The highest possible FICO credit score and VantageScore is 850. While achieving the highest credit score is a challenging goal, it isn’t necessary for you to enjoy the many benefits of being in the “Exceptional” credit score range of 800 to 850. The benefits include higher credit limits, loan amounts, and lower interest rates on credit cards and loan balances.
Read on to learn the essentials of how your credit score is determined and how you can get to the top of the credit score mountain.
- It takes time to build good credit. It is unlikely you will achieve a perfect score in your 20s or 30s.
- The higher your credit score, the better your opportunities when applying for loans and credit opportunities.
- It is possible to achieve a perfect credit score, but a relatively small amount of people do so.
How High Can Your Credit Score Go?
Two organizations evaluate your credit history and attach a score to it:
- FICO (formerly Fair Isaac Corporation) – the most commonly used score by lenders to gauge each consumer’s creditworthiness and determine whether to approve applications for loans, credit cards, and other borrowing.
- VantageScore – jointly developed by the three major credit bureaus (Experian, TransUnion, and Equifax) and is gaining in popularity.
FICO has been associated with credit scores for over 30 years and is the industry standard, while VantageScore is still trying to increase its 10% market share.
Each scoring system arrives at your credit score differently, although 850 is the highest score for both.
The Benefits of an Exceptional Credit Score
There are many benefits you can expect to enjoy by achieving a perfect (or close to perfect) credit score:
- Lower interest rates on loans and credit cards: having an Exceptional credit score earns you favorable interest rates for credit cards and borrowing because you pose a small risk of defaulting. As a reward, your annual percentage rate (APR) can be half that of someone with a poor or fair credit score.
- Higher loan amounts and higher credit card limits: you can also borrow more and have increased limits on your credit cards with a perfect or near-perfect credit score. Lenders see you as a good credit risk and may be willing to lend you more money.
- More credit card perks: credit card companies will give you more perks like free miles to keep you with them if you’re an exceptional customer. They may also waive the annual fee for having excellent credit and paying on time.
- Better options for mortgages and renting: mortgage companies and landlords prefer to do business with those who have shown they pay their bills on time. Foreclosures for banks and evictions for landlords are expensive and time-consuming. Excellent credit gives you more housing options.
- Better insurance rates: property casualty insurers have found lower claim rates are associated with people having excellent credit. Insurers will also check rates periodically while you’re a customer, and if your score has dropped, they may raise your rates or even deny you the chance to renew your policy. This goes for both car and homeowners insurance.
- Good first impression with potential employers: many employers use credit scores as a way to gauge how responsible someone is, especially if they’re involved with the company’s finances. Check your credit report before you start looking for a job so you can spot mistakes and missing information.
- Not paying deposits: utilities and cell phone companies check credit before doing business with you to determine if you need to pay a deposit for services. Having exceptional credit will eliminate that need for you.
Who Has a Perfect Credit Score?
Less than 2% of credit scores sit at 850, according to Experian. While that’s a small percentage, the people who have attained a perfect score share some things in common. They have:
- 5.9 credit cards
- 4.2 retail credit cards
- $2,558 credit card balance
- $182 retail credit card balance
- $205,057 mortgage balance
- $32,872 personal loan balance
- 0 accounts listed as delinquent
Age is also an important factor. The older you are, the more time you have to build strong credit. The average credit score by age is:
- 18 to 24: 679
- 25 to 40: 686
- 41 to 56: 705
- 57 to 75: 740
- 76 and older: 760
The majority of people with 850 scores are above the age of 57, according to Experian. In addition, around 70% of people having a perfect credit score are baby boomers, 22% are members of Generation X, and only 4% are millennials and Gen Z’ers.
Bear in mind that anyone, no matter their age, can earn a spot in the “exceptional” range by forming and sticking to good habits concerning credit. You don’t have to be wealthy to have a Very Good to Exceptional credit score; many people with average incomes have used credit wisely and reaped the benefits.
How to Get a Credit Score of 850
Now that the question “What is the highest credit score possible?” has been answered (850 by both FICO and VantageScore), you may be motivated to get as close to it as possible. People with exceptional credit didn’t arrive there by accident. They had a sound financial plan and worked hard to reach the perfect score. These are some ways you can achieve a score of 850.
Never Miss a Payment
- Your payment history is the most significant factor affecting your credit score for FICO and VantageScore. Missed payments can cause your score to drop significantly, and they can remain on your credit report for up to seven years.
- To avoid forgetting payments, sign up for autopay and have your bills paid automatically every month. Most banks have this feature built into their platform, and it will take a lot of pressure off of you if you have a busy schedule.
- If you have a missed payment on your credit report and are now current, ask the lender to remove the late payment information from your report. Some lenders will do it for you if you’ve been with them awhile, and otherwise have a clean payment history.
