You may not realize that you have more than one credit score, or that credit card companies and other lenders use different credit scoring models. Generally speaking, the highest credit score in most consumer credit scoring models is 850, although there are less frequently used scoring models that go as high as 900.
The old VantageScore model went as high as 990, but under the new VantageScore 3.0, the highest possible credit score is 850. VantageScore is the credit scoring system created in cooperation with the three major credit bureaus (Experian, Equifax and TransUnion).
In addition, banks, insurance companies and other types of lenders may also have their own proprietary credit scoring models. It’s impossible to know exactly how many types of credit scores actually exist — or the actual “highest score.”
That said, people with high scores get the best credit terms and rates on financial products, so your numbers do matter. Here’s what you need to know to get — and maintain — the highest possible credit scores.
How Are Credit Scores Calculated?
It’s impossible to give a formula for all the different credit scores, because there are so many proprietary credit scoring models in use. However, the two main scoring models, FICO and VantageScore 3.0, do make their scoring criteria publicly known.
Information taken from your credit report is used to calculate credit scores. FICO considers the following criteria:
- Payment history, especially late payments
- Account balances
- Your credit history and how long you’ve had credit
- The different types of credit accounts you have
- New credit and new credit applications
The VantageScore 3.0 also looks at all of those criteria, but weighs these factors differently in determining your credit score.
There is some information included in your credit reports that doesn’t factor into your credit scores, like hard inquiries that are more than a year old and less than two years old. This may be used by credit card companies to determine your credit limit or which credit card offers they’ll approve you for.
How Can I Check My Credit Scores?
Under the Fair Credit Reporting Act, you’re entitled to get a free credit report each year from each of the three main credit bureaus. You are not, however, entitled to free credit scores — you can request your credit scores from the bureaus, but you’ll pay a fee for them.
One of the easiest ways to get a free credit score is through a credit card company. Many major credit card issuers make credit scores available to their cardholders.
There’s another way to get free credit scores, but you need to have applied for some type of credit, such as a mortgage loan or credit card, in order to do so.
Under federal law, a mortgage lender must show you the credit scores pulled during the application process. Other types of lenders must also give you the credit scores used in the decisions if you were denied credit or given less favorable credit terms because your scores fell below the lender’s acceptable credit score range.
How Can I Get the Highest Credit Scores Possible?
There’s no magic formula for achieving the highest score. A perfect credit score based on one scoring model and one credit report may not translate into a perfect score with another because of the different weighting formulas and algorithms.
That said, there are definitely steps you can take to get the best credit scores possible.
Make your payments on time
Both FICO and VantageScore 3.0 give the highest weight to your payment history, so always pay all your bills on time. This doesn’t just apply to loans and credit card accounts, either. If you have any debt that winds up as a collection account — a medical bill, for example — it remains on your credit reports for seven years, even if you pay it off, and can drag down otherwise high credit scores.
Minimize your overall credit card debt
Credit card debt affects both your total amounts owed and your overall credit utilization, both of which contribute to credit scores. From a personal finance perspective, it’s always best to pay your credit card statement balance in full each month to avoid debt, but it’s also a good idea when it comes to maintaining the highest possible credit scores.
You might improve your scores by having multiple credit cards — provided you don’t max them out or carry a balance — so you have a high available total credit limit and low utilization. You can also decrease your credit utilization rate without opening new credit accounts by asking for a credit limit increase. In some cases, being added as an authorized user to a family member’s credit card may also give you more available credit, lowering your credit utilization, and ultimately, increasing your credit scores.
Have different types of credit accounts
There are two major types of credit accounts. There’s revolving credit, which includes ongoing loans like credit cards, where you can spend and pay each month. The other is installment loans, which include personal loans, car loans, mortgages, and other situations where you borrow a large sum of money up front then pay it back over time in installments. To get the highest possible credit scores, you need both of these credit types on your credit reports.
Keep in mind that you don’t need to go out and buy a new car just to boost your creditworthiness with an installment loan. If you’re looking to build credit and don’t have any installment loan accounts, you can use a credit builder loan to add positive payment history to your credit reports and increase your credit mix.
If you’ve had an installment loan in the past and paid it off satisfactorily, it will count toward a healthy credit mix while it remains on your credit reports. The idea is to demonstrate you can manage multiple types of credit accounts over time.
Don’t apply for unnecessary new credit
Credit inquiries affect your credit scores, but not all credit inquiries are treated the same by credit scoring models.
There are two types of credit inquiries: hard credit pulls and soft credit pulls. A hard credit pull is recorded on your credit reports when a lender requests one of your credit reports to make a lending decision. If you apply for a car loan or mortgage, for example, and the bank pulls your credit, it’s a hard inquiry that may impact your credit scores.
Soft credit pulls are not made in combination with a credit application and don’t affect your credit scores. If you’ve ever received pre-approved credit card offers, the credit card company likely did a soft credit pull to see if your credit reports met the approved criteria for a particular card offer.
Other examples of soft credit inquiries include an employer checking your credit as part of a background check, or you as an individual consumer requesting a free credit report. Home and auto insurers may also do a soft credit inquiry to determine your rates.
If you shop around for a mortgage, for example, you may end up with multiple hard inquiries from multiple financial institutions. Luckily, newer credit scoring models know people rate shop on these types of loans and reduce the impact of the inquiries by grouping related inquiries together.
This same grouping does not apply to multiple credit card applications, though. When you apply for a credit card, you’re saying you want the account open if you’re approved, even if you don’t activate the card.
In general, you’ll likely end up with the highest credit scores when you haven’t applied for any new credit in the past year. Hard inquiries stay on credit reports for up to two years, and impact credit scores for one year.
How Many People Get the Perfect 850?
Actual credit score distribution data is hard to come by, but according to FICO, about 1 percent of Americans have a perfect score at any point in time. It’s a waste of time to obsess over the perfect 850, because for all practical purposes, a FICO credit score of around 800 or higher (which includes about 15 percent of the population) works the same as “perfect credit.”
In other words, people who reach that level of excellent credit, even if it isn’t a perfect credit score, will qualify for the lowest interest rates and best credit card offers. Perfect credit scores won’t save you any more money than excellent credit scores; it’s really just a matter of bragging rights and personal satisfaction at that point.
Do Perfect Credit Scores Really Matter?
Ultimately, perfection doesn’t matter nearly as much as having credit reports that reflect several years of managing credit wisely. If you have a FICO Score 8 above 740, chances are good that you’ll qualify for the best credit card offers, lowest interest rates and best rewards programs offered by most credit card companies.
There’s very little difference to lenders between, say, an 800 FICO Score 8 and the perfect 850. People with excellent credit scores are likely to get the best possible terms on any loan or credit card account, provided there’s enough credit history and income to back it up.
Is there any advantage to perfect credit scores? Those extra points can offer a bit of protection if you happen to miss a payment or ding your score with high credit utilization or multiple credit inquiries. But it’s easier to avoid those unnecessary penalties in the first place and focus on managing your credit responsibly.