Your credit score ranges from 300 to 850. There are technically many types of credit scores, and not all of them use this scale, but the most popular ones do. That includes the FICO® Score system, which is what's most widely used by lenders.
Since higher scores are better, an 850 is a perfect score. It's also notoriously difficult to reach. While improving your credit score isn't too difficult, getting the highest possible score is. It takes many years and quite a bit of work managing your credit.
So, just how rare is it to have a perfect credit score? A credit score study by The Motley Fool Ascent has the answer. After we look at that, we'll also cover why perfection isn't necessary when it comes to your credit score.
How many Americans have an 850 credit score?
Only 1.31% of Americans with a FICO® Score have a perfect 850 credit score. While a score this high is rare among any demographic, older generations are more likely to have perfect credit. Baby boomers make up a whopping 59.4% of the people with an 850 credit score. Millennials, on the other hand, make up just 4.1%, and Generation Z a mere 0.1%.
In terms of actual numbers, there were 258 million credit-eligible people as of the 2020 U.S. Census. However, some adults don't have enough data on their credit history for FICO to be able to calculate a score for them. They're considered “credit invisible.”
FICO data scientists have estimated that 232 million U.S. consumers could be scored under the FICO® Score system. Based on that number, about 3.04 million Americans would have an 850 credit score.
Nobody needs perfect credit
The financial benefits of perfect credit are the same as having very good credit. The only special thing about perfect credit is bragging rights — but showing off an 850 probably isn't going to make you the life of the party.
In terms of how high your credit score needs to be, a FICO® Score of at least 760 is fine. At that point, your score is high enough to pass any credit check, qualify for any financial product, and get the lowest rates on loans. You'll likely be able to qualify for all these:
To be clear, no credit score guarantees you'll be approved for whatever you want. You can still get denied for a credit card or mortgage with a 760 credit score, or an 850. Lenders look at much more than just your credit score. But once you have a FICO® Score of 760, your credit won't hold you back from anything.
To sum it up, an 850 credit score is a lot of work for no real reward. A high credit score is beneficial, but an 850 isn't necessary.
How to improve your credit score
If it's not where you want it to be yet, here are a few tips that will help you raise your credit score:
- Have at least one credit card you use regularly. To build credit, you need to borrow money and pay it back. A credit card is one of the best ways to do this. If you pay your full balance every month, you don't get charged credit card interest.
- Always pay your bills by the due date. Your payment history is the most significant factor in your credit score. A late payment (meaning one that's past due by 30 days or more) on a credit card or loan can severely damage your credit.
- Keep your balance below 30% of your credit limit. For example, if your card has a limit of $10,000, aim to always have the balance below $3,000. Another important part of your credit score is your credit utilization ratio, and using too much of your credit can cause issues.
- Be selective when applying for new credit cards and loans. Opening new accounts and applying for new credit cards can lower your credit score. When you're trying to improve your credit, it's best to keep these to a minimum.
Some people think building credit is complicated, but it's really not. If you follow those habits, you can make fast progress with your credit score.
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We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Discover Financial Services is an advertising partner of The Ascent, a Motley Fool company. Lyle Daly has no position in any of the stocks mentioned. The Motley Fool recommends Discover Financial Services. The Motley Fool has a disclosure policy.