Have you always been insatiably curious about your credit score? I am. In my mind, my credit rating is like a report card, like a personal best race. (Hey, those are the best those of us with zero athletic talent can do.)
Despite widespread media reports of Americans’ debt troubles, most consumers have credit scores that fall between 600 and 750. Better news: In 2020, the average FICO score in the United States hit an all-time high of 710, according to Experian.
So, speaking of an 800 credit score – what is it, and should you work towards it? Let’s dive in.
What is considered a good credit score?
First, FICO scores range from 300 to 850, which translates into the following categories:
- 300-579: Poor
- 580-669: Medium
- 670-739: Good
- 740-799: Very good
- 800-850: Great
As you can see, FICO defines a good credit score as a score between 670 and 739.
What percentage of the population has a credit score above 800?
In April 2018, about 21% of the population had a credit score between 800 and 850, which represents the highest echelons of credit score possibilities.
However, that doesn’t mean most Americans don’t fall into these “upper brackets.” In fact, in 2020, 69% of Americans had a “good” credit score — at 670 or higher. Americans worked to get their credit in a better position than last year and even increased their scores by three percentage points from last year.
How did they do it? Credit card debt was reduced by 14% last year and credit use also fell by 3.5%, to 25.3% in 2020.
Is it possible to get an 850 credit score?
Yes! You can achieve a perfect credit score of 850. 1.2% of all FICO scores in the United States fall precisely at 850.
How do you know if you are close to 850 or far away? You can check your credit scores using several different methods.
One thing to note: If you check your credit reports for free through Experian, TransUnion, or Equifax, that doesn’t mean you have access to your credit scores. (This is a common misconception.) You get your credit reports – a list of all the actions you’ve taken with creditors.
So how do you know your credit score? You can take different actions:
- Check with your financial institution.
- Look at your credit card statement.
- Take a look at your loan information – your lender can provide this to you.
- Use a free credit scoring service or credit scoring site.
- Purchase a credit score summary directly from one of the three major credit bureaus or another provider like FICO.
Don’t worry if the credit scores provided by the three national credit bureaus look different. Some creditors may report information to one, two, or all three credit bureaus. Therefore, the three credit bureaus might show you a slight variation in your credit score!
What does a credit score of 800 mean?
When you have a credit score of 800, it means you have an exceptional score. Since you have a well above average credit score, you’ll likely struggle to get the best credit deals when applying for new credit. For example, if you want to buy a house, you may qualify for the lowest mortgage interest rates on the market.
Credit scores vary, however. Just because you have a credit score of 800 this month, will it stay the same next month or next year? Nope! Because your credit score goes up and down all the time, you get a report of your credit at that time. It may look different this month than next year, so remember that when you take a look at your credit scores.
Therefore, you may wonder what will happen if you slip to 799 or slightly lower. Remember that 799 is still classified as a “very good” score and you will still have plenty of opportunities to qualify for good credit offers. That said, hitting the 800-850 range will still give you the best possible offer options.
How to get an 800 credit score
When you want to aim for those next-level credit scores, keep a few things in mind. Take a look at a few guidelines you want to relentlessly apply to gain admission to Club 800:
- Keep your utilization rates at or below 30%. What does it mean? This means that even if your credit card offers you a line of credit of $10,000 per month, repeatedly using more than 30% of that line will affect your score.
- The length of the credit history is important. Longer credit history will result in a higher score than shorter credit history.
- Credit inquiries affect your score. Applying for new credit means your score may drop temporarily, but often “comes back” within a few months.
- The composition of the debt makes a difference. Multiple types of credit, including revolving credit (like credit cards or HELOCs), and installment loans (like student loans and mortgages) look better on your credit score than just one type of credit.
- Keep an eye on your credit reports and scores so you know what’s going on. Keep up to date with your credit reports, as the credit bureaus may have made a mistake.
- Get rid of debt – with a caveat. Getting rid of revolving debt (like credit cards) improves your score by reducing your credit utilization rate. However, be aware that closing some lines of credit can lower your credit score temporarily.
- Make all your payments on time. (Yes, even those pesky utility bills.)
Keep your credit score in top shape
Should you insist if your credit score does not reach the 800 range? Not. Many borrowers can get adequate loans and interest rates when they are in the lower credit brackets.
However, you may want to consider increasing your credit if you fall into the “poor” or “fair” categories to ensure you get the best possible credit deals when you want to buy a car, buy a house, or use business credit. other ways.