A perfect credit score is more than just a badge of honor. It is a goal we could (and should) all aspire to. While only a small percentage of Americans have the 850 credit score, it is not a target out of reach for the average person. 

Is it Possible to Get an 850 Credit Score?

A 2019 Experian study found that just 1.2% of credit-holding Americans had the perfect FICO® score of 850. Achieving this perfect score generally requires practicing excellent financial behavior for years. 

(Keep in mind that the oldest FICO score, FICO 8, maxes out at 850, as do many other FICO scores. However, some of the newer scoring FICO models go to 900. So don’t be surprised if some of your scores go above 850.)

It might surprise you to know that people with perfect credit scores do in fact take out loans, use credit, and carry debt. The key distinction from the 99 percent is in how they manage their debt. 

An Experian study found that the top scorers had more credit accounts in their name but carried less debt than the average American. 

Consumers with perfect scores had an average of 6.4 credit cards but about $3,000 in debt. That compares to the national average of 3.8 credit cards and approximately $6,500 debt.

How to Get an 850 Credit Score:

So how long does it take to build credit? There’s no quick path to having a perfect credit score. It takes time, effort, and consistency. To increase your chances of attaining a perfect credit score, apply the following habits that have been tried and tested by those who have done it.

Get a Perfect Payment History for at Least the Past 2 Years

Payment history contributes more than a third of your FICO score so getting it right will have a major impact. Paying bills on time demonstrates to potential lenders that you have a low risk of default. 

There should be nothing negative on your credit report. Always pay your bills and debts on time. Do not miss a payment when it is due. Make the most of auto-pay if you sometimes forget when a bill is due. Have a significant savings buffer that you can tap into even you’re your income is temporarily disrupted. 

In the event you are caught up in a rare late payment, contact the lender and request that they work with you. If you already have a long and stellar record with them, the lender may just opt to overlook the delay. 

Of course, this will only work if the delay is marginal i.e. a payment late by a day or a week. Since payments have to be 30-days late to get reported to the credit bureaus, there is some leeway here.  

Apply for Credit Strategically

Each time you apply for a new credit account, the lender or service provider will make a hard inquiry of your credit information. Such hard inquiries will drop your credit score by several points. If you want a perfect 850 score, you have to be strategic about how and when you apply for new credit. 

To minimize the instances where your score drops by several points due to hard inquiries, only apply for credit when you need it. Too many new accounts, especially when opened within a short time window, may be a sign that you are in financial distress and taking on more debt than you can afford.

Keep your Credit Utilization at 1-10%

The lower your credit utilization rate, the better your chances of attaining a perfect credit score. The average revolving credit utilization rate for people with a perfect credit score was 4.1 percent.

Avoid charging any big-ticket items such as recreational vehicles, cars, or tuition to your credit card. Instead restrict card transactions to utilities, food, groceries, and other items that don’t require a large transaction.

The average American had slightly more than $22,000 in credit card limits available to them. If you are going to have a perfect score with that credit limit, your debt would need to be $902 if you stick with the 4.1% credit utilization. 

A high credit limit allows you to hit a low credit utilization rate without starving yourself of necessary credit. That said, remember to not apply for too much credit in the beginning. 

Get a Mix of Credit Types (Installment and Revolving)

Credit scoring companies give weight to a diversity of credit sources. Credit mix is responsible for 10 percent of your FICO score.

And it’s not just about having multiple credit accounts – you need different types of credit. Specifically, have a healthy blend of installment (like a personal loan) and revolving (such as credit cards) accounts. 

Get a Credit Builder Loan 

At this point, it should be apparent that your journey to an 850 score is hinged on building good credit. One avenue you could use to build your credit quickly is to apply for a credit builder loan from Credit Strong, a division of Austin Capital Bank. 

Credit Strong credit builder loans start small, with only a $28/month payment. You can customize your term length to go up to 10 years. They are accounts that build credit.

The money you borrow is placed in a certificate of deposit or secured savings account for the duration of the loan. Once you pay off the loan in full, the funds are released to you. 

As you make the payment installments, the lender reports your transaction activity to the major credit bureaus (Equifax, TransUnion, and Experian). 

The rationale of a credit builder loan is to demonstrate and strengthen your reputation of making on-time, regular payments over a fixed duration. And since you get the principal loan amount at the end of the repayment period, credit builder loans are also a means of saving money.

Monitor your Credit Scores & Reports Frequently

We live in an age where identity theft is alarmingly common. Someone could apply for credit using your identity and this would have an adverse effect on your credit score. 

To minimize the odds of this happening, sign up for credit monitoring. Keep an eye on the transaction alerts to ensure there are no instances of identity theft.

Credit report errors outside of identity theft are common, too. If you catch and dispute any error as soon as it happens, it will minimize the damage it does to your credit report. 

Dispute and Fix Errors on your Credit Report

Credit reporting companies are not infallible and neither are the organizations that share your credit information with them. Check out the thousands of complaints on CFPB’s Consumer Complaint Database claiming incorrect credit bureau information. 

There is a real risk of errors making their way to your credit report and therefore decreasing your score without merit. For instance, fraudulent or unauthorized hard inquiries may cause a dip in your score. By monitoring your credit reports and scores regularly, you can catch any such errors.

Identifying errors in your credit report should kick off a process of disputing and correcting them. File a dispute with a credit reporting company. The company will subsequently commence an investigation and contact the organization that submitted the information. 

If the information is found to have been incorrect, the credit bureau will make the necessary changes to your report and notify you accordingly.

Build Up Your Average Length of Account

The average age of your account is important for your FICO score. The length of credit history makes up 15 percent of the score. The older an account is, the more valuable it is to your credit score. This is why you should avoid closing accounts as much as you can.

Consumers with perfect credit scores typically have an average account age of well over a decade. Often, the oldest account is between 20 and 30 years old – or more. Even when you are not using the account, the lender or service provider may continue reporting on your long and positive relationship with them. 

Some credit card issuers will, however, close unused accounts. To keep the account active, you can make small purchases from time to time as long as you pay the balance off in good time to maintain a good record.

Wrapping Up

By consistently applying the tips outlined here, you can grow your credit score to 850. Still, it is unlikely that your score will remain at 850 forever. 

Routine financial action such as paying off a loan or applying for new credit will trigger dips in your score, even if it is temporary. Nevertheless, that will not imply you no longer have excellent credit. Once your score exceeds 800, it’s already considered exceptional.

Actually, there is often not much difference in the benefits someone with a score of 760 enjoys when compared to an individual with a perfect score of 850. From 760 and up, many lenders will treat you as a customer eligible for the best terms. 

Either way, your effort to attain a perfect credit score is worth it. The nearer to a perfect score you come, the harder it is to fall under 760. And the easier it is to apply for new credit accounts.

CreditStrong helps improve your credit and can positively impact the factors that determine 90% of your FICO score.

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