Hey, there, overachiever. Are you really trying to attain a perfect credit score? Here’s the thing: You don’t need to. Any score over 760 will pretty much net you a lender’s best rates and terms. Plus, even if you do score that elusive 850, you probably won’t keep it for long. Credit scores are mercurial: They change as new information hits your credit report or, most notably, as your loan balances go up and down. (Translation: Perfection is fleeting.)
But we get it. Sometimes you need that A-plus. So, in the interest of indulging your financial dreams, here are nine signs you could one day see a perfect credit score.
1. You’ve Never Missed a Loan or Credit Card Payment …
Payment history is the most important factor of credit scores, accounting for 35% of most popular scoring models. Plus, one little slip can do big damage once it hits your credit report — and it can stay on record for up to seven years. In other words: Don’t expect to see the highest score ever if you’ve missed a payment (or two) in that time frame.
2. … Or Any Other Bill’s Due Date for That Matter
Sure, utility companies, doctors, gyms and other service providers don’t routinely report missed payments to the credit bureaus, but collection agencies do. And, if you leave any old bill unattended long enough, that’s where the debt might end up, with a credit score fall to follow.
3. Your Debt Levels Are Virtually Non-Existent
The rule you commonly hear involves keeping the amount of debt you owe below at least 30% and ideally 10% of your total credit limit(s), particularly when we’re talking credit cards. If you’re trying to achieve credit perfection, you’ll want to focus on the ideal part.
Expert Intel: It’s a bit of a misnomer that you need to carry debt to build credit — you simply need to have credit accounts on the books that are being managed responsibly. So, for instance, someone could conceivably build a good credit score with a single credit card they pay off in full each month. People with 850s tend to have more than one loan on the books (more on this in a minute), but you’ll be best served in the long run by adding financing as you truly need (and can afford) it.
4. You’ve Had Good Credit for a While …
There’s a reason older demographics tend to have higher credit scores: Credit history, or the length of time you’ve been responsibly using credit, accounts for 15% of most scores. Technically, though, this category doesn’t have anything to do with your age. Instead, your credit history “starts” when you open your first credit account.
5. … But Haven’t Applied for Any New Loans Recently
That’ll boost your credit history, which also factors in the average age of your credit accounts. Plus, loan applications generate credit inquiries, which can ding your score for up to one year and hang out on your credit report for up to two. (More on how long stuff stays on your credit report here.)
6. You’ve Got a Mix of Credit Accounts on the Books
Credit scores give you maximum points for responsibly managing different types of credit. That’s why having, say, a mortgage, an auto loan and a credit card (or two) — all in good standing — tends to be a common characteristic of people in the 850 club. In technical terms, this means you have revolving lines of credit, like a credit card, and an installment loan, like that mortgage, on the books.
7. Your Public Record Is Clean
Judgments and liens can wind up on your credit file, though there are indications that will soon be changing. For now, though, a matter of public record could wind up hurting your credit score.
8. Your Credit Report Is Error-Free
Credit report errors can happen for a number of reasons and most misinformation will needlessly harm your credit. To achieve perfection, your file needs to be pristine — which you can help to ensure by diligently pulling your free annual credit reports from each major credit reporting agency and disputing any error you see.
9. You Keep a Compulsive Eye on Your Standing
You know the old adage “if a tree falls in a forest and no one’s around to hear it, does it make a sound?” Well, the same can be said about an 850 credit score. You’ve got to play all your credit cards right, and then you’ve got to be lucky enough to check your score at the precise moment perfection strikes. (Like we said earlier, that 850 probably isn’t going to stick around for long.) Fortunately, you can view two of your free credit scores, updated every 14 days, on Credit.com.