A perfect credit score is 850—but perfection is beside the point

There’s more than one type of credit score, but the two most popular, FICO and VantageScore, use the same range, from 300 to 850. By this rubric, a credit score above 800 is considered excellent; “very good” FICO scores range from 740 to 799; a “good” credit score ranges from 670 to 739; and 580–669 is considered “fair.” Any score below 580 is considered poor. While a significant 21% of consumers have an “excellent” score of 800 or higher, only 1.2% have a perfect credit score of 850. Although a bad credit score can have a negative impact on your fiances, a perfect score won’t necessarily get you better interest rates than a “very good” one. 

Some credit scoring models have different ranges, such as earlier versions of VantageScore, which ranged from 501 to 990; and FICO scores specialized for auto loans and bank cards, which range from 250 to 900.

Your credit score doesn’t have to do with your income level, savings, or investments. It’s simply a measure of how you manage debt. You can achieve a high credit score by showing financial institutions that you have a variety of loans that you always pay back on time. In addition to on-time payments and low credit utilization, there are two factors that really distinguish those with perfect scores. People with perfect credit scores:

1. Have more credit cards. People with perfect credit scores have an average of 6.4 credit cards, almost twice the national average of 3.8. 

2. Have less credit card debt. Those with perfect scores owed an average of $3,025 on their credit cards. (The national average is $6,445). 

There are five factors that determine your credit score:

1. Payment history: This accounts for the largest chunk of the credit score (35%) and shows whether you make timely payments on your loans and credit cards.

2. Accounts owed: This is the second largest part of the credit score (30%) and has to do with how much money you currently owe on your credit cards and loans. 

3. Average age of credit: The age of your credit accounts for 15% of your credit score. 

4. New credit: This makes up 10% of your credit score and refers to any recent checks on your credit report. (This does not include soft inquiries, which are requests you make yourself.)

5. Credit mix: The final 10% of your credit score is determined by types of credit accounts: revolving and installment. Having a mix of both revolving and installment credit looks best to lenders. 

Perfection isn’t the point of a credit score—all you need is a score that’s high enough to be approved for low interest rates. Here’s how to improve your score. 

1. Safely pay off credit card debt. Paying off your credit card debt is an important first step to improving your credit score, but be careful about how you do it. Don’t close all your accounts at once, which can cause the age of your credit to drop. Beware of balance transfer cards, which are designed to help you pay off credit card debt but can create a frustrating cycle of opening new cards.

2. Create an emergency fund. Once you’ve paid off credit card debt, start your emergency fund. Your credit score might not reflect how much money you have in the bank, but an emergency fund can prevent you from carrying a balance on your credit card in the face of an unexpected cost, which will, in turn, lead to better credit.

3. Ask for a higher credit limit. Since one of the factors determining your credit score is credit usage (i.e., how much of your credit limit you actually spend each month), a higher credit limit, can help get your usage way down. Keep your credit utilization ratio below 30%. If your credit score is too low to qualify for standard credit cards, look into secured cards, which require an up-front deposit.

4. Turn on autopay. On-time payments account for the biggest portion of your credit score. To make sure you never, ever miss a monthly payment, turn on autopay. Check your statement for any errors before you make the payment. If your credit card issuer doesn’t have the autopay feature, set an alarm or write it in your calendar (or both!)—just find a way to pay your bill the same time every month. 

5. Ask your landlord and utilities companies to report your payments. If you always pay your rent and utilities on time, that should count toward your credit history, right? Typically, it doesn’t factor in, but you can ask your landlord and utilities companies to start sending this information to the major credit bureaus, and it might help boost your credit score.

6. Check your credit report. Regularly monitoring your credit score can help you track your progress and flag any errors. Your credit score isn’t the only thing that’s important to landlords—credit reports include additional, specific information, such as late payments on loans or breaking an apartment lease. Checking your credit report occasionally will alert you to any mistakes, and you’ll be more prepared to discuss the contents of your report with a potential landlord.

7. Protect against fraud. Fraud can seriously mess up your credit, so make sure to review your bank account and credit card statements in addition to your credit report. Keep your passwords, PINs, and physical cards safe, and shred documents with identifying information.

It’s important to maintain good credit, but a perfect credit score doesn’t come with any more benefits than an excellent one. Credit scores are constantly changing, so there’s no reason to become obsessed with getting the perfect score.

To improve your credit score, you may need to adjust your personal budget. Rent is one of the easiest fixed expenses to dial down by coliving—that is, living with roommates. Bungalow offers affordable private rooms in shared homes in 10 cities nationwide.  Bungalow rooms are less expensive than solo living options like studio apartments, and our homes come with furnished common spaces and stocked kitchens, reducing your move-in cost. Find a Bungalow near you.