How I Got a Perfect FICO Score

How I Got a Perfect FICO Score (But Does It Even Matter?)

If you want to buy a house or a new car, you've probably wondered what it takes to get a perfect FICO credit score.

Well, that's a great financial goal. And having a perfect FICO score does demonstrate your ability to manage your use of credit.

However, you should consider the following two points:

  1. You don't need a perfect FICO score to get the best rates.
  2. If you truly manage your finances the right way, your credit score shouldn't matter.

I'll get into those items in a bit, but first, let me show you my perfect FICO score…

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My Perfect FICO Score

To be honest, I wasn't even attempting to get a perfect credit score.

I was managing my money like I had taught myself over the last several years. I just happened to check my FICO score because it was a free service offered on one of my credit card accounts.

Now, don't get me wrong, I do track my finances and credit scores routinely.

I have a reminder set to check my credit score using Credit Karma every week. But I do that just to ensure nothing bad happens to my score without me being aware of it.

And I use Personal Capital to track my finances and stay on top of my net worth.

Both of those financial tools are free to use, and I highly recommend using both of them.

However, I hadn't checked my FICO score before. I'll discuss the differences between the credit scores I check with Credit Karma and the FICO score a bit later.

How to Get Your FICO Score for Free

I have a Bank of America credit card, and I was able to get my free FICO score there. It is based on data from TransUnion.

Bank of America report showing perfect FICO score

Unfortunately, if you don't have a credit card with Bank of America, this isn't an option.

If you have a different credit card, you should check with your provider.

However, Discover provides your FICO score for free, and you don't even have to be a customer.

Discover report showing perfect FICO score

The Discover score is based on data from the Experian credit bureau.

Signing up for the Discover Credit Scorecard is pretty simple. Just go to the website, answer some questions about your credit history, and you'll get your score.

My Credit History

While I have excellent credit now, it wasn't always that way.

I have struggled with credit card debt in the past.

I know I've had credit scores in the 600 range, but I'm guessing it was even lower before I started paying attention to it.

After I recovered from my credit card debt, I started managing my money differently.

Yes, I still have debt.

I have a mortgage, a car payment, and a pool loan (soon to be paid off!).

And I use a credit card for just about everything I buy.

I love the convenience, and I love credit card rewards even more!

But I also have a large amount of available credit, and I pay off my cards in full each month. I also have a large number of accounts, a good mix of accounts, and a long credit history.

While I had excessive credit card debt before, I never missed a payment.

And now, I do my best to save for significant expenses in advance.

Factors Affecting Your Credit Score

Credit Score Factors Pie Chart

If you are interested in achieving a perfect FICO score, you need to understand the factors that affect it.

1. Payment History (35%)

Payment history is the most significant factor in your credit score.

It accounts for 35% of your score.

It only makes sense. If you have had problems making your payments in the past, lenders will be less willing to risk lending you money in the future.

That is why it is so important to always make your minimum payments.

And don't ever miss a payment without talking to your credit provider. They are often willing to help you during difficult economic times.

2. Amount Owed (30%)

Several factors are taken into consideration for how this affects your score.

And this area has the second most significant impact on your score at 30%.

Your credit utilization, or how much of your available credit you are using on revolving accounts, is a major factor. If you are close to maxing out your credit cards, it can be a signal to creditors that you are stretching yourself thin financially.

The number of accounts that you are carrying a balance on can signal credit issues to providers.

And the total amount owed, as well as the distribution across different types of accounts, may have an impact on your score.

Having a good track record with installment loans also helps you int his area.

One thing to keep in mind is that even if you pay off your credit card in full each month, the amount reported to the credit bureaus is your statement balance.

I believe that last factor, along with continuing to pay down my installment loans, is what contributes the most to the fluctuations in my score.

3. Length of Credit History (15%)

The length of your credit history has a 15% impact on your FICO score.

This area takes into consideration how long your credit accounts have been open, as well as the use of your accounts over time.

While many people may think it is good to close old credit card accounts, especially if you’ve struggled with them and finally paid them off, it actually isn’t.

There are two reasons for this.

First, if you don't have many accounts, and you close a credit card you opened when you were young, and all of your other accounts are relatively new, it can have a significant effect on your overall credit age.

