How to get a perfect credit score

There are plenty of numbers to keep track of when it comes to your financial situation but one, in particular, dictates your borrowing power — that’s your credit score. This three-digit number generated by a complex algorithm predicts how likely it is that you will repay your debts. It also dictates what kind of interest rates you can get when borrowing money for something like a home or car. A better credit score usually means cost savings over the long-term.

With scores ranging from 300 to 850, it begs the question from all overachievers alike: what does it take to get an 850?

We will answer that question here, but also address a corollary question: is it worth it to go for the credit score gold?

When it comes to credit scores, how perfect do you need to be?

While credit scores affect your ability to obtain credit and what terms you’re offered, you really don’t need to stress about reaching 850. Why? “Because all else equal, there is no difference in what’s offered to a person with a 760 and someone with that amazing 850,” says Kimberly Rotter, Haven Life editor and consumer credit expert.

Furthermore, credit scores are fluid. They represent a snapshot of your creditworthiness at the moment the score is calculated. Credit scores change every time one of the calculated factors changes, including the passage of time.

For practical application, a 760 is as perfect as you need to be (in fact, many lenders make their best offers to customers with a 740 credit score).

Credit score ranges

Credit scores fall between 300 and 850 and as you might guess, where you fall on that spectrum is key. Ratings are given for each range of scores, which provides a convenient shorthand to know where you stand. It’s important to note that every lender sets its own ranges. There is no standard cutoff point for any credit score range. Here’s an example of how a lender might see your score:

760-850 Excellent
700-759 Good
640-699 Fair
550-639 Poor
Below 550 Bad

The most favorable terms on consumer credit products are offered to folks whose scores are in the excellent category. In other words, there is no advantage to having a “more excellent” score.

What is the average U.S. credit score?

We all want to know if we’re normal. So, what is a “normal” or average credit score? The answer to that burning question is 699. But that only tells part of the story.

Average credit scores vary significantly depending upon your age. According to Time, this is a break-down of average credit scores for each decade of life:

18-29 years old: 652
30-39 years old: 671
40-49 years old: 685
50-59 years old: 709
60+ years old: 743

Notice a trend? Your credit score generally improves as you age.

What does it take to get a perfect credit score?

Having an excellent (or perfect) credit score comes with enough financial perks to be well worth the effort to maintain a high score. However, if you’re set on achieving a perfect one, these steps will help:

Pay. On. Time. Every. Time. You can’t reach 850 with a single negative item on your credit report.
Keep your revolving credit balances low. “The closer you get to zero, the better, but don’t swear off credit cards completely,” says Rotter. You have to have and use credit to achieve a great credit score. “For a perfect credit score, your utilization will probably need to be under 2 or 3 percent (overall and on each card),” she suggests. “Also, your balance is reported on the statement closing date, not the payment due date, so if you use your credit cards throughout the month you may need to pay them off before your statement closing date to have lower utilization reported to the credit bureaus.”
Leave older accounts open, and avoid applying for new credit unless you really need to. As shown by the age/credit score chart above, it is unrealistic to expect a perfect score early in your financial life. “You may need to be purposeful about this if you want an 850,” says Rotter. “My score dropped considerably when my student loan aged off my credit history because my only other credit account was a three-year-old credit card.” Open accounts stay in your file indefinitely. Closed accounts in good standing are removed from your file after ten years.
Diversify the types of credit you have, but not artificially. Don’t apply for a car loan if you don’t need a car. Most of us acquire a diverse credit history naturally. You can, however, move things along when you get the opportunity. For example, apply jointly with your partner when it comes time to buy that car so that both of you get the benefit of the car loan on your credit history.
Apply for credit very sparingly. Credit inquiries don’t affect your score much, but they can keep you from that 850 score. Inquiries stop factoring into your score after one year, although they remain on your credit report for two years.

Go for the gold

Despite its near-unicorn status, a perfect 850 credit score is achievable, but fewer than 1% of American adults get there. If you do, you’ll join a very exclusive club. Here’s a great interview with two 850ers on Credit Karma that explains exactly how they did it.

Frankly, a perfect credit score is easy to get if you handle your credit wisely and have some patience. However, it’s a treasure that no one really needs to find. You’ll get real financial benefits if you simply strive to maintain an excellent credit score and that’s worth bragging rights any day.

Rachel Parisi is a freelance writer and attorney. She focuses her writing on insurance, financial services, and employee benefits. In her previous life, she served in the United States Air Force as a missile combat crew commander (think ‘Wargames’).