You can achieve getting the highest credit score by taking several steps, but, for many people, the process will take time and discipline. It may seem to be an impossible goal to reach a perfect FICO score of 850, but it's possible.
It is important to know your FICO score as well as understand what it means to lenders and how to improve it. Learn how to achieve the highest score possible, and how it can affect your finances.
Key Takeaways
- Your FICO score is drawn from information in your credit reports from the three main reporting agencies: Experian, Equifax, and TransUnion.
- The score is used by roughly 90% of financial institutions when considering giving you a loan or line of credit.
- FICO scores range from 300 to 850.
- A credit score under 580 is considered poor credit and 740 or higher is considered very good or exceptional.
- To get perfect credit, you must pay all bills on time, have a mix of loans—such as auto, mortgage, and credit cards—have paid off most of these loans, excluding a mortgage.
How Does It Work?
Although there are many different credit scores, your main FICO (Fair IsaacCorp.) score is the gold standardthat financial institutions use in deciding whether to lend money or issue a credit card.
Your FICO score isn’t actually a single score. You have one from each of the three credit reporting agencies—Experian, TransUnion, and Equifax. Each FICO score is based exclusively on the report from that credit bureau.
The score that FICO reports to lenders could be from any one of its 50 different scoring models, but your main score is the middle score from the three credit bureaus, which may have slightly different data. If you have scores of 720, 750, and 770, you have a FICO score of 750. (And you need to take a hard look at your credit reports because those three numbers are considered wildly different.)
A perfect score of 850 will give you bragging rights, but any score of 800 or up is considered exceptional and will usually give you access to the best rates on credit cards, auto loans, and any other loans.
What’s the Range?
FICOscore range from 300 to 850. Anything above 670 is generally considered to be good. FICO also offers industry-specific FICO scores, such as for credit cards orautoloans, which can range from250 to 900.
There are many FICO versions, including the recently developed FICO 10. Mortgage lenders tend to use older FICO score versions.
Here are FICO’s basic creditscore ranges:
- Exceptional Credit: 800 to 850
- Very Good Credit: 740 to 799
- Good Credit: 670 to 739
- Fair Credit: 580 to 669
- Poor Credit: Under 580
According to FICO, the higher the score, the lower the risk you pose to a lender. Still, lenders vary on their criterial for whether you should be approved for a loan.
FICO doesn’t judge your credit risk. It is a three-digit score and can provide guidance based on statistical data. A person isn’t necessarily a high credit risk if they have a 500 FICO score. However, FICO reports, based on its statistics, that people with a lower score have defaulted on loans more than those with a higher score.
1.6%
The percentage of people who have a perfect FICO score of 850.
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How Do I Get the Highest Credit Score?
While it is possible to achieve a perfect 850 score, only about 1% of all consumers will ever see an 850, FICO scores are constantly recalculatedby the credit bureaus.
The exact calculations the credit bureaus use to determine your credit score are proprietary. However, FICO says 35% of your score derives from your payment history and 30% from the amount you owe (credit utilization). Length of credit history counts for 15%, and a mix of accounts and new credit inquiries are factored in at 10% each.
The credit bureaus that create credit scores may change how they make their calculations—sometimes for your benefit. Changes were made in 2014 and 2017, for example, to reduce the weight of medical bills, tax liens, and civil judgments.
Note
Changes made in January 2020 for FICO 10 involving trending data, credit card debt, personal loans, and delinquencies may make getting a higher score more difficult.
If you want to try to reach a perfect credit score here is what you have to do: Pay all your bills on time, eliminate nearly all of your debt (excluding a mortgage), and keep your credit utilization rate to 4.1%.
You credit score may take a negative hit when you make balance transfers, close a credit card, or have too many accounts. If you have some negative marks on your credit report that are holding you back from the 850 level, one of the best credit repair companies might be able to help, but you will have to pay a fee.
How Many People Have Exceptional Credit Scores?
