Perfect credit score: unrealistic, unnecessary
one of the lucky ones in the financial pecking order: Your credit score is high.
Really high. But what if you want perfection?
Get a hobby.
Having a high score is
great. But the slight difference between
very high and perfection just won't
make a difference in your everyday life.
A credit score is your
credit history at one point in time,
reduced to a single number. One of the
most popular credit-scoring models,
the FICO score, can range from 300 (very
bad) to 850 (solid gold). But don't
expect to see many 850s walking around.
"It's very rare to
be there," says Maxine Sweet, vice
president of public affairs with Experian,
one of the three major credit bureaus.
"I've never seen it."
While it's theoretically possible to
score 850, most high scores top off around 825, Sweet
says. "You can't get much higher," she says.
From a practical standpoint, that's just
as well, several credit experts say.
"There is no reason to go from 775
to 850, because you're still going to get the same rate,"
says Linda Sherry, spokeswoman for Consumer Action,
a Washington, D.C.-based advocacy group.
In practical terms, there seems to be no measurable difference between an 800 and 850.
"I have not noticed a difference" in terms offered to people with scores above the norm and those in the 800 to 850 credit score range, says Curtis Arnold, founder of CardRatings.com. In either event, "you're going to get treated to their best rate."
|If your credit score is high and you still want to nudge it up a few more points, try these six tricks of the trade:
Use credit sparingly
Even if you pay off your balances every
month, you may show a balance on the
day your history is pulled for a loan,
says Craig Watts, public affairs manager
with Fair Isaac Corp., the company that
pioneered credit scoring and developed
the FICO score. Creditors like to see
consumers using credit judiciously so
that they know consumers will have no
problems paying, he says.
Use a small fraction of your available
Credit scoring will examine how much
of your available credit you're using
and penalize you if the percentage is
The ideal? "As close
to zero as you can get," Watts
The limit credit bureaus want to see? Anywhere from 25 percent to 35 percent depending on the formula (and who you ask).
"A balance above 50 percent really begins to hurt you," says Steven Katz, director of corporate communications for TransUnion.
So keep it at 25 percent to be on the safe side. If you're shooting for that super-premium score, just remember: the lower, the better.
In years past, credit counselors used to tell consumers to close accounts they weren't using, especially if they were getting ready to apply for a mortgage or car loan. The reason: It was believed that lenders were leery of someone who could go out at any time and max out their credit and add a large pile of debt to their obligations.
|-- Updated: June 16, 2008