The highest possible credit score for any given credit scoring model is typically around 850. However, a score over 740 is still generally considered to be great and puts you in the range for the best interest rates on things like credits cards, mortgages, and cars.
For common versions of FICO and VantageScore,
the scale ranges from 300 to 850 and lenders typically adjudge anything above 720 excellent credit.
However, if you succeed in getting the highest credits scores possible, you are likely to keep it month after month. Now, these scores fluctuate because they are a snapshot of your credit profile.
The most widely-used FICO 8 scoring model and the VantageScore 3.0 are both on a 300-850 scale. Credit scoring company says about 1% of its scores range up to 850. According to VantageScore spokesman Jeff Richardson, fewer than 1% of its credit scores are perfect.
However, there is no magic to having perfect credits scores. Rather, getting a perfect score is a product of observing healthy credit habits like paying on time, using credit lightly, and having a long credit history, and rarely opening a new account.
As stated by FICO, those who achieve credit score perfection pay on time, use credit lightly, as well as have a long credit history and rarely open a new account.
As you would expect, older consumers are more likely to have high scores than younger ones.
However, scores fluctuate because they are a snapshot of your credits profile. Thus even if you succeed in getting the highest credit score, you have to keep it month after month.
Is It Important To Have The Highest Credit Score?
You’re probably wondering if having the highest credit score is such a big deal?
Even though having a high credit score is not a do or die affair, it is actually a great goal to aim for. This is an uncommon feat and takes a lot of credit history to attain an 850 score.
From the individuals surveyed by FICO, the average age of their oldest account was 30 years old. This means that it is quite hard for young adults to achieve such a high credit score because they do not have time on their side.
Hitting a credit score of 740 or higher is considered excellent. Thus reaching this score is a good goal, and can help you qualify for the lowest rates on a loan or mortgage.
Why is Having a High Credit Score Important?
While it is not mandatory to have an 850 credit score, it is important to maintain a high credit score. This makes it easier for you to buy a home, purchase a car, and even get a job.
our history of repaying your debts and making your monthly on-time your credit score displays payments. With an excellent or even a perfect credit scores, the lender assumes you are not a risky investment because they assume that you will treat new credit as you have credit in the past and repay it responsibly.
However, if your credit history shows that you do not pay your bills on time, some lenders may be reluctant to extend you a line of credit. They may be more concerned that this pattern will repeat itself, and they will run out of money.
Currently, most workplaces are increasingly looking to hire employees with high credit scores. The reason for this is because a good credit score demonstrates a history of financial responsibility.
With high credits scores you enjoy the following:
- Lower interest rates
- Gives you bargaining power
- Better car insurance rates
- Waived security deposits.
Who Determines Your Credit Score?
The two primary scoring models are FICO and VantageScore. FICO was created in 1989 by Fair, Isaac, and Company.
VantageScore was created in 2006 as a joint effort by the three major credit bureaus and was created to be a more consumer-friendly model of credit scoring.
FICO
FICO makes use of predictive analytics to take consumer information and analyze it. The company uses the following five factors for its credit scoring model:
- Payment history
- Total debt
- Credit history
- Types of credit
- Credit inquiries.
From these factors, FICO gives each individual a credit score. To generate a FICO score, you must have a certain amount of available credit.
On the whole, FICO is considered a credible source of consumer information. This is because FICO scores tend to be a reliable way of determining if someone will be able to repay a loan on time.
VantageScore
VantageScore was developed as a joint venture by Experian, Equifax and TransUnion. It calculates consumer credit scores just like FICO but in a slightly different way.
Unlike FICO, VantageScore uses six different categories in its credit scoring model, they are:
- Payment history
- Credit utilization
- Total balance
- Depth of credit
- Recent credit
- Available credit.
How to Get a Higher Credits Scores
To achieve a high credits score of 740 and above, do the following:
- Practice financial responsibility
- Make consistent, on-time payments
- Monitor your credits reports
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