Suze Orman Says You Don't Need a Perfect Credit Score. Here's the Number to Aim For

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  • Credit scores range from 300 to 850 under the FICO scoring system.
  • A perfect credit score of 850 isn't necessary.
  • You'll get all the same benefits with a score of 760 or higher.

You don't need to go for that elusive 850.

For the most part, a higher credit score is better for you financially. As your credit score goes up, there are quite a few ways it can benefit you, including lower interest rates on loans and credit cards with more perks. But this doesn't mean you need the absolute highest possible credit score.

Suze Orman recently talked about this on her podcast, "Women & Money." A listener asked if it was smart to pay off her car loan in full or keep it so it could help her credit score, which was already a 780. Orman told her to pay off the car loan, because it doesn't matter if you have a 780 or an 850 credit score. In fact, she says that what you really want is a score of 760 or higher. Here's why she's right.

Why a credit score of 760 or higher is ideal

When lenders check credit scores, they group scores into ranges. Your exact credit score isn't what's important -- it's the range your credit score fits into.

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Let's say you're applying for a mortgage. Lenders normally base your interest rate on your FICO® Score (the most widely used type of credit score) using the following score ranges:

  • 760 to 850
  • 700 to 759
  • 680 to 699
  • 660 to 679
  • 640 to 659
  • 620 to 639

If you have a score of 680 or 720, then increasing your credit score can help you secure a lower mortgage rate. But once you have a score of at least 760, you're in the lowest rate category. You won't save any more on interest by getting to a score of 800 or 850.

We used mortgages as an example, but it works the same way with other financial products. You can qualify for the lowest rates on auto loans with a credit score of 720 or higher. A score of 720 or higher is also enough to qualify for any of the best credit cards.

Just to clarify, a high credit score never guarantees approval for anything. Lenders also look at other factors, as well. For example, if a lender doesn't think your income is enough for the mortgage you want, it could deny your application no matter what your credit score is.

Orman is correct that the credit score to aim for is 760 or higher. Once you have that, you're good to go. Your credit score will be high enough to qualify for any financial product and to get you the lowest interest rates. Keep in mind that this recommendation is for your FICO® Score, specifically. Some free credit score tools provide other types of credit scores, like your VantageScore, which can be much different.

How to raise your credit score

If your credit score hasn't quite reached that sweet spot yet, here are a few tips you can follow to raise it:

  • Always pay on time. Your payment history is the single most important factor in your credit score. If you always pay your credit cards and loans on time, that alone can help you get a high credit score.
  • Use less than 30% of your credit limit. For example, if your card has a credit limit of $10,000, keep the balance below $3,000 at all times. This is considered a good credit utilization ratio, which helps your credit score.
  • Don't apply for too many credit cards at once. The number of credit cards you have doesn't affect your credit score, but opening multiple credit cards in a short period of time can. While you're building credit, only apply for one or two credit cards per year, at most. Once you have a high credit score, then you can relax and get more, if you want.

Building your credit score is a good goal, but only until a certain point. Once you've reached a 760 FICO® Score, you don't need to worry about getting it any higher. There aren't any new high credit score perks you're going to unlock after that, so maintaining your score is all that's needed going forward.

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