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Why the perfect credit score isn’t necessary

Jan. 04, 2022
6 min read
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Editor’s note: This post has been updated with new information.


Stellar credit can open doors and save you a lot of money over your lifetime, but if you think you need the perfect credit score to qualify for the best deals from lenders and card issuers, you’re in for a surprise.

Perfection isn’t necessary. In fact, you can set yourself up to receive the best deals from lenders and credit card issuers with a credit score that is nowhere close to perfect. In this post, we’ll explain why the ideal credit score isn’t necessary and what you should be aiming for instead.

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What is the perfect credit score?

The factors that make up your FICO score. (Image courtesy of FICO)

Credit scoring models like FICO and VantageScore are designed to grade your level of credit risk on a sliding scale. Both scoring models have a range of 300 to 850. So, if you want to earn the perfect credit score, 850 is the magic number.

FICO and VantageScore scores are designed to predict the likelihood that you will become 90 days late on any of your credit obligations within the next 24 months. The higher your score climbs on the scale, the less likely you are to become seriously delinquent on a debt. This makes you a more attractive applicant to lenders, card issuers and insurance companies.

Related: How your credit scores work

The real perfect score

FICO's loan savings calculator. (Screenshot courtesy of myFICO)

When you’re working to improve your credit score, it’s important to identify why you want to earn a higher score in the first place. For example, are you aiming for a score that will make it easier to qualify for loans? Do you want a credit score that’s high enough to help you qualify for the best rates and terms from lenders and credit card issuers? If so, you can achieve both of those goals with a score much lower than 850.

To qualify for the best treatment from lenders, you typically only need a credit score of 760 or above. In the eyes of a lender, you could say that 760 is the real perfect credit score.

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Some people have a hard time believing that a score of 760 — 90 points shy of the highest credit score possible — could be just as good as a score of 850. Here’s proof.

FICO offers a loan savings calculator that can help you estimate how much interest you might be charged on various types of loans based on your FICO score. It’s a great way to figure out how much money earning a better credit score might save you. Guess what score you need to move into the highest category (with the lowest interest rate) on FICO’s loan-saving chart? Yup, 760.

Credit improvement tips

The perfect credit score isn't necessary, so take that into consideration when aligning your credit goals. (Photo by wutwhanfoto/Getty Images)

Do you already have a credit score of 760 or higher? If so, you may technically be able to improve your credit score if that’s something you want to do. Just remember, even if you do earn a higher score, you’re not likely to receive any better treatment from lenders or credit card issuers.

If you are looking to improve your credit score, here are five tips that might help:

Always pay on time

Your payment history accounts for 35% of your FICO score. As a result, even the occasional late payment can do a number on your score. If you want to earn excellent scores, on-time payments are a must.

Don’t let your credit card balances climb too high

A hefty 30% of your FICO score is heavily influenced by your credit utilization (i.e., the percentage of your total available credit you are using). Make a habit of paying off your credit cards in full each month (preferably before the statement closing date on your account). Your credit scores and your wallet will thank you.

Be patient or ask a loved one for a favor

Another 15% of your FICO score is based on the age of your credit — including the average age of your accounts. Having older accounts on your credit reports can help you in this department. If your credit is relatively young, you can consider asking a loved one to add you as an authorized user to an older, well-managed credit card account.

Mix it up when it comes to the accounts you open

Some 10% of your FICO score is influenced by the mixture of account types on your credit report. So it can help your scores to have a variety of accounts on your reports — revolving, installment, etc. — and manage them well.

Use discretion when applying for new credit

The final 10% of your FICO score is largely based upon how often you apply for new credit. So you don’t have to be afraid to apply for new credit when you want to take advantage of a good offer, but make sure you don’t apply for new accounts too frequently.

Bottom line

The highest possible credit score is an understandable goal if you're an overachiever at heart. You’ve spent much of your life striving to be the best. But an obsession with earning the perfect credit score could potentially hold you back.

Are you afraid to take advantage of valuable credit card offers because you don’t want to risk any potential damage to your credit score? If so, you could be cheating yourself out of some attractive opportunities to earn points and miles.

