Today, a perfect credit score is 850. Whether you ask FICO or VantageScore, this three-digit number is what to aim for if you want to be considered an elite consumer.
If you want to be a member of the 850-point club, you are not alone. Many Americans strive to earn the privilege to be a part of it. It is hard work, but the rewards are enormous. The perfect credit score will make life easier when you buy auto insurance, upgrade your credit cards, or refinance in Utah, Oregon, Oklahoma, or anywhere else in the country.
Knowing you have a FICO score or VantageScore of 850 can put you on cloud nine, but it offers nothing more than bragging rights. If you already have excellent credit, you do not need to aim for the 850 points anymore to enjoy the benefits of having it. Here is why.
The Perfect Credit Score Is Not Sustainable
Attaining a FICO score or VantageScore of 850 is extremely difficult, but staying at that level is even harder. One reported past due, and you can lose tens of points instantly.
Sure, you are not likely to commit terrible financial decisions if you can reach the 850-mark. However, understand that your credit score is bound to go down from that point. After all, where else can it go?
Hoping to take advantage of its benefits but not wanting to see it drop is ironic. Doing anything that can trigger a hard inquiry will inevitably tarnish your perfect credit score.
The Credit-Scoring Rules Change Constantly
What is considered perfect credit score now might be deemed less immaculate tomorrow. Credit-scoring companies, such as FICO and VantageScore, decide how high the ceiling can get based on agendas that matter to them.
A good example is the early iterations of the VantageScore, which used to score up to 990. The scoring model’s latest version moderated the number and made it just 850.
Beyond the highest available credit score itself, the algorithms of FICO and VantagScore evolve, too. They never stop experimenting on the combination of factors that work in hopes of increasing the accuracy of credit scores.
Furthermore, FICO score and VantageScore might not even matter when you buy a financial product. More often than not, creditors use industry-specific credit scores that include components average consumers do not know. Such credit-scoring models can categorize customers in different and broader ranges. In other words, you might think that you have an excellent FICO score, but your mortgage lender considers your creditworthiness just “very good.”
The Bar Is Lower Than You Think
You might be shocked to know that creditors could not less care if you have the perfect credit score. It would not make sense for any personal loan lender or auto insurer to weed out consumers with less than ideal credit, for individuals with perfect credit are too few to keep their business alive.
Besides, creditworthiness is only one of many factors a creditor thinks about when making decisions. If you have a credit score of at least 800, both FICO and VantageScore already see your credentials as excellent and are good enough to qualify for the lowest interest rates and premiums.
Chasing the perfect credit score is a fun challenge to achieve sound financial habits. From a practical standpoint, the ideal credit score is no better than a score with one point less.