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A Perfect Credit Score: Is It Possible?

By Matthew Frankel, CFP® – Oct 5, 2014 at 2:02PM

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There are millions of Americans with very good credit, but is a perfect credit score a realistic goal?

If you check your FICO credit score, which is the method most commonly used by lenders, you'll see a number between 300 and 850. Higher scores are better, and scores in the range of 500-800 are most commonly seen.

Source: via flickr

Now, if you just want "good credit," it's not too hard to figure out how to get there. Pay your bills on time, don't borrow more than you can afford to pay back, and don't max out your credit cards, and your score should definitely fit into the "good" range.

But what if "good" isn't enough for you? Is there such a thing as a perfect credit score? And if so, how can you get there?

Is there such a thing?
Well, yes, but very few people are even capable of achieving it. According to one report, just 0.5% of consumers could theoretically achieve an 850, but the actual number of consumers who do is very small. In other words, for the vast majority of consumers, an 850 isn't possible -- even if they do everything right.

In fact, a perfect 850 is so rare that those who do have a perfect score often are the subject of news stories.

One person who achieved a perfect score shed some light on how he got there. He said that in his pursuit of a perfect 850, he watched his credit score like a hawk, obsessed over his credit card statement and reporting dates, and almost never applied for new credit. He also kept a small (non-zero) balance on his credit cards and says that paying down his mortgage was a big factor for his score.

Know what your score is made of
The actual FICO scoring formula is and always has been a closely guarded secret. Plus, the formula is updated fairly regularly, making it impossible to pinpoint the impact of any individual piece of information on your credit report.

However, the Fair Isaac Corporation, the creator of the FICO scoring model, does shed some light onto the relative weights of certain types of information.

The largest part of your credit score is "payment history," which makes up 35% of your total score. And this category is simple enough to master: just pay your bills on time and consistently.

Some of the other categories are not so straightforward. For example, "amounts owed" which counts for 30% sounds like your score will suffer if you have high loan and credit card balances, however this is not necessarily true. "Amounts owed" refers to the amount of your balances relative to your available credit.

For instance, if you have $2,000 in credit card debt and have total credit limits of $5,000, you are using 40% of your available credit. On the other hand, if you owe $15,000 in credit card debt, but have combined credit limits of $75,000, you are only using 20% of your available credit.

The rest of your score comes from "types of credit used" which counts for 10% and gives you points for having a healthy mix of different credit types, such as a mortgage, auto loan, credit cards, etc. "New credit" takes into consideration how many of your accounts are new and how many times you have applied for credit recently, and makes up 10% of your score.

And finally, "length of credit history" accounts for the remaining 15% of your score and takes into account such factors as the average age of your open credit accounts and the age of your oldest credit account. For a more detailed description of what goes into each category, check out

Learn from the habits of "high achievers"
In addition to making public the weights of different categories, the FICO people also share some statistics about their highest achievers. These aren't people with "perfect" scores, but those in the upper tier with scores above 800, well into the realm of "excellent" credit.

For example, those consumers with the highest scores tend to keep their accounts open for a while. The average account age is 11 years, with the oldest account opened 25 years ago. And, the average high achiever uses just 7% of their total credit limit, and 96% have absolutely no late payments on their credit history.

Don't focus on being perfect
The best piece of advice I can give is that you shouldn't get too hung up on achieving a "perfect" score. Sure, there are some bragging rights to be had by seeing an "850" on your credit report, but there are few other benefits.

A credit score in the 800s will put you in the top 13% of U.S. consumers and will allow you to qualify for pretty much anything you want to buy, provided your income and employment situation are sufficient.

So while it makes complete sense to aim for a very high score, trying to achieve a "perfect" credit score is a very difficult goal, and one without many tangible benefits.

Matthew Frankel has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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