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As long as you pay your bills on time, keep your credit card balances low, and only open new credit accounts when you need to, you’ll have a perfect credit score, right?
Unfortunately, this simply isn’t the case. While doing all of those things will almost certainly result in a very good credit score, it’s surprisingly difficult to achieve a perfect credit score.
The FICO credit scoring formula produces scores ranging from 300 to 850. However, just over 1.5% of U.S. consumers have a perfect 850, according to the latest data from major credit bureau Experian.
Why is it so hard to achieve a perfect credit score?
The short answer is that achieving the elusive 850 requires a “perfect storm” of information on your credit report. Unfortunately, since the FICO formula is a closely guarded secret, we don’t know exactly what that information is.
All we know are the five general categories of credit scoring information and their relative weights:
- Payment history (35% of FICO® Score): Paying your bills on time and avoiding collections and adverse actions.
- Amounts you owe (30%): Keeping your balances low relative to your credit limits and initial loan balances.
- Length of credit history (15%): Time-related factors including the age of your oldest credit account, ages of individual accounts, and age of your average credit account.
- New credit (10%): Newly opened accounts, as well as credit applications you’ve recently submitted.
- Credit mix (10%): The variety of credit account types that appear on your credit report.
To be fair, just understanding these categories can be enough to get your score into the “exceptional” range. For example, you know that “amounts you owe” is an extremely important category, so you can make an effort to keep your credit balances very low relative to your credit card limits.
However, we don’t know exactly what credit utilization, combined with all of the other factors, will produce the combination of positive information needed for a perfect score. And that’s why it’s so rare.
Habits of people with perfect FICO® Scores
There are some characteristics of people with perfect credit scores that probably won’t surprise you. For example, the average person with an 850 FICO® Score has never had a delinquent credit account.
On the other hand, here are some statistics you might find surprising:
- The average person with an 850 FICO® Score owes more than $3,000 on their credit cards and has about six active credit card accounts. However, this represents just 4% of their total available credit.
- In addition to nearly six traditional credit cards, the average consumer with a perfect credit score has about four retail (store) credit cards open.
- The average person with an 850 FICO® Score has a nearly $246,000 mortgage balance, $19,296 auto loan balance, and owes $17,545 on other loans.
- People with perfect scores tend to have long credit histories. Baby boomers and Generation X members (consumers about 44 years old and above) make up 92% of those with perfect scores.
The key takeaways are people with perfect scores keep their debts low and pay all their bills on time. And they use their credit, with both installment loans and credit cards.
Here’s the good news
One important thing to know is that other than for bragging rights, there really is no practical reason to pursue a perfect 850. In fact, with a score above 780, you should be able to qualify for the lowest interest rates and best credit offers lenders have available.
To give yourself a bit of cushion (since applying for credit can make your score go down a bit, temporarily), a score of about 800 could be worth aiming for — and this is far more achievable, as more than 20% of U.S. consumers are in this range.
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