What is the Highest Credit Score You Can Have?


A consumer’s FICO (Fair Issac Corporation) score can range between 300 and 850, with the average consumer scoring in the 600s. Equifax, Experian and TransUnion are the three major credit bureaus that calculate scores and provide them to lenders, and each of these companies calculate scores in a slightly different manner. However, receiving a score from a single company can provide consumers with a good picture of their credit health and history. By federal law, consumers are entitled to one free credit report from each company per year, which allows a total of three free credit reports per consumer. For those looking to build or rebuild their credit, receiving a credit report every four months is vital to that goal.

Scores vary between credit bureaus because each agency may have slightly different information on the consumer. Lenders offering a credit card or auto loan will most likely make a decision on extending credit based on a single agency’s score, while lenders offering more extensive lines of credit, such as a mortgage, will look at all three of the agency’s scores.

In order to determine a credit scores, companies look at five different things and calculate them at certain percentages to come up with a score. Thirty five percent of a credit score is based on how well the person pays bills on time. Thirty percent of a credit score looks at how much available credit a person has and how much of it they have used. For example, if a consumer has a total credit limit of $5,000 and has utilized only $500 of their credit limit that is considered a good debt load. Financial advisors recommended that consumers never use more than 50% of their credit limit, as this can lower their FICO score. Fifteen percent of a credit score is based on the amount of time a consumer has had credit available to them, or the length of their credit history. If two people have a good history of paying on a credit card, the person who has had the card longer will have a slightly higher score. The final twenty percent of a credit score is based on requests for new accounts, recent applications for financing and the mix of types of credit available to the consumer. Together, all of these aspects determine one’s credit score.

The first step to improving a credit score is to pay down revolving debt, such as credit cards or lines of credit. As long as the consumer does not close the account after paying off the debt, this can dramatically improve the percentage of credit available verses credit used, which as previously stated, accounts for 30% of one’s score. When working to improve a credit score, consumers often make the mistake of forgoing credit all together after paying off their debt. As 45% of a credit score is based on how well one pays their bills and how long they have had their credit, without using credit there is no way to improve those numbers. However, using credit does not need to equal paying interest or finance charges. Every credit card and many lines of credit have grace periods in which a consumer can pay within a certain timeframe without also paying interest. Doing this will not only improve the credit score, but also not cost the usual extra money associated with utilizing credit.

The most important part of working towards the perfect credit score of 850 is to have a workable debt management plan and to stick to it, pay bills on time every time and only take on new debt if absolutely necessary. Rebuilding a credit score can take many years, but the accomplishment of doing so is not only emotionally satisfying, but financially responsible as well.

This post was written by

jason – who has written posts on Budget Clowns.
Father of three and married to a lovely women. Always looking for ways to save money, and invest it properly for my children's future.

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