What Is a Perfect Credit Score and How to Get One
There are plenty of things in life you want to be perfect. Your Instagram page, your steak sear—and perhaps your credit score.
Your credit score is a big part of your financial life, potentially affecting what you pay for everything from a mortgage to auto insurance. Credit scores range from 300 to 850 and the average FICO Score is about 715. But a small minority of Americans—just 1%—achieve perfection, the magical 850.
How do you become one of the credit score elect? It takes discipline and patience, including years, if not decades, of steadily paying your bills on time. Also important are having access to sufficient credit to boost factors like your credit utilization ratio, according to credit experts.
Of course, we can’t all be perfect. Fortunately, you don’t really need to. A very good credit score—think 760 and above—should be enough to qualify you for top borrowing rates. “Other than vanity, which I totally get, there’s really no reason to have an 850,” says John Ulzheimer, an Atlanta credit card expert and writer who formerly worked at credit bureau Equifax and credit score developer FICO.
Necessity or not, we spoke to several people, including Ulzheimer himself, who have achieved a perfect credit score to find out what’s involved.
How to get a perfect credit score
There’s no precise formula for how to earn a perfect credit score. Nonetheless, both FICO and Experian reveal some of the common credit characteristics that consumers with a perfect 850 FICO Score share. Here are some key findings:
- Average credit utilization ratio: 4%
- Total late payments on credit report: 0
- Average age of oldest account: 30 years
- Average number of credit cards: 6
- Average credit card balance: $2,500
- Average auto loan balance: $17,000
- Average mortgage balance: $205,000
- Average personal loan balance: $33,000
- Collection accounts on credit report: 0
- Around 25% opened one or more new credit accounts in the past year.
As you can see, you don’t need to be rich to earn a perfect credit score. Many consumers with a perfect 850 credit score also owe outstanding car loans—suggesting they aren’t paying for them with cash. And their average mortgage balance is $200,000, well below the average mortgage size, which is around $237,000, according to Experian.
What you do need to do to earn a perfect score is to pay your bills on time, all of the time. Collection accounts and late payments are non-existent on the credit reports of consumers with perfect credit scores.
In addition, you need to be careful with how you use credit cards—these consumers consistently pay off their balances and maintain a low credit limit to balance relationship, a.k.a credit utilization ratio.
“You don’t have to be highly educated or come from affluence to understand the common sense value of paying bills on time and not getting into excessive credit card debt,” says Ulzheimer. Maintaining a very low credit card utilization ratio is also key, the credit expert points out. “If you do those…things and you’re patient,” he says, “you can’t help but have elite credit scores.”
Tips on how to earn the perfect credit score
So, what actions does it take to get the perfect credit score? Here are some tips offered by the experts.
Set up a system for payments
Given how important it is to pay your bills on time, you shouldn’t leave anything to chance. One way to avoid common mistakes—like simply forgetting to pay a bill—is to simply take the task out of your hands, says Kate Horrell, a blogger and financial counselor who has maintained perfect and near-perfect scores for years.
“The mortgage is set to autopay,” says Horrell, “and we have automatic payments set to pay the minimum credit card payments every month too.”
Horrell says that while she usually pays off her cards’ entire balances each month, having autopay cover at least the minimum provides a fail safe. It’s “a safety net in case we get distracted or something comes up,” she adds.
Play the long game
Credit expert John Ulzheimer started consistently hitting an 850 credit score when he was in his 40s. One of the biggest keys to his success, he says, was patience.
“Some people can’t hit 850 for no other reason than their credit report isn’t old enough,” says Ulzheimer. “It has nothing to do with them not paying their bills on time or not using credit cards responsibly.”
Credit scoring models like FICO can’t consider your age when calculating your credit score. But the age of the accounts on your credit report is fair game.
Based on this information, it makes sense that most consumers who have a perfect credit score are older. Almost 60% of perfect score achievers are Baby Boomers, according to Experian. Another 14% belong to the Silent Generation and 22% are from Generation X. Meanwhile, only 4% of consumers with a perfect 850 FICO Score are Millennials and less than 1% are part of Generation Z.
Don’t shy away from signing up for credit cards
It might be natural to associate having a stable full of credit cards with profligate spending, but that’s not how it works. Perfect scorers had six credit cards on average, compared to fewer than four for other Americans.
Perfect scorers also added new credit obligations—such as new cards and loans—frequently, even though these typically require hard credit inquiries that could temporarily ding your credit. Per FICO, around 10% of perfect score achievers had one or more hard inquiries in the past year and around 25% had opened at least one new credit account in that time period.
Don’t close old credit cards
When you’re trying to achieve the perfect credit score, it also helps to avoid certain moves, such as closing old credit cards.
Horrell says her credit card loyalty is one thing that has helped her maintain a pristine score over the years. “One big factor for me may be not closing a long-standing account,” says Horrell. “I’ve had one credit card for over 30 years.”
Closing a rarely-used card can be tempting. Who doesn’t do a little financial housecleaning? But closing an old credit card has the potential to damage your credit score in two ways—one immediate and one delayed.
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When you cancel a credit card you lose the credit limit associated with the account. That action could raise your overall credit utilization rate and might trigger a credit score decline as a result.
Furthermore, when you close a credit card it will eventually come off your credit report. Positive, closed accounts typically only stay on your credit report for 10 years thanks to credit bureau policy.
Once a credit bureau removes a closed credit card from your credit report, it no longer counts toward your average age of credit. (Note: Average age of accounts is a key factor that influences 15% of your FICO Score.) The result? When an old account comes off your credit report and your average age of credit goes down, your credit score may decline.
Why you shouldn’t sweat an imperfect credit score
If you have bad credit, working to improve your score is a worthwhile investment of your time and energy. Good credit has the potential to help you qualify for loans, credit cards, and to save money in the form of lower interest rates, car insurance premiums, and more. Yet most financial professionals agree that a perfect credit score isn’t something that you need.
A credit score of 760 or better (considered “very good” to “exceptional”) will typically get you the best rates available on prime loans according to Casey Fleming, mortgage advisor and author of “The Loan Guide.”
As a result, a perfect credit score or, indeed, any credit score above 760 probably won’t save you money. “I’ve been doing loans for 28 years,” Fleming adds, “well over 1,000 clients. The highest credit score I’ve ever seen was 832.”
Roughly 1 in 4 consumers has a FICO Score of between 740 and 799, making them top-shelf borrowers, according to Experian. All total, around 45% of consumers have FICO Scores above 740, classifying them as having “very good” to “exceptional” credit. The good news is that the same good habits that can help you earn a perfect 850 credit score can help you earn a 760 score as well, but typically much faster.
“Lenders don’t treat you better at 850 than they treat you at, for example, 780 or 800,” says Ulzheimer. “You’re essentially void of credit risk in both scenarios and lenders will throw money at you at highly competitive terms.”
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