What Is the Highest Credit Score Possible & How to Get It

Why Is A Credit Score Important?

When it comes to your credit score, the higher, the better, a high credit score means you have a good borrowing history and are likely to be approved for loans and lines of credit.

But first, what is a credit score? A credit score is a number that lenders use to decide whether or not to give you a loan. It is based on your credit history, including information about your borrowing and repayment habits.

The credit score is important because it shows lenders how likely you will repay a loan. The higher your credit score, the more likely you will be approved for a loan with a lower interest rate.

Credit Scoring Methods: FICO vs. VantageScore

Credit scores are calculated using a scoring model. Here is a comparison of the two most common scoring models, FICO and VantageScore.

FICO

The FICO score is the most common credit score lenders use; it ranges from 300 to 850 and is calculated using five factors.

VantageScore

VantageScore is a scoring model developed by the three major credit bureaus – Experian, TransUnion, and Equifax. It ranges from 300 to 850 and is calculated using six factors.

How Is a Credit Score Calculated?

Let’s look at how the two scoring models calculate your score.

FICO

Payment History: This is the most significant factor in your credit score, accounting for 35% of your total score. It includes whether you make your payments on time or if you have any late payments or collections.

Amounts Owed: This is the second biggest factor in your credit score, accounting for 30% of your total score. It includes information about how much debt you have and what kind of debt you have.

Credit History Length: This is the third biggest factor in your credit score, accounting for 15% of your total score. It includes information about how long you have been using credit.

Credit Mix: This is 10% of your total score. It includes information about the different types of credit you have, such as mortgages, car loans, and credit cards.

New Credit: This is also 10% of your total score. It includes information about how many new accounts you have opened recently and how.

The higher this number, the more you are opening yourself up to risk, and the lower your credit score will be.

VantageScore

Payment History: This is categorized as "extremely influential" of your score, and it includes whether you make your payments on time or if you ever have any late payments.

Age and Type of Credit: This is categorized as "highly influential" to your score. It includes how long you have had credit, your credit mix, and new credit inquiries.

Percent of Credit Limit Used: This too is "highly influential" on your score. It includes how much of your available credit you are using.

Total Balances/Debt: This is categorized as "moderately influential" to your score, and it includes how much debt you have and the average account age.

Recent Credit Behavior and Inquiries: This is categorized as "less influential" of your score. It includes how recently you have used credit and how many new inquiries you have.

Available Credit: This too is "less influential" on your score. It includes how much credit you have available to you.

As you can see, payment history is the most important factor in both scoring models. So, if you want to improve your credit score, focus on making all your payments on time.

How to Increase a Credit Score

Here are a few tips to help you build higher credit scores:

• Make all your payments on time. This is the most important thing to improve your credit score. Late payments can stay on your credit reports for up to 7 1⁄2 years. Call the creditor if you have missed a payment by 30 days or more. You can also ask the creditor to stop reporting the missed payment to the credit bureaus if you are making payments to bring the account current. Time is of the essence since every month the account is marked late, it impacts your score.
• Keep your balances low. The lower your balances are, the better it will be for your credit score.
• Do not open too many new accounts at once. When you open too many new accounts, it looks like you are trying to get too much credit, which can lower your score.
• Do not max out your credit cards. When you charge up your cards to their limit, it lowers your score.
  
  

Ask for higher credit limits. If your credit limit increases and your balance stays the same, you lower your credit utilization. 

• Pro tip: see if it is possible to increase your limit without a “hard” credit inquiry, which can lower your score.
• Use a mix of credit products. Having different types of credit – such as mortgages, car loans, and credit cards – can help improve your score.
• Monitor your credit report. You should check your credit report regularly to make sure there are no errors that could be dragging down your score.
• Become an authorized user. A relative (or friend) with a high-limit credit and on-time payments can add you as an authorized user. Their account will be added to your credit reports, which can benefit you by improving your utilization and payment history. You do not need access to the card or the account number to boost your credit score.

What Are the Benefits of High Credit Scores?

There are many benefits to having a high credit score, including:

• You will qualify for the best interest rates on loans and credit cards.
• You will get more lending options.
• You will get approved for a mortgage more easily.
• You may be able to rent an apartment with no cosigner.
• Your insurance rates may be lower.
• Employers may check your credit score before hiring you.
• Landlords may check your credit score before renting to you.
• You will be less likely to be denied a loan or credit card.
• You will pay lower insurance premiums.
• You may qualify for discounts on your cell phone bill and other utilities.

What is the Highest Credit Score Possible?

The highest credit score possible is 850. However, not many people have that high score, and the average credit score is around 700.

So, if you want to improve your credit score, focus on making all your payments on time and keeping your balances low. Make sure to access your free credit report to check for mistakes and dispute any errors you find.

The Bottom Line

Both the FICO and VantageScore credit scoring models use a variety of factors to calculate your score. But it is clear that the most important factor is your payment history, so make sure you always make your payments on time.

You can also build higher scores by keeping your balances low, opening fewer new accounts at once, and using a mix of credit products. And do not forget to check your credit report regularly for errors that could be dragging down your score.

You will enjoy many benefits if you have a high credit score, including lower interest rates on loans and credit cards and more lending options. So it is worth striving for the highest score possible.

FAQs

1. Is 500 a good credit score?

A credit score of 500 is below the average credit score and is considered Very Poor. A credit score of 700 or above is generally considered good, and a score of 800 or above is deemed excellent.

2. What can I do if I have a low credit score?

Try these tips to help raise a low credit score: Check your credit report and dispute any errors. Access your free credit report to check for mistakes. Dispute any errors you find. Make all your payments on time. Ask for higher credit limits and become an authorized user.

3. Why does a high credit score matter?

A high credit score proves to lenders that you are a responsible borrower and more likely to repay your debts on time. This can lead to lower interest rates on loans and credit cards, and better lending options.

4. What credit score is suitable for buying a house?

Lenders generally consider a score of 620 or higher to be good for buying a house. However, your interest rates and terms may vary depending on your credit score. It can be possible to still get a house loan with a lower credit score, but you will most likely have to pay a higher interest rate.