Have you ever wondered, ‘what is a perfect credit score?’ Well, it’s 850! That’s the top end of all the most commonly used credit scoring models, like FICO and VantageScore—which are the most commonly used credit scores in America.

But here’s the thing: you don’t need a perfect credit score. According to research conducted by credit bureau Experian, a score above 760 is likely to qualify you for the best interest rates. So, it’s good to aim high, but you don’t have to reach for perfection—in fact, by setting more realistic goals you’re more likely to be successful.

Credit score ranges and what they mean

Now, let’s break it down a bit. FICO puts credit scores into different ranges to give you an idea of how lenders might view them. Here’s how they categorize these ranges:

  • Poor: 300-579
  • Fair: 580-669
  • Good: 670-739
  • Very good: 740-799
  • Exceptional: 800-850

Keep in mind that different scoring models may have slight variations, but this breakdown gives you a general idea.

How credit scores are calculated

You might be wondering what factors influence your credit scores. Credit-scoring companies consider various factors from your credit reports when calculating your scores. The weight assigned to these factors may vary depending on the scoring model and the company doing the scoring. Here’s how FICO groups and weighs the different credit factors:

1. Payment history: 35%

2. Amounts owed, including credit utilization: 30%

3. Length of credit history: 15%

4. New credit inquiries: 10%

5. Credit mix: 10%

For more information on how credit score ranges and what they mean, check out our article Credit score range: what does it say about you?

The advantages of a high credit score

Having a high credit score comes with some major perks. Lenders see it as a sign of healthy credit and responsible credit usage. Here are some advantages you can enjoy with a high credit score:

1. Pay lower insurance premiums: Some insurance companies use your credit reports to determine insurance approval and premium rates.

2. Qualify for lower interest rates: Lenders typically offer the lowest interest rates to those with the highest credit scores, according to the Consumer Financial Protection Bureau.

3. Get approved for a higher credit limit or loan amount: A high credit score may make it easier to secure a higher credit limit on your cards or a larger loan.

4. Have more housing options: With a higher credit score, renting an apartment or obtaining a mortgage becomes easier.

5. Obtain utility services more easily: The Federal Trade Commission states that a good credit history makes it simpler to acquire utility services.

6. Get a cellphone without hassle: Good credit may reduce the need to prepay or pay a security deposit when opening a cellphone account.

How can you achieve a perfect credit score?

Right about now, you’re probably wondering how to reach a perfect credit score. Here are some of the good financial habits that can help to maximize your credit score.

1. Paying bills on time: Approximately 96% of those with a FICO score of 800 or higher consistently pay their credit accounts on time.

2. Keeping credit utilization low: People with high scores tend to use only around 7% of their available credit. Keeping balances low can positively impact your score.

3. Avoiding excessive credit checks: While occasional hard inquiries are unavoidable, applying for multiple lines of credit within a short period might negatively affect your score.

4. Keeping old accounts open: Individuals with high FICO scores tend to have accounts that have been open for an average of 11 years. Remember to stay in touch with your lender because an inactive account could be closed.

In a nutshell, a perfect credit score is generally considered to be 850, but having a score above 760 can already qualify you for the best interest rates. So, keep an eye on your credit, practice healthy credit habits, and enjoy the advantages of a good credit score!