Perfect credit scores sound wonderful – but just how useful are they? It turns out that you won’t really get any benefit from those last few points, because lenders are prepared to offer their best rates to people with lower scores.
But, if you are going for perfect but can’t quite get there, it’s probably due to your average age of accounts. This is a component of your score that can only be maxed out by spending decades being a responsible credit user, so you’ll just have to wait. Learn more in our video with credit expert John Ulzheimer.
Hi, my name is John Ulzheimer and I’m a credit expert who contributes to CreditCardInsider.com. If you have any questions or comments please leave them in the comments section below.
Today’s question is this, and it comes from from Darren L. via YouTube: How can I get a perfect credit score? And in particular Darren is looking to get those last 50 to 75 points.
As you probably know most credit scores range from 300 on the low end and 850 on the high end with really anything above 750 putting you into that elite category. You’re going to get whatever you want from pretty much any lender at the best deal or best terms that their offering at that particular time.
So I’m going to caution you to think twice about trying any unproven or radical strategies to try to get those final 50 to 75 points because you’re already in a scenario where you’re considered elite by lenders. And normally what happens when people have scores in the 775 and 800 range and they start doing crazy things like closing accounts or opening new accounts or moving balances from one card to another and they realize afterwards that they made a mistake because their scores have actually gone down because while they may have helped one particular characteristic of the scoring system they’ve also penalized themselves in another particular characteristic so the net is actually working against them.
Most of the time people who have really high scores but imperfect scores, meaning that they don’t have any 850, don’t have an 850 because of their age. And it’s not their age in particular, not their date of birth how old they are, it’s how old their credit reports are. One of the components in both FICO’s and VantageScore’s credit scoring systems looks at some metrics regarding the age of the information on your credit report, and there’s two ways it’s done:
- The oldest account on a credit report, and that really sets the date of birth of your credit file.
- The average age of the different accounts that are on the report.
You’re going to want to have an older report because you’re going to earn more points in that category, and that category generally runs in the fifteen percent range, meaning that 15% of the points in your score, which by the way is that last 50 to 75 that you’re seeking, those are the points that are driven out of that category. So if you’re a younger person, 25 – 30 years old and you just happen to have a younger credit report as a result, you’re not going to max out that particular category that’s why you’re not going to have those perfect scores.
Generally speaking people who have scores in the really high 800 range, 840 – 850, are people who are older. Not necessarily because of their age, but because they’ve had credit for so long that the oldest account on their credit report might be decades old and the average age of all the different accounts on the credit reports may actually equal 20 or 30 years, and that’s when they’re earning that last little bit of points that gets them to that rarefied air of 840 and 850.
So again it’s great to strive for perfection on credit scores, however it’s really not necessary because you’re not going to get anything better from a lender at 850 than you would get at 800, and even down to 775. Most of the published interest rates for mortgages and auto loans max out, meaning you get the best deal possible already, in the 750 – 760 range. So again, go for it, but be very very careful not to do something silly and the next YouTube video you want me to do is how to recover for making a mistake trying to actually improve your credit score.
If you have any other questions pertaining a credit or financial topics, please submit them at CreditCardInsider.com or in the comment section below. Thanks for watching and have a great day.
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