Second, closing a credit card with a sizable credit line can negatively affect your credit utilization and have an even greater impact than the age.

One other thing to be aware of is that even if you don't use them anymore, you should occasionally buy something using these older cards and pay it off in full.

If you don't have any use on a card for an extended period, your credit provider may close the account without any notice, negatively impacting your score.

4. Credit Mix (10%)

While credit mix only makes up 10% of your credit score, if you're trying to obtain that perfect FICO score, you need to understand it.

A good credit mix means that you've had several different types of credit in your history and have paid them off responsibly.

Different credit types include installment loans (mortgages, student loans, auto loans) and revolving accounts (credit cards, retail cards, home equity lines of credit).

Again, this factor doesn't impact your score very much, so you shouldn't open more accounts for the sole purpose of creating a good credit mix if you are looking to improve your score in the short-term.

Doing that will impact the last factor as well…

5. Credit Inquiries (10%)

When you apply for new credit, it appears on your credit report and remains for two years.

If you have an established credit history, these entries will have less of an impact.

However, if you have a large number of inquiries at once or have a short credit history, they can be more impactful.

Be aware, it is okay to have multiple inquiries when applying for a car loan or a mortgage. Creditors understand there may be numerous credit checks with these large purchases.

But a large number of credit card inquiries are likely to raise a flag to new creditors.

Opening new accounts to diversify your credit mix can have a negative impact in the short term. But if you are looking to improve your credit for future purchases (like a home), opening new accounts could improve your credit mix.

Additionally, it will provide additional credit to improve your credit utilization, thus improving your credit score in the long-term.

Credit Score Frequently Asked Questions

Here are some of the most frequently asked questions about credit scores. If you have other questions, please let me know in the comments.

What does a perfect FICO score do for me?

Basically bragging rights…

Yes, it does help you obtain the best rates and almost be guaranteed approval when applying for new credit.

But if your score is around 750 or above, you'll receive the best rates as well.

Credit approvals are more based on a bell curve than strict numbers.

What other factors are considered for credit approvals besides credit score?

While your credit score is the main factor typically used for credit approval, lenders also consider your income and work history to determine your ability to repay your debts.

What is the difference between credit scores and FICO scores?

Credit scores are based on different calculations and can result in different scores. FICO scores were created to have a consistent representation of your credit for lenders and are used by a majority of them.

FICO credit scores are denoted by a version number and type. There are different versions, such as FICO Score 8, FICO Auto Score 5, FICO Bankcard Score 8. These versions are updated to reflect how credit usage changes over time.

How do I dispute errors on my credit report?

This FTC article explains how you can get a free credit report and how to dispute any errors.

Additionally, free apps like Credit Karma will notify you of changes to your credit report.

If you don't recognize those changes, you should take immediate action to ensure your credit isn't harmed.

Is it possible to get an 850 credit score?

Yes, you can achieve a credit score of 850. However, while it is possible to get this perfect score, it isn't necessary to receive the best rates from lenders.

How important is an excellent credit score?

Credit scores only matter when you need credit.

If you manage your money so that you only buy things that you can afford, your credit score doesn't matter nearly as much.

You might say that's great, but I still might need a mortgage and a car!

Well, I agree. And the same principle applies. But only get a mortgage and a car that is within your budget.

If you stick to what I said, only buying things you can afford, you'll likely build excellent credit along the way.

The problems start when you take out a mortgage or car loan that is beyond your means, and then you start using credit cards irresponsibly.

I still recommend using credit cards. Just use them smartly.

Use them for rewards and pay them off each month.

Having a good credit score is just one part of being financially healthy.

Related: Best Personal Finance and Budgeting Apps

So What's the Point of Achieving a Perfect FICO Score?

To brag about it!

But that's about it.

I'm really not a bragger; I just happened to noticed I achieved it and thought it would be a good starting point to discuss improving creditworthiness in general. I hope it has been helpful from that aspect.

It's an excellent accomplishment, but the foundation that gets you there is what's important.

And don't stress about getting the perfect score. Having an excellent score puts you above most other people anyway.

Most importantly, be smart about your finances and don't use that perfect score to get a loan for something you really can't afford.

Perfect Credit Score: How I Achieved It.

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