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A perfect credit score is 850 and while it’s rare to achieve and maintain, it’s certainly not impossible. Doing so requires good self control, discipline and commitment.
Highlights/ Key Takeaways:
- A perfect credit score is a credit score of 850.
- While it’s not easy to achieve and maintain perfect credit, it’s certainly possible.
- In most cases, a perfect credit score will lead to the same perks you’d get with a good or excellent credit score between 670 to 800.
How to Achieve a Perfect Credit Score: 9 Tips to Follow
1. Pay Your Bills on Time
Payment history is the most important factor in your credit score. In fact, even one late or missed payment can wreak havoc on your credit. That’s why it’s important to pay your mortgage, car loan, credit cards, and other bills on time, every time. If you happen to miss a payment, reach out to your lender or creditor to ask forgiveness. As long as you’ve been a loyal, responsible customer, there’s a good chance they’ll honor your request.
2. Enroll in Automatic Payments
The easiest way to reduce the risk of late payments is to enroll in automatic payments for your credit accounts. By doing so you can ensure the funds get debited from your bank account on time. You won’t have to keep track of multiple due dates. Some lenders will even reward you with an autopay interest rate discount.
3. Pay Your Credit Cards Off In Full
If possible, repay your credit card balance in full every month. This can keep your credit utilization ratio low and do wonders for your credit score. Plus it will help you avoid interest charges and debt that can take a toll on your finances.
4. Don’t Close Old Accounts
Chances are you have credit accounts that you no longer use. One of the greatest mistakes you can make is closing them. If you keep them open and use them on an occasional basis, you’ll increase the length of your credit history and in turn, improve your credit. Remember to keep your old accounts in good standing or you’ll hurt your credit score instead.
5. Only Open Accounts When Necessary
It’s all too easy to apply for a new credit card or loan any time you need to borrow some money. But doing so can hinder your credit score. This is because most lenders and credit card companies will perform a hard inquiry when they check your credit. Too many credit inquiries within a short period of time is no good.
6. Focus on Revolving Debts
Your revolving debts are any credit accounts you can continuously withdraw funds from, up to your set credit limit. These may include credit cards and personal lines of credit. If you can’t pay off your balances on all your credit accounts, prioritize your revolving debts. This can save you a great deal of money on interest and improve your credit.
7. Consider Your Credit Mix
The types of credit accounts determine your credit mix. If you notice most of your credit accounts are credit cards, for example, it’s time to mix things up. The next time you need to borrow money, it might make sense to get a personal loan instead. The more diverse your credit mix is, the better for your credit score.
8. Increase Your Credit Limits
Every once in a while, increase your credit limits. While each credit card company has their own unique process, it’s usually quick and easy. Most credit cards will allow you to do this online. The purpose of higher credit limits is to lower your credit utilization. If you’ve been a responsible borrower, you are able to increase your credit limits without any issues.
9. Sign Up for a Credit Boost Service
Contrary to popular belief, you can increase your credit if you make on-time payments to your utility or cell phone company. All you have to do is enroll in a credit boost service that will report your payments to the credit bureaus. Experian Boost is one example to keep only your radar.
Does a Perfect Credit Score Offer Any Extra Benefits?
If you work hard to achieve and maintain a perfect credit score, you may wonder what you’ll get out of it. The reality is that a perfect credit score can lead to many of the same perks that you’d get with a good or excellent credit score.
For this reason, most experts agree that a good or excellent credit score in the 680 to 800 range is good enough.
Here are the most noteworthy benefits of good, excellent, or perfect credit.
Lower Interest Rates
When you apply for a personal loan, car loan, credit card, or any other type of credit, there’s a good chance you’ll qualify for the best interest rate. This can save you thousands of dollars in interest payments during your lifetime.
Those with less-than-perfect credit often have to settle for shorter loan terms. With a great credit score, you can lock in longer terms and take your time repaying your loan. Just keep in mind that longer terms mean higher interest charges.
If you have stellar credit, you’ll likely be eligible for any credit product you’d like. Whether you’re in the market for a premium credit card with amazing rewards, or a personal loan of up to $100,000 or a large mortgage, you shouldn’t have any issues securing it.
Lower Car Insurance Premiums
Insurance companies in many states consider credit-based insurance scores when reviewing applications for car insurance. If you have a solid credit score, you may open the doors to a great deal on your auto insurance policy.
How Long Does It Take to Get a Perfect Credit Score?
If you’d like to get a perfect credit score, know there is no set time frame. However, if you have an established credit history, make timely payments, and keep your credit utilization ratio low, you may slowly but surely get there. Of course, if you don't have a credit history or a history of late payments or bankruptcies, the process will take you far longer.
Factors Affecting Your Credit Score
There are a number of factors that will play a role in your credit score, including:
- Payment History: Payment history accounts for roughly 35% of your credit score. It shows whether you make on-time payments on your mortgage, car loan, student loan, credit cards, and other bills.
- Amount Owed: This is the second most significant factor of your credit score as it makes up about 30%. It refers to your credit utilization ratio or how much credit you’re using compared to your total credit limit.
- Average Age of Credit: The average age of your credit accounts is around 15% of your credit score. Your credit will benefit from older accounts that have been open for quite some time.
- New Credit: New credit makes up almost 10% of your credit score. It refers to any hard inquiries lenders or creditors make when you apply for new credit.
- Credit Mix: The remaining percentages of your credit score are based on the types of credit accounts you have, such as mortgages, car loans, and credit cards. The more diverse your credit mix is, the better.
Characteristics of People with Perfect Credit
In most cases, people with perfect credit scores are baby boomers and those from older generations. That being said, you probably won’t meet many college students or young professionals with perfect credit.
Real Live Examples of Getting Perfect Credit Score
Dominique Brown is one example of someone with perfect credit. This 34-year old from Alexandria, Virginia has 25 revolving credit accounts and 14 installment loans. Most of her accounts are under 15 years old. She attributes her credit success to budgeting and her family’s rule of never going over 20% utilization in any billing period.
Another example is 50-year old John Ulzheimer from Atlanta, Georgia. His perfect credit score is the result of never missing any payments since 1991- the year he graduated college and began his career with Equifax. He has 13 credit cards and a total of 19 active and inactive accounts. John pays off his accounts in full every month and has never carried a balance.
There’s also 55-year old Jim Droske from Chicago, Illinois. He has six credit cards and a perfect credit score. He still uses the first credit card he ever opened in 1984, a Chase Sapphire. The fact that he works for a credit counseling company and is obsessed with his credit score has helped his case as well.
Now that you know how to get a perfect credit score, it’s time to get to work. If you’re unable to achieve a score of 850, however, don’t fret. Most of the time, a good or excellent credit score will give you all of the benefits you desire. Plus it’s more sustainable than a perfect credit score.