The highest credit score you can achieve (under perfect circumstances) is 850 using the FICO model. However, any score above 740 is generally considered excellent and puts you in the range of the best interest rates on things like credit cards, mortgages, and auto loans.
The highest possible credit score
Let’s back up for a minute. As we have mentioned, having anything over 740 points is considered excellent. This is because credit scores generally fall into poor, fair, good, very good, and excellent ranges. The table below outlines these various credit score ranges. As you can see, Excellent is generally defined as anything above 800, while a good credit score falls between 670 and 739.
What do credit scores mean?
Three-digit numbers called credit scores represent how the models break down your credit situation. This number is calculated based on the information in your credit report from a given credit bureau, since each one has its own report and score. This report summarizes how you have used the credit. For instance, assuming you’re purchasing a $300,000 home with a 30-year fixed home loan and you have great credit, you could wind up paying more than $94,000 less for that home over the existence of the advance than if you had awful credit.
Each moneylender is unique
Any moneylender or MasterCard organization might have their meaning of a decent financial assessment too. For instance, a moneylender could support candidates with FICO assessments of 680 or higher for a credit. Another may be more specific and just pass those with scores of 750 or higher. Or on the other hand the two banks can offer acknowledge to anybody for a score of no less than 650, yet accuse buyers of scores under 700 a higher loan fee.
Credit Utilization Ratio
This ratio is the amount of credit you have used divided by your total available credit limit. If you have credit cards with a combined credit limit of $8,000 with balances of $3,000, your credit utilization ratio is 37.5%.
Having a good credit score requires a utilization ratio of 30% or less, and 10% is even better. Following the example above, to reach 10% with a combined credit limit of $8,000, your balances must remain between $800 and $2,400.
Credit age
This factor represents how long you have used your credit. More accurately, it is the age of the oldest account, the newest account, and the average age of all the accounts in your credit files. Let’s say a previous account was close and remove from your history, and the next oldest account is 10 years “younger.” Well, your credit report will show your credit age base on this account, not the one that was delete. In other words, the credit age does not express the amount of time that you have used credit, but the time of the current accounts in your reports. In this sense, having a good credit rating in terms of this factor requires that an account on your report be at least six months old.
Credit mix
The credit mix represents how many installment and revolving accounts you currently have. Installment accounts are loans, such as mortgages, car loans, or personal loans, with a fixed monthly payment for a set term (number of months or years). Revolving accounts are credit cards and lines of credit with an overall credit limit that you can collect against. Lenders want to see that you can handle and are familiar with both types of accounts, so a good mix of both makes for a better credit score.
How do I get my credit scores?
You can get your credit score from a variety of providers, many of them online and for free. You can also get your full report from each credit bureau for free once a year at AnnualCreditReport.com. These reports do not include your credit score. Credit.com offers you your Experian Vantage Score 3.0 credit score for free for life. Knowing your score lets you know what your credit score is and can help you determine which credit cards you’re most likely to qualify for and which loans and mortgages you might be able to get.
You may be wondering, “Is a perfect credit score really necessary when there’s such a wide range from ‘excellent’ to ‘perfect’?” Well, the truth is that no. Although getting an 850 is a great goal, it may not be realistic. Additionally, falling into the “Excellent” rank can often reap the same benefits as having a perfect score. 850 is theoretically the highest possible credit score, but, for example, only 3% of Credit Sesame members have a score higher than 800 (2018). Also, as we saw in the data presented above, only 2% of people in the United States under the age of 30 have a FICO score greater than 780. In other words, a credit score of 850 is a great goal, but not it is common.
