How to get the perfect credit scoreWith credit being of central importance to Americans’ everyday lives, it’s not surprising that many people seek advice on how to improve their credit scores. As the national average credit score of Americans rises, more people are finding themselves asking whether or not it’s possible to actually get a perfect credit score. Keep reading as we break down how the credit scoring system works and determine if there is such thing as a perfect credit score.

How is credit scored?

In order understand what credit scores are and how they’re measured, it’s important to know how credit scores are calculated. First, there is not one single credit score (e.g., there are FICO scores and VantageScores) and different lenders have access to different credit scoring models — meaning your bank may check your FICO scores, while your lender may check your VantageScores. FICO claims its scoring model is the most widely used, which is why understanding the FICO model is very important for consumers, as the odds are high that they’ll encounter it. Plus, knowing how FICO scores work will help you understand how most other types of credit scores work.

FICO scores are evaluated on a scale of 300 to 850, with 850 being the “perfect score.” It’s been estimated that no more than 1.5% of Americans have this elusive and seemingly illustrious score, but an increasing number of hopefuls are aiming to be among these ranks one day. It’s worth noting that FICO scores and credit scores in general are ranked in ranges, and the ranges change based on the scoring model you’re using. The difference between scores in the same range (e.g., FICO scores of 820 and 850) is fairly negligible, but that fact hasn’t waned enthusiasm for the idea of having a perfect credit score.

Is a perfect credit score achievable?

There’s no guarantee that you’ll get the perfect credit score, but there are definitely things you can do to better your credit scores. If you’re working toward a perfect credit score (or at least want to try), here are some things to keep in mind.

Perfect credit requires establishing a long, healthy credit history

Individuals who have the covetable score of 850 generally have very long credit histories, usually spanning back decades across various different types of credit (loans, credit cards, mortgages). Washington Post columnist Michelle Singletary detailed her own journey to 850 last year, revealing that she not only had a credit history stretching back 25 years, but also that she’s not had a single missed or late payment over the past seven years. It goes without saying that any delinquencies or judgments on your credit reports drag down your score, but the good news is that these go away after seven years.

Perfect credit requires paying down debt quickly and avoiding balances

Two more critical habits that those with high credit scores practice is that they avoid spending anywhere near their credit limit and almost always pay their accounts in full to avoid interest and fees. This also has the consequence of keeping their credit utilization ratio low. The credit utilization ratio, which makes up about 30% of your FICO score, is a way to evaluate how much of your available credit you’re using at any given time. For example, if you have a credit limit of $1,000 and you are carrying a credit card balance of $200, your credit utilization ratio would be 20% because $200 is 20% of $1,000. Some oft-repeated advice is that your total utilization should be below 30%, but in talking with Ethan Dornhelm, vice president of scores and predictive analytics at FICO, Singletary revealed that there’s no specific utilization threshold that negatively impacts credit. She does point out that, on average, consumers with FICO scores over 800 tend to only use 7% of their available credit. Although spending less is the most common way of managing your credit utilization ratio, another way to keep it low is increase your credit limits across your sources of debt and divide expenses across each of them. Doing so will lower for each card’s utilization ratio (and your overall ratio), as your debt and expenses will be evenly distributed.

Is perfect credit a worthwhile goal?

Those who might be within range of a perfect credit score could be wondering if aiming for 850 is worth it. The decision to work toward perfect credit is a personal one and while the perks might be negligible, at best, aiming for or working toward such a lofty goal will have the added benefit of helping you build a solid credit history and strong financial habits.

For more credit advice and information on building great financial habits, keep reading our personal finance blog.