Yeah, yeah, everybody’s a winner…we know. But seriously, what good is having your FICO score if you don’t know what the number means on the overall reporting scale? Maybe you have a 740 FICO score. If the maximum score is 750, you’re pretty much a credit genius. If the max is over 1,000 you’re sporting a “C” average – not really all that impressive.
So what's the maximum score, and how do you achieve it?
How Does It Work?
Although there are many different credit scores, your main FICO (Fair Isaac Corp.) score is the gold standard that financial institutions use in deciding whether to lend money or issue credit to consumers. Your FICO score isn’t actually a single score. You have one from each of the three credit reporting agencies – Experian, TransUnion and Equifax. Each FICO score is based exclusively on the report from that credit bureau. The score that FICO reports to lenders could be from any one of its 50 different scoring models, but your main score is the middle score from the three credit bureaus, which may have slightly different data. If you have scores of 720, 750 and 770, you have a FICO score of 750. (And you need to take a hard look at your credit reports because those three numbers are considered wildly different.)
What’s the Range?
That’s really what you want to know, right? The best-known range of FICO scores is 300-850. Anything above 700 is generally considered to be good. FICO also offers industry-specific FICO scores, such as for credit cards or auto loans, which can range from 250 to 900. There are many FICO versions; FICO 9 is the newest. Mortgage lenders tend to use older FICO score versions.
Here are FICO's basic credit score ranges:
- Exceptional Credit: 800-850
- Very Good Credit: 740-799
- Good Credit: 670-739
- Fair Credit: 580-669
- Poor Credit: Under 580
According to FICO, the higher the score, the lower the risk you pose to a lender. But no score says whether a specific individual will be a “good” or “bad” customer.
FICO undoubtedly has a team of attorneys telling it to drive home the point that it (the company) doesn't judge somebody’s credit risk. It only reports a score and can provide guidance based on statistical data. A person isn’t a high credit risk per se if they have a 500 FICO score. FICO just reports, based on its statistics, that people with a lower score have defaulted on loans more than those with a higher score. See the difference?
How Do I Get the Highest Score?
Put away your perfectionist ways when it comes to your credit score. While it is theoretically possible to achieve a perfect 850 score, statistically, it probably won’t happen. In fact, less than 1% of all consumers will ever see an 850 and if they do, they probably won’t see it for long, since FICO scores are constantly recalculated by the credit bureaus.
And it’s not like you can know with absolute certainty what is affecting your credit score. FICO says 35% of your score derives from your payment history and 30% from the amount you owe (credit utilization). Length of credit history counts for 15%, and mix of accounts and new credit inquiries are factored in at 10% each. Of course, in actually calculating the score, each of these categories is broken down even further, and FICO doesn't disclose how that works. The credit bureaus that create credit scores may also change how they make their calculations – sometimes for your benefit. For example, a change was made recently to reduce the weight of medical bills, tax liens and civil judgments.
No need to obsess about hitting that 850 mark. But if you want to try and reach it: Pay all your bills on time, eliminate nearly all of your debt (excluding a mortgage) and use, on average, no more than 7% of your available credit from all your accounts. And be careful with balance transfers, closing a credit card or having too many of them.
The Bottom Line
Although it’s nice to have a perfect or near-perfect score, it means very little, other than having a badge of honor that less than 1% of the population could achieve. Once your score gets and remains above 780, lenders see you as a low credit risk. You’ll get the best interest rates and are pretty much guaranteed a “yes” to any loan you apply for that appropriately fits your income level. And if you're curious, here are the best places to get your credit score or report for free.