Four Secrets to Getting a Perfect Credit Score

Distribution of credit scores
National distribution of credit scores

The higher the credit score, the better. People with higher scores get better interest rates on credit cards, better rewards cards, and find it easier to qualify for car loans, bank loans or mortgages.

Most people have credit scores in the mid to low 700’s. People with poor credit can be in the 600’s or even 500’s. And the perfect credit score? That would be the shining, elusive 850. If you’ve never seen of these you may have come to believe that the perfect score, like Santa Claus and the tooth fairy, is a myth.

Actually it does exist. Craig Watts, senior manager for Public Relations for FICO, tells MainStreet that while most people score in the middle-to-low 700s on their credit scale, less than 1% of the U.S. population (about 1 million people) do, in fact, net a full score of 850.

These people tend to be older, often senior citizens. They are fiscally conservative, and are often discreet, which means they’re not the type to participate in online forums or trumpet their financial achievements.  “They aren’t the type of people who stand up on a bus and tell everyone they scored an 850,” says Watts.

Which means they also don’t share their secrets for achieving that credit score.

If you think you’re unlikely to ever achieve a perfect credit score, don’t despair. “In reality, you don’t have to have an 850,” says John Ulzheimer, a former FICO employee now with Credit.com. Those with a FICO score above 760, he says, will enjoy the same great offers and privileges as those with a perfect credit score.

That isn’t easy to achieve either. Yahoo Finance’s MainStreet column put together a profile of America’s credit stars, that tiny minority with perfect credit scores. Here are their secrets:

1. They Have Spotlessly Clean Payment Records

Those with perfect credit scores use credit cards regularly, and make their payments on time every month, without fail. They also have a scrupulously well managed credit record. Ulzheimer explains that the credit elite have no bad debt to speak of. “No liens, no bank repossessions, no settlements,” he says. “Nothing.”

2. They Have Varied Types of Accounts

There are two types of debt. There are fixed debt products, like car loans or mortgages, where you pay off a set amount every month until the loan is paid off. Then there’s revolving debt, People with perfect credit scores typically have debt account of both types. They balance them well, make their payments on time, and don’t get in over their heads.

3. They Have Well-Aged Credit Histories

“One advantage to being older is that you tend to have a longer credit history,” McClary says. But it’s not your age that matters, it’s the age or your oldest open credit account. In other words, if you’ve had a credit card for twenty years and have always made the payments on time and kept the debt-to-limit ratio low, you’ll have a great credit history. So don’t close accounts and open new ones. Keep the card you opened in college, use it, and pay it off fully every month.

4. They Have Very Few Credit Inquiries

Every time you apply for credit, the card issuer checks your credit history. If you this too often, these inquiries damage your credit score, because it appears to the credit bureaus that you are desperately seeking to increase your credit balance. It won’t damage your credit score too badly, but it will have an effect, especially if the inquiries are close together. And it will certainly keep you from becoming a credit superstar.

This is why Ulzheimer advises that you not open up a raft of store accounts during the holiday season, no matter how the retailers are pushing them at you.

“Applying for credit organically as you need it is fine,” Ulzheimer says, before cautioning “never use your credit score to get a 10% discount at the mall.”