What is the highest possible credit score? – Councilor Forbes

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About 1.6% of the U.S. population had perfect FICO scores in April 2019, according to a FICO report. Consumers who reach this height will generally be eligible for the best rates and terms on various financial products, such as credit cards, mortgages, student loans, auto loans, and personal loans.

If your goal is to achieve a perfect credit score, you should aim for a score of 850. This is the highest FICO score and VantageScore available for the most used versions of the two credit scoring models. While it might seem like a challenge, Forbes Advisor is here to help. We’ll walk you through the steps to get the best possible credit score.

Why your credit score matters

Your credit score is important because lenders use this three-digit number to determine your risk to a borrower. The higher your credit rating, the more likely you are to qualify for a loan and get the best interest rate. Typically, the best rates and loan terms are reserved for people with good credit (670 or more).

Over the course of your life, a good credit score can help you save a ton of money in interest. It can also help you avoid certain fees. For example, if you have taken out a personal loan, a high credit score might help you avoid personal loan origination fees – the fees charged to process the loan.

However, if you have a bad credit score (below 580) or minimal credit history, you may not meet a lender’s minimum credit rating requirements. This can prevent you from having access to the money you need. You will likely need to apply for a loan with a co-signer or co-borrower to qualify, or you can explore bad credit personal loans.

Key characteristics of consumers with the highest credit score

While there is no set formula for a perfect credit score, here’s what consumers with the highest credit scores have in common:

  • Long credit history. Most people with perfect credit scores have long credit histories. According to a 2019 FICO report, their the oldest average credit account was 30 years old.
  • Perfect payment history. A person with perfect credit usually has a perfect payment history. This means that they don’t have any collections, late payments, or other negative information listed on their credit reports.
  • Low rate of credit utilization. The majority of people with a score of 850 do not use up much of their available credit. According to the same FICO report, their average credit utilization rate was 4.1%.
  • A low number of recent credit applications. Although some open new credit accounts, the majority of them do not. When you apply for a new account, it usually requires a serious credit check, which can damage your score between one and five points.

How to get a perfect credit score

If you want to increase your chances of getting a perfect credit score, follow these five steps. While there is no guarantee that you will achieve perfection, at the very least, you could improve your score.

1. Never miss a payment

Since payment history represents 35% of your credit score, it’s important to pay all of your bills on time. Once your payment is 30 days late, your creditors can report it to one of the three major credit bureaus: Experian, Equifax, or Transunion. This can damage your credit score and the late payment can stay on your credit report for up to seven years.

To reduce your chances of missing a payment, sign up for automatic payment or use an invoice manager app to receive reminders and view all of your due dates at once.

2. Keep your credit utilization rate low

The second most important credit score factor is your credit utilization rate – it is 30% of your score. Your credit utilization rate measures how much credit you use versus how much you have available. While it’s generally recommended that you keep your credit utilization ratio below 30%, a ratio closer to 0% will help boost your credit score even more.

3. Don’t apply for credit too often

When you apply for a loan, a lender takes your credit away, causing a serious credit investigation to show up on your report. This request remains on your report for up to two years. According to FICO, each new credit application can reduce your score by up to five points. Although the impact of this type of credit check diminishes over time, it could prevent you from having a perfect credit score.

4. Examine your credit reports

Credit report errors happen. If a creditor reports negative information that is inaccurate or incomplete to the credit bureaus, it can damage your credit score. To detect and correct reporting errors, review your credit reports at least once a year.

You can view your three credit reports for free by visiting AnnualCreditReport.com. Normally, you can only view them for free once a year. However, due to the Covid-19 pandemic, you can receive free weekly reports until April 20, 2022.

5. Become an authorized user

If you don’t have a long credit history, ask a family member who has excellent credit to add you as an authorized user on their oldest credit cards. Your score may increase if the credit card issuer forwards information to credit bureaus for authorized users. However, the downside is that your score may drop if the primary cardholder misses a payment and this is reported on your credit report.

Benefits of high credit scores

There are usually several benefits to having high credit scores, including:

  • Lower interest rates. When you apply for a personal loan, mortgage, car loan, or student loan, you are more likely to qualify for the best interest rate. It can save you thousands of dollars over the course of your life.
  • More loan options. If you have a high score, you shouldn’t have much difficulty meeting a lender’s minimum credit score requirements. This gives you access to lenders who only offer loan products to applicants with excellent credit profiles.
  • Credit card rewards and promotional offers. Since some of the best cash back credit cards require great credit scores (700+), you will likely qualify. Plus, you’ll also be able to benefit from a 0% APR rate credit card that doesn’t charge interest on purchases or balance transfers for up to 21 months.
  • Reduced auto insurance premiums. If you live in a state that allows credit-based auto insurance, you could pay a lower monthly premium.
  • Lower security deposit for an apartment. When you buy an apartment, you are likely to pay less for a security deposit than someone with a low credit rating.

Final result

While having the highest possible credit score isn’t a bad goal, don’t stress out if you can’t achieve it. It takes a long time and only a small percentage of people have perfect credit. Instead, focus on the steps mentioned above to develop good credit habits. Over time, you will develop a top notch credit rating.

Increase your FICO® score instantly with Experian Boost

Experian can help you increase your FICO® score based on paying bills like your phone, utilities, and popular streaming services. Results may vary. See the site for more details.

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