It can also be difficult to turn an excellent credit score (over 800) into a perfect score. In fact, it’s a lot easier to turn that great score into a lower score if you follow the wrong credit improvement advice. Remember, earning the perfect credit score may feel nice, but it won’t actually get you materially better rates on loans, so aim for a score of 760 or above, and that might just be good enough.

Additional reporting by Stella Shon.

Featured image by Getty Images/Maskot
Editorial disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airline or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

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TPG Editor‘s Rating
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Recommended Credit

740-850
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Pros

  • Excellent welcome offer worth 75,000 miles after you spend $4,000 on purchases in the first three months.
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  • 10,000 bonus miles (worth $100 toward travel) each account anniversary.

Cons

  • The $395 annual fee might be expensive for some, but this card’s benefits provide much more value than that.
  • If you don’t travel frequently, this might not be the best card for you.
  • Earn 75,000 bonus miles when you spend $4,000 on purchases in the first 3 months from account opening, equal to $750 in travel
  • Receive up to $300 back annually as statement credits for bookings through Capital One Travel, where you'll get Capital One's best prices on thousands of options
  • Get 10,000 bonus miles (equal to $100 towards travel) every year, starting on your first anniversary
  • Earn unlimited 10X miles on hotels and rental cars booked through Capital One Travel and 5X miles on flights booked through Capital One Travel
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Best card for premium perks while traveling
TPG Editor‘s Rating
Card Rating is based on the opinion of TPG‘s editors and is not influenced by the card issuer.
4 / 5
Go to review

Rewards Rate

10XEarn unlimited 10X miles on hotels and rental cars booked through Capital One Travel
5X5X miles on flights booked through Capital One Travel.
2X2 Miles per dollar on every purchase, every day
  • Intro Offer
    Earn 75,000 bonus miles when you spend $4,000 on purchases in the first 3 months from account opening, equal to $750 in travel

    75,000 bonus miles
  • Annual Fee

    $395
  • Recommended Credit
    Credit ranges are a variation of FICO© Score 8, one of many types of credit scores lenders may use when considering your credit card application.

    740-850
    Excellent

Why We Chose It

The Capital One Venture X card is one of the best all-round travel credit cards ever launched. Not only is it offering a tremendous welcome bonus, but cardholders can earn tons of miles on everyday spending and receive a 10,000-mile anniversary bonus to boot. Its annual fee is $395, but cardholders can count on up to $300 in statement credits toward travel booked through Capital One Travel each year and other valuable benefits like access to Priority Pass lounges and Capital One’s own growing family of airport lounges.

Pros

  • Excellent welcome offer worth 75,000 miles after you spend $4,000 on purchases in the first three months.
  • Up to $300 in annual travel statement credits toward bookings make through Capital One Travel.
  • 10,000 bonus miles (worth $100 toward travel) each account anniversary.

Cons

  • The $395 annual fee might be expensive for some, but this card’s benefits provide much more value than that.
  • If you don’t travel frequently, this might not be the best card for you.
  • Earn 75,000 bonus miles when you spend $4,000 on purchases in the first 3 months from account opening, equal to $750 in travel
  • Receive up to $300 back annually as statement credits for bookings through Capital One Travel, where you'll get Capital One's best prices on thousands of options
  • Get 10,000 bonus miles (equal to $100 towards travel) every year, starting on your first anniversary
  • Earn unlimited 10X miles on hotels and rental cars booked through Capital One Travel and 5X miles on flights booked through Capital One Travel
  • Earn unlimited 2X miles on all other purchases
  • Unlimited complimentary access for you and two guests to 1,300+ lounges, including Capital One Lounges and the Partner Lounge Network
  • Receive up to a $100 credit for Global Entry or TSA PreCheck®
  • Use your Venture X miles to easily cover travel expenses, including flights, hotels, rental cars and more—you can even transfer your miles to your choice of 15+ travel loyalty programs
  • Named editors' choice for "Best New Credit Card of 2021" by The Points Guy
  • Earn 10 miles per dollar when you book on Turo, the world's largest car sharing marketplace, through May 16, 2023