The highest credit score you can have is an 850 on commonly used credit score models. Few achieve this financial feat because it requires consistent and sound credit-building habits, and time. Scores fluctuate as new data is added to your credit reports, so achieving a perfect credit score is likely a temporary accomplishment if you do get there.
There are several versions of credit scoring models. The most commonly used credit score models are FICO 8 and VantageScore 3.0, which feature a score range from 300 to 850.
How Common Is a Perfect Credit Score?
Achieving a perfect credit score of 850 is harder than you think. Only 1.2% of FICO scores in the U.S. are currently at 850. That’s not very many people. How does that compare to most Americans? According to Experian, The average FICO credit score was 711 in 2020, which is considered a good credit score.
Why You Don’t Need a Perfect Credit Score
The pursuit of a perfect credit score is noble, perhaps, but the reality of achieving an 850 score does little to help you compared to other exceptional credit scores.
One of the main reasons to raise your credit score is to save money through lower interest rates. Most lenders, though, don’t offer lower rates for having the highest credit score on a scoring model. There’s little difference between an 800 and 850 in the eyes of a lender when determining your creditworthiness.
If you aim for a credit score within the 800 to 850 range — which FICO considers “exceptional” — you’ll have access to the most competitive rates on the market.
How Your Credit Score Is Calculated
FICO scores and VantageScores use the same five factors when determining your credit score, although they calculate them differently. The five factors that make up your credit score are:
- Payment history
- Credit usage
- Length of credit history
- Credit mix (types of accounts)
- New credit accounts
Each factor affects your credit score, although some have a greater influence than others. Regardless, but they are all important to consider and track.
How to Improve Your Credit Score
There are steps you can take to work toward your best credit score right now. Not only will following these steps help you boost your score, but you’ll also have a deeper understanding of your credit and personal finances in general.
Pay Your Bills on Time
Do yourself a favor and make payments on your bills on time each month. Late payments can remain on your credit report for up to seven years. An easy way to remember to pay your bills on time is to set up automatic monthly payments, either through the vendor or your bank, whenever possible.
Reduce Your Debt
Credit Utilization makes up 30% of your FICO credit score. Reducing the amount of debt you owe can help improve your score over time. If possible, make more than the minimum payment required or make multiple payments each month to slowly work down your total debt.
Increase Your Credit Limits
You can also lower your credit utilization by asking credit card issuers for a credit limit increase. Keep in mind this might require a hard credit inquiry, which can drop your credit score temporarily.
You can always ask if the creditor can increase your limit without that step. Some card issuers might be willing to work with you, especially if your income has increased since you opened the account.
Limit Your Credit Use
Keep lower balances on your credit cards and other revolving credit accounts. Also, only open new credit accounts when needed. Although your credit mix plays a role in your credit score, it’s unlikely that adding a new credit account type will boost your score.
Keep Your Credit Cards Open
Credit age is important. If you have credit cards you don’t want to use, don’t cancel your account, especially if it’s an account you’ve held open for multiple years. Doing so could lower your credit age considerably. Instead, set the unused credit cards aside in a safe place until you need them.
Check Your Credit Reports
Checking your credit report might not seem like an active way to increase your credit score. However, a 2020 Consumer Financial Protection Bureau (CFPB) report showed 59% of its consumer complaints were related to credit or consumer reporting. Of those 319,300 consumer complaints, 68% related specifically to incorrect information listed on credit reports.
Mistakes on your credit report could be pulling your credit score down. Errors might be as simple as incorrect personal information or something more serious like duplicate, outdated, or missing credit accounts.
You can access a copy of your credit report from the big three credit bureaus once every 12 months through AnnualCreditReport.com. Now through April 20, 2022, you can access your reports weekly.
If you find errors on your credit reports, contact the credit reporting agency immediately to dispute them. Credit reporting agencies are required to investigate and respond, typically within 30 days.
Use a Credit Monitoring Service
Another way to stay on top of your credit score is through the use of a credit monitoring service. The best credit monitoring services give you access to your credit score and often come with other helpful features like identity theft protection and access to credit reports.
Some credit monitoring services are free to use, while others charge a monthly or annual fee. Most services offer a mobile app, giving you 24/7 access to your score from anywhere in the world.
Boost Your Credit With Experian
Not only is Experian one of the three major credit bureaus, but it also offers a free service called Experian Boost, which can help increase your credit score. Experian Boost uses other recurring bills, like utilities, phone and internet services, and Netflix to build your credit history. There’s no guarantee that your score will get a boost, but the average FICO score increase was 12 points for those who did see a credit score lift. The process takes less than 10 minutes — a solid time investment for a significant credit score increase.
Credit scores play an important role in financial health and a higher score opens up more options, especially when making large financial commitments like buying a home or taking out a loan. Achieving a perfect credit score is a lofty but unrealistic goal. Instead, work to improve your score over time so you can use it to your advantage.