I’ve written about credit scores quite a bit over the years, so I have plenty of knowledge about how they work. You might figure I’ve used that knowledge to get a perfect 850 credit score. Not quite — mine normally fluctuates between the high-700s to low-800s.
Sometimes being a perfectionist is good. But when it comes to your credit, there’s nothing wrong with settling a little short of perfection. Here’s why.
Perfect credit is hard to get
Not many people have perfect credit. Only about 1.7% of Americans with credit scores have a perfect 850 FICO® Score, according to data released by FICO last year. FICO® Score, in case you’re wondering, is the most widely used type of credit score by lenders.
To get perfect credit, you need to do well in all the credit scoring criteria. That means:
- You have no late payments on your credit report. Consumers with perfect credit have no reported late payments or collection accounts.
- You have low credit utilization. The average utilization among consumers with perfect credit is 4.1%, according to FICO.
- You have a long credit history. FICO reports that the average age of the oldest credit account is 30 years for consumers with perfect credit.
- You have a good credit mix. For credit scoring purposes, it’s better to have credit cards and loans instead of just one of the two.
- You don’t apply for new credit too often. Credit applications cause a small dip in your credit score.
In my case, I have a spotless payment history, low credit utilization, and a long credit history. But I’ve never gotten a loan, and I frequently open new credit cards to save money on travel. (If you’d like to do the same, click here to check out our favorite travel rewards cards.) I’d need to micromanage my credit to get perfect credit, and I don’t want to do that.
You don’t need a perfect credit score
There aren’t any special benefits to perfect credit. FICO even explains this on its website, saying “an all-consuming focus on trying to have a ‘perfect’ 850 FICO® Score won’t really change how lenders look at you as compared to other high scoring applicants.”
Lenders generally look at credit ranges more than specific credit scores. The highest range, based on online information from FICO, is 760 to 850. Once you have a 760 FICO® Score, you’ll already be getting all the benefits a high credit score can bring. You’ll qualify for the lowest rates on mortgages and other loans, and you’ll be able to get the credit cards with the most features.
For many of the top credit cards, you don’t even need that high of a credit score. It’s possible to get approved with a good credit score of 670, or sometimes less.
If you have good credit, a quality credit card is a must. Click here to see our list of the best credit cards. You’ll find cards with cash back, travel rewards, big sign-up bonuses, and 0% intro APR offers.
How to get a high credit score
While you don’t need a perfect 850, a high credit score has financial benefits. Here are some simple habits you can follow to get and maintain excellent credit:
- Pay your bills on time every month. Credit card and loan payments are the most important, because if you pay them on time, it will raise your credit score.
- Don’t overspend with your credit cards. Ideally, pay them off every month to avoid interest charges.
- Keep track of your credit with a free online credit score tool. You can monitor your progress and check any factors hurting your credit score.
- Review your credit report at least once a year and dispute errors. You can get your credit report free of charge at AnnualCreditReport.com.
That’s what I do to maintain my own credit score. It may not quite get you to perfect credit — that’s a much bigger challenge. But you’ll build a high score that will get you all the same benefits.