Lately, you might have been able to check your overall credit score with the help of some sort of free service which includes your mortgage lender or even your bank. If you are into credit for a good amount of time you must be wondering about a perfect credit score. A perfect credit score is something that is approximately around 850. Whenever you are applying for any sort of credit, lenders review a detailed summary of your financial history to determine if you qualify for a particular credit line. Your overall credit history or credit score allows lenders to know your ability to repay the amount lent to you. Here in this blog we are going to learn more about a perfect credit score and check if it is at all possible to get.
What Is Meant By A Perfect Credit Score?
A credit score usually varies based on the credit scoring model such as VantageScore and FICO and all the credit bureaus (TransUnion, Equifax) that pull these scores. Listed below you can see the credit score ranges used by TransUnion and Equifax.
Vantage Score
- 300-499: Very Poor.
- 500-600: Poor.
- 601-660: Fair.
- 661-780: Good.
- 781-850: Excellent.
FICO Score
- 300-579: Very Poor.
- 580-669: Fair.
- 670-739: Good.
- 740-799: Very Good.
- 800-850: Excellent.
Factors That Usually Influence Your Credit Score:
Most credit scores are calculated differently depending on the overall credit scoring model. Here we have listed some of the major factors that are considered by Vantage and Fico scoring models..
- Vantage Score
- Less influential: All types of available credit and recent credit inquiries or behavior.
- Moderately influential: Overall debt and balances.
- Extremely influential: Overall payment history.
- Highly influential: Total percentage of credit limit used and duration or type of credit.
- FICO Score:
- Credit Mix (10%): Credit mix usually denotes the type of credit products you have which usually includes mortgage loans, credit cards, finance company accounts, installment loans, etc.
- Amounts Owed (30%): Amount owed denotes the total amount of loans or credit that you are using compared to your overall credit limit. This is also termed in general as credit utilization ratio.
- History Of Payments (35%): Payment history generally denotes if you have paid all your past credit bills on time.
- New Credit (10%): New credit determines the total number of times you have applied for or opened new credit-related accounts.
- Length Of Credit History (15%): It determines the total time you have had credit.
How Can A Perfect Credit Score Be Helpful?
In general, a perfect credit score can help you in receiving a lower annual percentage rate from lenders. It also gives you a better chance of being approved for new loans and other lines of credit.
Typically, credit cards in the market require either excellent or good credit. If you are desiring to get benefits from annual statement credits, competitive rewards, or even zero percent APR periods, you will need a good credit score. If you have an excellent credit score, you will maximize your odds for approval. For example, if you want to finance any new purchases or transfer the debt to reduce interest payments, you will need an excellent credit score.
However, it must also be noted that even if your credit score falls in the excellent category, there isn’t any guarantee that you will get approved for a line of credit that requires an excellent credit score. Most of the card issuers usually look into other factors apart from your credit score which includes, monthly home rent payments, income, etc.
Best Ways To Get A Perfect Credit Score
If your credit score falls under the good, bad or fair range and you really want to pump up into an excellent or perfect credit score, try to follow the tips listed below. All these tips and tricks can help you in raising your credit score by a considerable margin.
- Always Try To Pay In Full: It is always important to pay your minimum due balance every month. However, it is our recommendation to pay all your credit card bills in full every month especially to reduce your credit utilization ratio. The credit utilization ratio is a simple calculation denoting how much of your total credit limit you are using. It is usually calculated by a simple equation i.e. your overall credit balance divided by your total credit limit.
- Try To Make Your Payment On-Time: Payment history is another crucial factor denoting your overall credit score. Therefore it is always important to pay every month on time. Remember, autopay is a great option to ensure on-time payments. You can also try setting up reminders in your mobile calendar.
- Try To Open Minimum Accounts At Once: Remember, every time you apply for a new line of credit no matter if it is a loan or a credit card, and regardless if you are approved or denied, an inquiry always appears on your credit report. These types of hard inquiries tend to reduce your overall credit score by around five points and they also tend to bounce back within just a few months. Try limiting your applications and shop around only with prequalified tools that don’t hurt your overall credit score.
Though it’s nice to have a near-perfect or perfect credit score, it actually means very little apart from having just a badge of honor that only a handful of the population can achieve. Whenever your score passes the 780 range or higher, lenders usually take you as a low credit risk. Having such a score can help you in getting, good product offers, best-in-class interest rates, and generally a yes to a loan that fits your annual income level. If you want to boost your overall credit score really fast, a great way is to make use of your utility bills and home rents. We at Credit Rent Boost work hand in hand with tenants, and homeowners in order to report your monthly rent payments to the credit bureaus. If you want to know more about us, try having a glance at our website.
