you’ll need to maintain credit accounts that fall into two categories—installment accounts and revolving accounts.
- Installment accounts may include car loans or mortgages and require individuals to pay a specified amount every month until the balance is paid off completely.
- Revolving accounts include credit card accounts and have fluctuating balances.
#5 Credit Inquiries
Newly opened credit accounts affect 10 percent of your credit score.
Every time you apply for a credit account, an inquiry is made into your credit score.
The more hard inquiries (inquiries made by lending companies) into your credit report, the lower your credit score will be.
While a number of these inquiries over time will not affect your overall credit report too much, many inquiries made over a short period of time may keep you out of the top tier credit score.
However, if you are shopping for a house, for instance, all mortgage inquiries that are made within a 30-day time-frame will only count as one inquiry.
Re-establishing Your Credit Score
Whether you already have a high credit score and would like to make further improvements, or you have a poor credit score and need to give it a boost, it is possible to do so over time.
Get your credit report for detailed information so that you know what aspects of your credit rating you need to improve.
We made a detailed article with tips on building & re-establishing credit score recently, here it is: Easy Steps to Building Good Credit or Re-establishing Credit
