Perfectionists come in many forms. Some people aimed for that 4.5 GPA in high school, while others strive for a completed to-do list at work every day. In the financial world, this is the equivalent of achieving a perfect credit score. While it might seem elusive, a perfect credit score is doable — it just might not be worth your effort.
“It’s absolutely possible to have a perfect credit score,” Matt Schulz, senior industry analyst for CreditCards.com, told The Cheat Sheet in an interview. “But the truth is, that once you get to a certain level of credit score, it doesn’t necessarily matter if you’re perfect or not, in terms of whether you’ll get a loan, or what kinds of rates you’ll get.”
What is a perfect credit score?
There are several types of credit scores, depending on which agency you use, but the most popular is the FICO score. As Experian explains, the range of FICO credit scores goes from 300 to 850, with 850 being perfect. “Exceptional” or “excellent” credit is generally considered to be 800 and above, “very good” credit is considered to be from 740 to 799, and “good” credit is from 670 to 739 — with less than stellar credit scores ranking as “fair” or “poor.”
According to Schulz, there isn’t a magic number that’s going to guarantee you the same benefits of someone with a perfect credit score, since every loan agency has different barometers for measuring credit. However, there are some general rules to live by. “Certainly, once you’re above 800 you are doing just fine, and you’re pretty much going to get any loan that you would want with really good terms,” Schulz said.
The toughest part about achieving a perfect score is that it can be incredibly fickle. Even if you attain a score of 850 at one credit check, by the next one it could have fluctuated based on how much of a credit card balance you’re carrying, whether you opened another credit card recently, and so on. “A credit score is really just a snapshot of your credit at a given moment when the person looks at it,” Schulz said.
How to improve your credit score
Whether you’re trying to improve your credit to get to an optimal or excellent level, or if you’re choosing to aim for a perfect score for personal bragging rights, there are ways to increase your score, both in large and small ways.
In some cases, there are aspects of that out of your control, such as the length of your credit history. “Length of credit history is 15% of your FICO score,” Schulz explained. “By definition, it’s easier for an older person to have an excellent credit score than it is for a younger person.”
Others, however, are just a matter of changing your habits. One of the tenets of boosting your credit score is keeping your credit utilization rate low. In other words, your credit balance is a small percentage of the credit limit you’ve been granted. “Really the best thing that you can do if you want to keep your credit score high is to make multiple payments during the month,” Schulz said. If you typically spend $2,000 to $3,000 on credit cards in a month, for example, you might consider paying off half of that balance every few weeks instead of waiting for your bill to arrive.
Another suggestion Schulz makes is to call your credit card provider and ask for a raise in your credit limit. If you keep your spending the same but see that limit increase, you’ll automatically lower your credit utilization and likely see your credit score rise.
Finally, keep your score in mind in the months leading up to applying for a big loan, such as a mortgage or a car payment. Try not to apply for new credit cards during that time, Schulz said. Overall, applying for new cards is only a small and temporary ding on your score, but if you’re on the bubble between good and excellent credit, it can knock you down to the lower tier (and therefore less favorable interest rates).
The benefits of having excellent credit
Though having excellent credit might seem like overachieving, it can bring some tangible benefits your way. “Having an excellent credit score really makes it possible for you to make credit cards work for you in ways that they can’t work for other people,” Schulz said. People with excellent credit will likely get the best rewards and sign-up bonuses on new credit cards, and might be able to work with a bank to have their annual fee waived, for example. “It also opens up the possibility of instead of just saving you money, you can actually profit from it in the form of big sign-up bonuses that can get you free airfare or free hotel nights. That’s the kind of thing that an excellent credit score opens up to you,” Schulz said.
Though achieving an excellent (or perfect) score might seem like a pipe dream, it’s best not to overcomplicate it. “People tend to overthink credit, to a degree,” Schulz said. “Really what having a credit score is all about is paying off your balance every month, paying your bills on time, every time, and not applying for too much credit too often. If you do those three things, and you do them repeatedly over the course of many years, you’re going to have a good credit score.”