Have you always dreamed of being able to say you have a perfect credit score â€” that all-important 850 on the FICO scale?
First, you should know that having an 850 credit score isnâ€™t really all that important. In fact, the real â€śperfect credit scoreâ€ť is closer to the 760 mark. Why? Because thatâ€™s about as high as your score needs to be to get the best treatment from lenders.
As of April 2021, approximately 23.3% of U.S. adults could say they earned a FICO score of 800 or above. Around 39.5% of U.S. consumers have a score between 700 and 799.
Despite the fact that the idea of â€śperfectâ€ť is something of an illusion, you should try to get the best score you possibly can. To give you some ideas of how you might do this, we profiled four people who have perfect (or darn near perfect) credit scores.
To keep things fair and consistent, we asked everyone to run their FICO score using the free Discover credit score tool. (This FICO score is based on data from Experian, one of the three major credit bureaus.)
What we found were four very different pictures of â€śperfectionâ€ť â€” and what it takes to achieve it.
34 years old
His score: 850
His credit stats: Dominique has 25 revolving credit accounts on his credit report and another 14 in the form of installment loans (as a REALTOR, he invests in real estate properties). Overall, the average age of these accounts is just under 15 years. Dominique has one hard and fast rule about how much available credit his family uses: â€śWe never go over 20% utilization ever in any billing period.â€ť Heâ€™s not kidding. His credit report shows a super low utilization rate of 2%.
How he uses credit: Dominiqueâ€™s credit card habits begin and end with his budget. â€śIn my house, we plan every dime that we make before the month starts,â€ť he said. â€śFor every purchase that we can, we put it on the credit card and just pay it off in full by the due date.â€ť Because he pre-plans his monthly earnings and spending, Dominique never worries about needing enough to afford a certain bill. And by using credit almost exclusively, he earns tons of rewards points.
His secret: Dominique credits his mother with instilling good financial habits in him at an early age. â€śShe would give me an allowance every two weeks for chores, and I had to manage my money for savings, fun and goals, just like an adult,â€ť he said. His mother also gave him three rules to live by: Save 10% of his money, always stick to a budget and never spend more than he earned.
Thoughts on hitting 850: â€śThis may sound weird to some, but to have an 850 credit score was not a milestone for me financially,â€ť he said. â€śI realized a long time ago that your credit score is only half the battle â€¦ cash flow management is what matters the most.â€ť
46 years old
Her score: 825
Her credit stats: Brenda has six credit cards, including three general-use credit cards (cards that can be used anywhere) and three retail store credit cards. Her credit history is 25 years old. She has a mortgage loan with a balance. And she has borrowed money to buy cars and to pay for tuition.
How she uses credit: Brenda still has the first credit card she opened at age 19, at her motherâ€™s urging. She admits it took her a while to get the hang of it. â€śI didnâ€™t always [pay my bill on time], and it was out of control a couple of times,â€ť she said. Nowadays, she uses her cards primarily to earn cash back, and pays them off every month. â€śMy parents gave me a set amount of money each month while I was in college and said if I needed more, then I needed to get a job, and so I did,â€ť she said.
Her secret: Even with a history of missed payments on her accounts, Brendaâ€™s score is incredible. She has time on her side there. Because she hasnâ€™t missed a payment over the past 15 years, those old negative marks have long been removed from her credit report. Negative marks will generally only stay on your credit report for up to seven years.
53 years old
His score: 830
His credit stats: Jim has nine credit cards and, when we spoke with him, he had a total of $7,720 on those cards. That balance seems pretty high, but because he has such a high total available credit across all his cards â€” $88,000 â€” his utilization rate is very low. Heâ€™s using only 9% of the credit he could be using. Jimâ€™s credit history is 32 years old, and the average age of his accounts is about 10 years.
His secret: To put it simply, Jim is the perfect credit customer. Heâ€™s never missed a payment and heâ€™s never had an account go to collections. At age 24, Jim was thrown into a job in finance, running the lending department at an auto dealer. He saw firsthand how important credit scores were when it came to getting the best finance rates from lenders.
â€śI read a lot about how credit and credit scores work, and still do,â€ť he said. With Jimâ€™s long credit history and perfect payment record, itâ€™s no wonder his credit is stellar.
How he uses credit: Jim is steadfast about what he charges â€” and what he doesnâ€™t. â€śI only use credit for bigger purchases that can not reasonably be paid for in cash,â€ť he said. â€śI do not charge for points, and always pay much more than the minimum payment due until it is paid off.â€ť
50 years old
My score: 850
My secret: Yes, I also have a perfect credit score. Like most of the people I spoke with for this piece, I have one huge advantage here: Iâ€™m kind of old! And that means my credit history is older than average â€” 22 years and counting.
Fortunately, credit scoring models take age into account when they calculate scores. The older your credit history, the higher you score will be. I also have a stellar payment history. I can say I havenâ€™t missed any payments since 1991, when I graduated from college and started working at Equifax.
My credit stats: I have 13 credit cards and a total of 19 accounts, active and inactive on my credit report. As of last month, I carried a total of $9,500 on those cards, with a total credit capacity of $133,000. That makes my utilization rate a low 7%.
How I use credit: I pay my cards in full each month and have never carried a balance. The beauty of not carrying a balance is that I never have to pay interest, no matter what my APR is. In fact, I have no idea what my APRs are, because theyâ€™re irrelevant to me. I donâ€™t shy away from applying for credit but only do so when I actually need it. I learned about credit from my years working for Equifax and FICO.
Hereâ€™s what everyone profiled in this piece has in common: None have avoided credit. In fact, they all have a TON of credit cards.
But they use them wisely. None have recent negative marks on their credit reports, and keep their monthly balances low relative to their total credit limit. Last but not least, they all have credit histories that are at least 15 years old, which makes up 15% of your FICO score alone. Keep in mind that, while your FICO score isnâ€™t your only credit score, it is the one used most by lenders.
What else makes up your FICO score? As you work to get your best score, keep this five-part breakdown in mind.
There are several ways you can access your credit score for free so you can keep on top of it. MagnifyMoneyâ€™s parent company, LendingTree, has a credit monitoring service available to anyone who wants to sign up. LendingTree uses the VantageScore model, which is slightly different than the FICO model but uses the same scoring system.