Build Your Credit Mix
- People with perfect credit have multiple types of credit accounts. Consider leveraging loans and credit cards. A good mix of credit includes credit cards, mortgages, personal loans (see the FinImpact article on best personal loans for good credit) , and student loans. Lenders are more apt to extend credit or approve loans for people who have paid different types of lenders on time.
- A variety of credit accounts is healthy, but only apply when you actually need the credit. Too many credit applications in a short period can hurt your score with hard inquiries. Potential lenders can interpret a flurry of activity as a sign of financial desperation.
Keep Your Credit Utilization Low
- Maxing out your credit cards hurts your credit score. Aim to keep your utilization low. If you have maxed out cards, pay down the balances as soon as possible. Potential lenders are less likely to approve credit for someone already at their credit limit with other lenders.
- Credit utilization below 10% can help push your score higher. For example, if you’re credit limit for an account is $10,000, try to keep your balance at $1,000 or less.
- An effective way to keep your credit utilization low is to pay off your credit card balances every month. It’s a good credit habit to establish and is appealing to lenders who want customers that keep their balances low.
- Reducing your debt will help raise your credit score and lower your credit utilization. For example, if your limit on a credit card is $10,000 and you have a $6,000 balance, you are at 60% utilization. However, if you reduce your balance to $3,000, you’re now utilizing only 30% of your credit.
- Raising your credit limit will also positively impact your utilization rate. For instance, if you have a $5,000 credit limit and owe $2,000, your utilization is a higher-than-recommended 40%. Raise your credit limit to $8,000, and you’ll see it drop to 25%.
Beware of Quick Credit Score Fixes
If you’re working towards a perfect credit score, you may be tempted to pay companies that promise to “Improve your credit score by 50 points immediately!” It takes time to build good credit; a company making unrealistic claims can't do it in one day.
Give It Time
- The younger you are, the more time you have to demonstrate your creditworthiness. It is unlikely you will achieve a perfect score in your 20s or 30s. It can be done, but it takes perfect execution of managing your credit and a healthy dose of self-discipline.
- It helps to keep your oldest accounts open, even if you no longer use them. The length of your credit history counts towards your credit score. Keep your average account length higher by not closing older, inactive accounts.
Always Monitor Your Credit Score
- Keep track of your credit score and regularly review your credit report. For example, human error during data entry may show late payments when that hasn’t actually been the case. If you don’t order your free credit report each year from www.annualcreditreport.com, you could be hurting your credit score.
- For the balance of 2023, you can get your free credit report monthly instead of only once per year. The normal schedule of one free report annually resumes in 2024.
- If you spot errors on your credit report, you can dispute them with the three leading credit reporting agencies: Equifax, Experian, and TransUnion. Explain in writing what you think the error is, and include copies of documents that support your dispute.
How to Maintain a Perfect Credit Score
Once you’ve worked hard at doing all of the right things and have attained a perfect score of 850, you’ll want to keep it there. To do that, be sure to:
- Make all payments on time
- Keep your credit utillization below 10%
- Maintain a good credit mix
- Don’t close any old accounts you’re not using
- Check your credit report regularly
These best practices will keep you in the elite group of people with a score of 850.
How Credit Scores are Calculated
Although 850 is a perfect credit score according to FlCO and VantageScore, both companies use different scoring systems.
FICO Credit Scores
FICO scores are calculated using five different variables and attaching a weighted percentage to each:
- Payment history: 35%
- Amounts owed: 30%
- Length of credit history: 15%
- Credit mix: 10%
- New credit: 10%
Based on your performance with credit in these areas, you are given a score that will fit into one of these rankings:
- 300 to 579: Poor
- 580 to 669: Fair
- 670 to 739: Good
- 740 to 799: Very good
- 800 to 850: Exceptional
Your FICO score is important because it is used by 90% of top lenders. Knowing where you fit into the range of scores will let you know where you stand, which will help keep you motivated to reach the next level.
VantageScore Credit Scores
VantageScore uses its own scoring system when determining your credit score:
- Payment history: 41%
- Depth of credit: 20%
- Credit utilization: 20%
- Recent credit: 11%
- Balances: 6%
- Available credit: 2%
Once your credit score is arrived at, it is ranked accordingly:
- 300 to 600: Subprime
- 601 to 660: Near prime
- 661 to 780: Prime
- 781 to 850: Superprime
VantageScore was formed by the three major credit unions to provide an alternative to FICO for lenders. Since its introduction, it has introduced various scoring models, the latest being VantageScore 4.0 in 2017. It is used by approximately 10% of lenders.
What is the highest credit score possible? That’s a great question to ask yourself if you’re a perfectionist, but don’t put too much pressure on yourself. Striving to reach a score of 850 is a good goal, but it’s not essential. Once your credit enters the ranks of “Exceptional” (800 to 850), there won’t be a significant difference in the rates and perks you can access. And remember, monitoring your credit and maintaining good habits can help you maintain a strong score, even if it isn’t perfect.