How do you get an 850 credit score

For many consumers, a perfect credit score is like a four-leaf clover. You know it exists. It’s just rare.

The FICO credit score model ranges from a low of 300 to a high of 850. Just 1.5 percent of scorable U.S. consumers earn an 850 as of this past April, according to Ethan Dornhelm, vice president of scores and predictive analytics at FICO.

Each credit bureau report generates a score depending on the model used. The most widely used is FICO. So you can have more than one credit score depending on the credit file searched and the version of the scoring model used. I keep a constant watch on my scores, taking advantage of the many ways to view them for free. By the way, the scores given to consumers can differ from the ones used by lenders.

This month, I logged on to Discover Credit Scorecard (creditscorecard.com) to view my free “FICO 8″ score, which is based on my Experian file. Generally, my numbers fall in the low 800s.

And it was: a perfect 850 score.

Thinking it might be an aberration, I pulled my score at freecreditscore.com, which uses the same model and credit bureau. Another 850.

I logged in to one of my bank accounts. This lender uses the “FICO 9″ model. Still 850. At my credit union, ditto, but it pulls information from Equifax.

Four checks. My four-leaf clover.

For a second, I thought I heard the “Aaaahhhh” of an opera singer.

A reader named April from Millville, N.J., wrote to me recently, fretting about her inability to reach this pinnacle.

“I have a credit score of 800,” she wrote. “I pay my bills in full and on time every month. I have no debt except a mortgage that we pay extra on every month. What in the world allows someone to have an 850?”

Let’s take a deep dive into my Discover report, which nicely lays out the five categories affecting your FICO score, with specific explanations that can push you to perfection. Here’s what was listed, starting from least important to most vital.

Credit mix: The scoring model looked at 16 accounts, which included some installment loans (mortgages, auto loans, etc.) and revolving accounts (credit cards). A mix of credit shows you can handle various types of debt, and this counts for 10 percent of your score.

Length of credit: My oldest account has been open for nearly 25 years. A long credit history accounts for 15 percent of your score.

Recent inquiries: When you want to borrow, a lender will pull your credit report, and that’s called a “hard inquiry.” In the past 12 months, I haven’t applied for any new credit. Not actively seeking to use other people’s money demonstrates a lower credit risk. New credit determines 10 percent of your score.

Revolving utilization: The amount of debt you owe determines 30 percent of your score.

I pay my credit cards off in full every month. But, even so, I also make sure that, during the billing cycle, I don’t spend anywhere near my available credit limit.

You’ve probably been told, including by me, that you should keep your utilization of your credit limit to no more than 30 percent. However, that’s just a general target. FICO says there’s no specific threshold when utilization begins to negatively affect your score. But analysis has shown that consumers with FICO scores over 800 use an average of just 7 percent of their available credit.

In the period in which my score was assessed, my revolving utilization was just 1 percent.

Missed payments: This is the big dog. Your payment history accounts for 35 percent of your score. My report showed zero late payments on any accounts for the past year and none over the past seven.

“On average, consumers with a FICO score of 850 have over 25 years of spotless credit history,” Dornhelm said.

So to sum it up, people with an 850 perform spectacularly across all five scoring categories, Dornhelm said.

“They typically don’t have a single delinquency on file, use a very low percentage of their available revolving credit, have a well-established credit history and seldom open new accounts, applying for credit only when necessary,” he said.

I’m not all high and mighty or obsessed with getting a perfect score or keeping it. Once you get into the mid-to-high 700s, it’s all the same from there. You don’t need perfection to qualify for the best credit deals.

And while reaching this milestone is pretty cool, what does it really mean?

You can have a great credit score and still be struggling. High-score achievers are not necessarily debt-free: They often have multiple credit cards with balances, according to FICO.

An excellent credit score alone doesn’t measure your total financial soundness. It’s just a measure of your ability to manage debt.

Read more:

Editorial Note: Credit Karma receives compensation from third-party advertisers, but that doesn’t affect our editors’ opinions. Our third-party advertisers don’t review, approve or endorse our editorial content. It’s accurate to the best of our knowledge when posted.

What do people with perfect credit scores and the Loch Ness monster have in common? Most people can’t decide if they actually exist.

While we don’t know about the elusive aquatic creature in Scotland, we do know there are humans out there who have reached credit-score nirvana.

