What is a perfect credit score? And more importantly, do you need to aim for the highest possible number to ensure you can always qualify for a loan?
The value for achieving the perfect credit score depends on the rating scale being used. For instance, scores for the most widely used rating system, which is the FICO rating scale, range from 300 to 850. So, 850 represents the top score for FICO.
VantageScore, a credit rating product that was created by the three major credit bureaus (Equifax, Experian, and TransUnion), ranges from 501 to 990, so 990 is the top number to achieve with this rating system.
So, is the highest score just a theoretical target or is it possible to attain?
There are people who do achieve a perfect score in both systems – but it is a rarity.
Fair Issac Corporation, the company behind FICO scores, reports that about one-half to one percentof the population ever reach the top score.
What does it take to get the highest possible credit score?
Age, for one. Folks who hit the top number have typically been managing good credit for more than 20 years. This means they have no collection accounts, repossessions or bankruptcies – and haven't missed even a single payment in the last seven or more years.
They generally have a good mix of credit, including installment loans and maybe three or four active credit cards that they use regularly, while staying well below their credit limit. In addition, they have likely been carrying at least a couple of their cards since they were in their early twenties. Credit inquiries are minimal, as well.
Should you aim for the perfect score?
The good news is that the answer is... No. Attaining a perfect FICO score is not that important if you are already hovering around the high 700s or low 800s. It won't make a difference in getting getting loans or good interest rates.
A score of 800 is considered an excellent accomplishment for those who work hard on their credit. And even that's elite, as less than 15% of the population reaches this level, In reality, if you have a FICO score over 760, you are in an excellent position and will already get the best rates available.
Keep in mind that lenders look at more than just your credit score to make decisions. They look at your entire credit report and evaluate your history to determine your creditworthiness.
To learn more about credit scores, reports and the reporting bureaus, click on the article links below.
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