Over the past few years, the average credit score of American adults has been around 715. If you are a perfectionist, the score of 715 doesn't seem to be high enough, as most popular scoring models range up to 850.
But is it even possible to score 850 points? According to FICO. However, this is very rare. Less than 2% of the population have an ideal credit score. Even for me - a former NFCC certified credit advisor and a credit expert - 850 so far are out of reach. This year, my FICO 8 scored as high as 842.
Having said that, I hit 850 effortlessly, and neither should you. Why? Apart from self-improvement, there is no benefit to getting perfect scores. In fact, once you enter the 700s, your credit score has already qualified you for the best credit cards and loans on the market.
This embedded content is not available in your region.
The most widely used credit scoring model is FICO, ranging from 300 to 850. A perfect 850 credits are achievable, but most populations will never get that high score. According to the latest available data, only about 1.7% of U.S. adults have a FICO score of 850.
The group is most likely to achieve perfect scores for older people, as they have a longer credit history and higher financial stability, both of which help to build high scores.
Does this mean you have to wait for retirement to build a great reputation? Absolutely not!
In 2016, FICO highlighted a 43-year-old case, who was the youngest at the time, with a credit score of "Excellent" (800 or higher). Since then, I suspect many people in their 30s have joined these rankings, considering that the average credit score of American adults has risen by nearly 20 points since then.
As for myself, I am currently 42 years old and my score has been in the 800s for about 10 years. Of course, I have the advantage of a credit consultant in my 30s, and this work involves reviewing credit reports every day and teaching workshops on credit scores.
Again, getting a perfect 850 credit score is really no return. But if you insist on achieving perfection, there are some key ways to improve your chances.
According to FICO, "high achievers" (or people with a credit score of 795 and higher) have these characteristics:
No debt missed in their credit report
Credit card balance remains below 5% of its credit limit
The oldest average debt account has been 30 years
Over the years I have studied credit reports and scores, I have also chosen some tips to accelerate credit score growth. Depending on your situation, you may be able to copy some or all of them:
Become an authorized user: To start my credit profile, I asked a family member to add me to her oldest credit card as an authorized user. By doing so, my scores benefited from her positive history from her credit card.
Have my own card: After getting about 80 points in a year, I applied for my own credit card (there are now two in total).
Annual restrictions increase: I make sure to ask for my credit card addition at least once a year. I do this directly through the creditor's app to avoid the effort to ask for lowering my score. When my limit increases, it helps to lower my credit utilization and usually increases my score a few points.
Pay every two weeks: Last year, I paid off my credit card balance once a month and paid them off every two weeks, which kept my credit utilization low. This change helped me get about 8 points.
Having 850 credit scores doesn't benefit you in any tangible way. You don't need 850 to get the best loan interest rate and terms, nor do you need it to get a hard-to-get reward credit card.
For practical purposes, it is basically considered that anything above 800 can be considered perfect, but FICO even believes that a score as low as 670 is a good credit score.
So if you are worried about improving your score, try not to focus too much on a symbolic important number, such as the “perfect” 850. Instead, point out the plan you intend to use credit for the next year or two and check to see if your score or improvements in other areas are beneficial.
For example, suppose you want to qualify for a mortgage. You can qualify for a Federal Housing Administration (FHA) loan with a credit score of up to 500, as long as you save at least 10% down payment. For traditional loans, most lenders approve you at the lowest interest rate with a score of 760 or higher, and you don't have to pay for Private Mortgage Insurance (PMI) if your down payment is at least 20%.
Due to certain credit scoring models such as FICO automatic scoring and FICO bank card scoring, credit scoring models up to 900 are used, and credit scores exceed 850. However, these scores are not commonly used by lenders, and scores above 850 are not practically beneficial.
If the score range is as high as 850, it is considered that 780 credit scores are very good. A score of 780 or higher can help you get the best deals on your credit card and loan.
About 20% of people have a credit score of 800 to 850.