For most credit-scoring models, including VantageScore 3.0 and FICO, the highest credit score possible is 850.

We were able to speak to two Americans who belong to the exclusive FICO 850 Club: Brad Stevens of Austin, Texas, and John Ulzheimer of Atlanta. Both proudly showed off computer screenshots proving they’ve reached the pinnacle of credit scoring.

“Many people are skeptical that 850 is attainable. But it certainly is,” says Ulzheimer, who is president of The Ulzheimer Group and a nationally recognized credit expert.

Tips to get a high credit score

For years, it’s been widely reported that fewer than one percent of American adults have a FICO credit score of 850.

So, how did Stevens and Ulzheimer climb to the top of the credit-score mountain? Both of them say it was a slow trek that was aided by responsible handling of debt.

Ulzheimer says some of the control over your credit rests with you, while some of the control is out of your hands.

Just like a professor who grades your college coursework, credit-scoring models grade you on your credit activity. So while you might think you deserve a perfect score, the professor — or in this case, the credit-scoring model — has the final say over your grade.

How do you improve your credit?

There’s no quick fix. Improving your credit health takes time, but the most important behaviors can be summed up as this: Pay your bills on time (and if possible, in full) and reduce the amount you owe. It also helps to check your credit reports regularly and dispute any errors you see, such as a collections account that hasn’t been removed from your reports after seven years from the original delinquency date.

Based on the experiences of Stevens and Ulzheimer, what follows are some things you can do to aim for the FICO 850 mark (or at least improve your credit).

Keep in mind, though, that their circumstances are unique, and what they’ve done to achieve a FICO 850 score might not work for you.

Here’s the advice they gave:

• Nothing negative can show up on your credit reports. One example: You can’t have a single late payment on a credit card account. Payment history accounts for 35 percent of a FICO credit score.

• Almost none of your accounts can be carrying a balance. In other words, credit card debt must be near zero. The amount of debt you owe makes up 30 percent of a FICO credit score.

• Your credit history must stretch over many years. A 2011 study by SubscriberWise, a credit reporting agency for the communications industry, found the average length of a credit history for someone with an 850 FICO score was 30 years. Ulzheimer says some people simply can’t ascend to 850 yet because their credit history isn’t old enough, “even if they do everything else right.” Length of credit history accounts for 15 percent of a FICO credit score.

You’ll need to “max out” each of those components to pull off a perfect 850, thus making the task difficult, Ulzheimer says.

It’s not necessary to have a perfect score

Ulzheimer says his FICO credit score has hit 850 off and on for the past five to seven years. That achievement became easier once his credit history passed the 20-year milestone, he says. Yet Ulzheimer notes he hasn’t been striving for perfection with his credit score – he just knows the right behaviors for managing his credit well.

Unlike Ulzheimer, Stevens says racking up a perfect FICO credit score of 850 has been his goal for a few decades.

“As many do in their 20s, I experienced financial instability and suffered some setbacks that greatly impacted my credit scores. That credit also limited my economic flexibility,” says Stevens, managing partner of a private car service in Austin.

He adds: “As I grew older, I became more aware of how good credit opened opportunities for advancing and enhancing my life. So I continued to work on getting an ever-better score. After a while, it not only became a goal but … a total obsession.”

But Ulzheimer says obsessing over how close your FICO credit score is to 850 doesn’t necessarily pay off. Why?

Ulzheimer says an 850 FICO score isn’t needed to gain the best interest rates or APRs on credit cards and loans. In fact, he adds, there’s not much difference in that regard between, say, 800 and 850. More than anything else, arriving at 850 merely gives you “bragging rights,” Ulzheimer says.

“As long as your scores are above 760, you are likely going to get the best deals,” Ulzheimer says.

Bottom line

Achieving a perfect credit score isn’t necessary, but checking your credit scores and reports is. If you’re not tracking your credit on a regular basis, then you don’t know whether your scores are heading in the right — or wrong — direction.

Want to see your VantageScore 3.0 credit scores for free? At no cost, you can see them from two major credit bureaus, Equifax and TransUnion, on Credit Karma.

About the author: John Egan is a blogger, content marketer and freelance writer in Austin, Texas. He is former editor in chief at Austin-based startup LawnStarter, and he previously worked at the Austin Business Journal, Bankrate and S… Read more.

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