Maximum Credit Scores
Is it important to have the highest possible score?
Bowlers aim for a 300-point game. Students taking aptitude tests for college entry aim for 2,100 on the SAT or 36 on the ACT. Overachievers all over the world seek maximum scores and perfect scores. Credit scores are no exception.
What Is a Credit Score?
Your credit score is a number that measures your creditworthiness. It’s based on the information on your credit report, which includes a record of your credit card and loan history. The maximum credit score you can achieve depends on the credit scoring model that’s being used.
Various Credit Score Maximums
One type of credit score is the FICO score. The maximum FICO score is 850 (minimum 300). There are other credit scores, from the credit bureau and other third-parties. If you purchase one of these scores, the score provider will give you the scale for that score. (These scores often mimic the FICO score, with a maximum of 850)
Having the maximum credit score is extremely rare. According to FICO, Only 25% of people with a credit score have a FICO higher than 785, and an even smaller percentage of people have the maximum FICO score.
How Important Is a Maximum Credit Score
The benefit of having a great credit score is to get low-interest rates on credit cards and loans and to make it easier to have your applications approved. You can do this without having the maximum credit score. Strive for a FICO score above 720. Scores above 720 are considered excellent and will almost always allow you to reap the benefits of a high score.
Also, remember that creditors and lenders consider more than just your credit score when they’re evaluating your applications. They’ll also look at the amount of debt you have and your income. You could be denied for certain credit products, despite having a great credit score, if you have a lot of debt or you don’t make enough money for the credit limit or loan amount you’re asking for.
Even if you achieve the maximum credit score at one point in time, it doesn't mean you'll always have a perfect credit score. Your credit score often changes as the information on your credit report changes. It's common for credit scores to gain or lose points from one day to the next. Changes in your balance, credit limits, payment history, and accounts, even changes to the credit score algorithm can impact your credit score.
What It Takes to Get the Maximum Credit Score
There are a few things you can do to get the best credit score possible. Pay your bills on time each month, even those that aren’t listed on your credit report. Avoid having too much debt and too many open accounts. Keep your credit applications to the minimum, ideally less than 7% of the credit limit.
In an October 2012 press release, FICO gave details about a few habits of high achievers - consumers with FICO scores above 785. These people have:
- An average of seven accounts, open and closed
- An average of four accounts with balances
- Most have balances below $8,500 on non-mortgage accounts
- 95% have no missed payments on their credit reports. Less than 1% have an account currently past due
- 1 in 100 have a collection on their account, and 1 in 9,000 have a bankruptcy or tax lien
- Their average credit age is 11 years. The oldest account was opened an average of 25 years ago.
A perfect maximum credit score is great to aspire to, but it’s ok to "settle" for an excellent high credit score. If your credit score needs help, spend some time reviewing your credit report and putting together a plan to improve your credit score.