People often ask me "what is the highest credit score that it is possible to achieve?" Before I answer the question, allow me to clarify one point. First, there are consumer credit scores and FICO credit scores. FICO credit scores are used widely by lenders when deciding whether or not a consumer will qualify for a loan. In this article we will be discussing FICO credit scores only. The range of FICO credit scores is from 300 to 850. Therefore, 850 is technically the highest credit score that is possible to achieve. However, there is not a single person alive today with a credit score of 850. Achieving a credit score over 800 is a calculated effort which takes years and years of flawless credit management. Consumers with credit scores over 800 almost always study ways to achieve these astronomically high FICO scores. Scores in the 800s do not just happen on accident.
I will give you some tips below on how to achieve the ever so difficult 800+ score but, first, let me caution you. I am about to make a statement which I, myself, find to be absurd. Still, absurd as it may be, it is the truth. You can actually be turned down for loans and, especially, for credit cards if your credit score is too high! Again, I know this sounds crazy, but I have examples to back up the statement. Check back next week for all the gory details and learn why having a score of 780 may actually be better than a score of 800+. In the meantime, if your desire is still to achieve the highest scores possible here are some tips:
1. Always pay your bills on time. One single 30 day late can derail your plans to obtain the ever so difficult to obtain 800+ score.
2. Keep your credit card balances between 0% and 1%. On a $10,000 card you would want to keep your balance between $0 and $100 to stay on track for an 800+ score.
3. Have the right mix of credit. Consumers with FICO scores above 800 have proven to the credit bureaus that they manage different types of credit accounts well. Having a mixture of credit cards, mortgages, auto loans, student loans, and other installment loans can help you to move closer to the astronomical 800+ score.
4. Length of credit. To reach an 800+ score you will need to show a long track record (10+ years) of maintaining an immaculate credit report. Beware - applying for new credit can lower the average age of your credit file.
Remember, these are tips on how to achieve a credit score over 800. However, if your current credit scores are currently anywhere from poor to average then your initial plan of attack may be slightly different from some of the tips above. For example, if you do not have enough credit established then it may be beneficial for you to open some new accounts as a way to help establish healthier credit scores even though opening the new accounts would lower the average age of your credit file. Remember, striving to achieve a high credit score is great - a wise investment in your financial future. However, don't drive yourself crazy trying to reach a hard to reach score of 800. Once you have a credit score of 780 everything else is just gravy!