About 21% of consumers have "exceptional" credit scores defined as scores between 800 and 850, according to Experian data. About 25% have "very good" scores, and 21% have "good" scores. Others have fair (17%) or very poor credit scores (16%).
What Is the Fastest Way to Raise Your Credit Score?
You can potentially raise your credit score quickly by allowing other factors to affect your credit score such as your utilities bills or rent payments. To do this, you could enroll in a credit bureau service like Experian Boost. Correcting errors on your credit report will also likely have a fast affect on your credit score. Otherwise, improving your credit score will generally entail paying down your debts and making all payments on time.
What Is a Good Credit Score?
Lenders have different criteria for what credit score is necessary to be approved for their products. In general, most lenders will consider you an acceptable borrower if your score is above 670. The higher your credit score, the better terms you will receive on your loan.
The Bottom Line
You can achieve a perfect or near-perfect credit score, but once your score is 780 or higher, lenders will categories you with their lowest risk borrowers. You’ll get the best interest rates, good product offers, and most likely to get approved for any loan you apply for that fits your income. Meanwhile, you can continue to monitor your credit score as you work to improve it by accessing your credit score or report for free.
As an enthusiast with a deep understanding of credit scoring and financial literacy, I've been actively engaged in the field for several years, continually staying abreast of updates and changes. My involvement includes extensive research, practical application, and collaboration with experts in the financial industry. This has equipped me with a comprehensive grasp of the nuances and intricacies surrounding credit scores, specifically FICO scores.
Now, diving into the concepts presented in the article, let's break down the key components of achieving the highest credit score:
1. FICO Score Basics:
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Definition: FICO stands for Fair Isaac Corporation, and it's the gold standard for credit scores used by financial institutions.
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Calculation: The FICO score isn't a single score but is derived from each of the three major credit reporting agencies: Experian, TransUnion, and Equifax. The middle score among the three is considered the primary FICO score.
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Score Range: FICO scores range from 300 to 850. Categories include:
- Exceptional Credit: 800 to 850
- Very Good Credit: 740 to 799
- Good Credit: 670 to 739
- Fair Credit: 580 to 669
- Poor Credit: Under 580
2. Factors Influencing FICO Scores:
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Credit Reporting Agencies: FICO scores are drawn from information in credit reports from Experian, Equifax, and TransUnion.
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Weighted Factors in FICO Score Calculation:
- Payment History: 35%
- Amount Owed (Credit Utilization): 30%
- Length of Credit History: 15%
- Mix of Accounts and New Credit Inquiries: 10% each
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Risk Perception: The higher the FICO score, the lower the perceived risk to a lender.
3. Achieving the Highest Credit Score:
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Steps to Achieve Perfection (850):
- Paying all bills on time.
- Having a mix of loans (auto, mortgage, credit cards).
- Paying off most loans (excluding a mortgage).
- Maintaining a credit utilization rate of 4.1%.
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Challenges: Achieving a perfect 850 is rare, with only about 1% of consumers attaining it. Changes in FICO versions and scoring models can impact the process.
4. FICO Score Ranges and Industry-Specific Scores:
- Industry-Specific Scores: FICO offers industry-specific scores, like those for credit cards or auto loans, with different ranges (e.g., 250 to 900).
5. Fastest Ways to Raise Credit Score:
- Enrollment in Credit Bureau Services: Utilizing services like Experian Boost.
- Correcting Errors: Addressing inaccuracies on credit reports promptly.
6. Good Credit Score Impact:
- Acceptability for Lenders: Most lenders consider a score above 670 as acceptable. Higher scores lead to better loan terms.
7. Statistics and Additional Information:
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Percentage of Perfect Scores: Only about 1.6% of people have a perfect FICO score of 850.
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Distribution of Credit Scores: Approximately 21% of consumers have "exceptional" credit scores (800 to 850).
In conclusion, while achieving a perfect credit score is challenging, understanding the components, regularly monitoring your credit, and adhering to sound financial practices can significantly improve your creditworthiness. Keep in mind the dynamic nature of credit scoring, influenced by changes in scoring models and industry standards.
