Here’s How Many Americans Have a Perfect 850 Credit Score
A perfect credit score may sound like a big financial goal. But a very small percentage of Americans actually have it.
According to a spokesperson for credit reporting agency Equifax, only 0.24% of US adults with a credit file — about two in 1,000 people — have a perfect score of 850 using the VantageScore 4.0 model. At the same time, about 53 percent of consumers fall within the “super-prime” model range of 720 to 850.
The highest credit scores, usually ranging from 300 to 850, are reserved for people with nearly perfect credit habits, including years of on-time payments, low credit card balances and long, well-established credit histories. Consumers with perfect scores also tend to have an above-average number of credit cards, low credit utilization rates and below-average total balances, according to Experian, another major consumer credit reporting agency.
On average, Americans use about 28% of their available credit card limits, while people with a credit score of 850 use only 4%, according to data from Experian.
Keeping balances low is important because credit utilization accounts for about 30% of the FICO score – the credit scoring model used by about 90% of lenders in the US – making it one of the most important factors in the credit scoring formula. Low utilization rates indicate that the borrower is less dependent on credit, which lenders often consider a sign of low lending risk.
Perfect players also have no delinquent accounts on their credit reports, which means they have been paying their bills on time. By comparison, about 4.8% of US mortgages are in some category of delinquency, according to the Federal Reserve Bank of New York’s latest report on mortgages and loans.
Why you don’t need a perfect credit score of 850
Achieving high credit scores isn’t uncommon — and financial experts say consumers don’t have to chase perfection to get the best loan terms.
“You don’t have to have perfect credit to qualify for the best rates when you apply for financing, such as a personal loan, new credit card or mortgage,” Leslie H. Tayne, credit expert and founder of Tayne Law Group, tells Money. “Most of the time, if a buyer has a high credit score — in the 780 bracket or higher — they’ll qualify for the best rate the lender offers.”
The US credit score is estimated at 715, according to FICO data. Although the 715 is generally considered “good” as opposed to “excellent” or “exceptional,” many borrowers are already within the range lenders typically reserve for their best rates.
“If you’re looking for the best deals by FICO score, you need a 720 to get the best deals on auto loans and a 760 to get the best deals on home loans,” says John Ulzheimer, a credit card expert formerly with FICO and Equifax.
However, borrowers should aim to improve their credit whenever possible. A high score can provide protection if your credit profile changes — for example, if you carry high credit card balances — and help keep your score high enough to get favorable rates.
The biggest mistakes people make when trying to improve their credit
For consumers trying to improve their credit scores, experts say the biggest improvements often come from focusing on long-term habits, not quick fixes. Think about it: debt settlement, not credit transfers, Tayne said.
Another common mistake is closing old credit accounts, which can hurt borrower scores because it can reduce available credit and increase credit utilization.
“It’s ironic in some ways that closing a credit account or paying off a large revolving debt, like a mortgage or car, can actually hurt your credit score, but it’s true,” Tayne explains.
If a credit card no longer serves you, he says it may be better to keep the account open than to close it right away – especially if it doesn’t have an annual fee.
“The benefit of keeping it open will have to exceed that cost,” he adds. “However, having a card that you don’t use can contribute to a better credit-to-income ratio and your credit utilization percentage.”
Borrowers should also be wary of questionable advice on the internet.
“Improving your credit isn’t a mystery,” says Ulzheimer. “When I was at FICO, we told people the same thing until they were red in the face: Pay on time, avoid too much credit card debt and apply for less credit. Lather, rinse, repeat.”
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