If you’re applying for a new home, you may be worrying about your credit score more than ever. But if you check your credit score too much, will your credit go down?
Also is there such thing as perfect credit, and how do you get better credit? There are many factors that can affect your credit. Keep reading to learn more.
What Is The Highest Credit Score?
The highest credit score in most consumer credit scoring models is 850. However, some other scoring models that are less used can go up to 900.
VantageScore is an older credit scoring model that used to go up to 990, but now it only hits 850. VantageScore was created with three major credit bureaus (Experian, Equifax, and TransUnion).
Insurance companies, banks, and other lenders may even have their own credit scoring models. We don’t know exactly how many scoring models exist, or what the actual highest score is.
However, if you have a high score, you’re going to get the best rates on products. So your credit score really does matter. Here’s how you can make your credit better.
How Many People Get the Perfect 850?
We can’t tell how many people exactly have a perfect 850, but according to FICO, about one percent of Americans have a perfect score. So don’t obsess over a perfect 850, because actually a score around an 800 or higher (which is only 15 percent of the population) is considered the same as “perfect credit.”
So basically, people who get excellent credit, even if it isn’t a perfect credit score, will get the lowest interest rates, and best credit card offers. You won’t necessarily save any money with the perfect credit score, it’s more like bragging rights, like owning a Tesla or black card.
How Are Credit Scores Calculated?
There isn’t really a formula for all credit scores, but there are two main scoring models. These models are FICO and VantageScore 3.0, which make scoring criteria publically known.
Here are some things that factor your credit score. Factors like payment history and late payments. As well as your account balances and credit history.
The credit accounts you have including new credit application are all taken into consideration.
FICO for example measures credit weighs various factors. Your payment history plays about 35 percent of your score, the amount you owe factors 30 percent.
Your history takes about 15 percent. While 10 percent is given to new credit and credit used.
How Can I Check My Credit Scores?
The Fair Credit Reporting Act says you are supposed to get a free credit report each year from each of the three credit bureaus. Credit card companies are the easiest way to get a free cred score.
A mortgage lender must also show you your credit score during your application process under federal law.
There are also many websites and services like Credit Karma, that will check your credit for you for free. These programs will also send you e-mails letting you know if someone is looking at your credit score and give you tips on ways to improve your credit.
How Can I Get the Highest Credit Scores Possible?
While there is no magical formula for perfect credit, there are a few things that affect your credit. You want to make sure you’re making all of your payments on time. Late payments affect your credit.
You also want to make sure you don’t have credit card debt, which goes hand in hand with late payments. Credit card debt affects your credit. So make sure you pay your credit card balance in full each month.
Having multiple credit cards, and not maxing out those cards, is another way to improve your credit. Just make sure you always have a balance on these cards. Do not get rid of a credit card once you pay it off.
You also want to have different credit accounts, such as revolving credit which includes ongoing loans and credit cards. There’s also installment loans like mortgages and car loans.
Maintaining Good Credit
Instead of focusing on perfect credit, make sure you maintain good credit. Some things that help keep good credit is making sure you don’t close old credit cards. Always keep a credit balance, and don’t close a credit card because you paid it off.
Also, manage your debt. There’s a chance you may have debt you weren’t even aware of. Get on top of that and make a plan to pay off that debt.
You also want to make sure you keep your credit card balances low. This means paying off as much as your credit card as you can each month, and not just the minimum.
Also, limit how many new credit applications you apply for. Every time you apply for new credit, this affects your credit score.
Keep an eye out on your credit report. See what’s affecting your credit, and work on making that better.
Do Perfect Credit Scores Matter?
Honestly, precision doesn’t matter as much as having reports that show you know how to manage your credit well. If you have a FICO score above 760, you’ll be able to qualify for the best credit card offers, best rewards, and lowest interest rates.
There’s not a huge difference to lenders if you have a 780 or 800 credit score. People with excellent credit get the best terms, as long as there’s enough credit history and also income to back this up.
The advantage of having a perfect credit score is protection if you miss a payment or if you have multiple inquiries about your credit. Its easier to avoid this if you properly manage your credit from the beginning.
Improve Your Credit Today
Now you know what is the highest credit score, realize it’s not important to have perfect credit, rather good consistent credit. Make sure you’re watching your credit score and doing everything in your power to improve it.
While having an 850 credit score is nice, so is consistently having good credit. For more information on your credit and to find out if watching your credit is hurting your score, check out this article.