Credit scores range from 300 to 850. But anything above a 780 will help you score the best terms.
Both FICO scores and VantageScores range from 300 to 850. But having either a credit score of 300 or 850 is very rare. The competitive among you might be tempted to chase after the elusive perfect 850. But rather than waste your time and effort chasing a perfect score, make your goal a score that’s good enough to help you get what you want at a price you can afford.
Scores between 781 to 850 are considered excellent VantageScores. For FICO, this range is called “exceptional” and is defined as 800 to 850. However, 740 to 799 are “very good” FICO scores. It is my belief that a score of 781 will get you the same benefits as an 850 score on either scale.
An excellent credit score will earn you better terms when you go to borrow money. This will likely come with lower interest rates, of course, but can also mean reduced down payment requirements and longer terms. And while your score is generally not viewable to others who may review your credit reports, they will be able to see that you are checking all of the right boxes.
See related: What is the most accurate credit score?
How to get an excellent credit score
Just follow the basics. Pay your bills on time, every single time. And keep an eye on your how much of your credit you are using. While utilization below 30% is generally recommended, those in the upper echelons of credit scores keep this percentage in the single digits.
It’s also important to have a healthy mix of secured and unsecured installment credit and revolving credit. But remember that accessing new credit to help your mix may temporarily bring your score down. This is why you should be cautious when applying for new credit. If you’re hoping to boost your score, only apply for necessary credit – not just because you want to. And do your homework as best you can to figure out if you’ll be approved.
Finally, don’t close old accounts unless you have a very good reason because credit age is important to your score.
See related: What is a good credit score?
FICO high achievers
A few years ago, FICO came out with the term “FICO high achiever.” To better understand those who achieve this highest scoring accolade, FICO looked at credit trends from the high achievers and found, among other factors, the following:
- They have, in total, seven credit card accounts, both open and closed.
- They rarely open new accounts.
- 96% never missed a payment.
- They have balances on four cards or loans on average.
- They use only about 7% of the credit available on their credit cards.
In a nutshell, high achievers pay their bills on time, keep credit utilization low and open new accounts rarely.
I do recommend reviewing your credit reports on a regular basis, even if you are not in the market for new credit. This enables you to spot any issues of concern and take care of them quickly before they become a problem and bring down your score. And it is valuable knowledge to have and review, even if you don’t find any mistakes.
Remember to keep track of your score!