Why a Perfect 850 Doesn't Matter

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Why a Perfect 850 Doesn't Matter

There are many reasons to strive for perfection. Getting a perfect score on the SAT could help get you into your dream school, while pitching a perfect game can get you a plaque in Cooperstown. And of course, there's that sense of pride that comes with knowing that you could not possibly do any better.

The pursuit of perfection gets all the glory, but the truth is that it may not always be worth it. For many of us, this might be a difficult concept to grasp. When it comes to your credit score, it's the truth.

Is perfect possible?

For starters, a perfect credit score isn't realistic. While it's possible to receive an 850 score, it's very uncommon. According to the Fair Isaac Corporation, the company responsible for creating the FICO score, less than 1 percent of consumers attained an 850 credit score in 2010.

It's also important to note that you can have more than one credit score. In fact, you can have dozens of them. Not only could the bureaus have differing information about you, but each one could also calculate your score in several different ways depending on what it will be used for.

So while it's certainly possible to receive an 850 at one point or another, it's more difficult to assert that you have absolutely perfect credit. Even if you receive an 850 when applying for a credit card, you could end up with a lower score when applying for an auto loan.

Is Perfect Practical?

So a perfect score is hard to get, and receiving one doesn't necessarily mean you'll have perfect credit across the board. Still, you might decide that you want to hit that 850 mark anyway, at least once. How do you try for it? And should you?

The algorithms used to calculate credit scores are notoriously complex. If you already have a high score and start making changes to your credit profile in an attempt to pump up your credit, you run the risk of making innocent missteps that could harm your score. This makes the endeavor of consciously building a perfect score risky and imprecise.

 

Pursuing a perfect credit score may not be worth the effort. Why: bit.ly/1ODxRYh [Tweet this]

 

Is Perfect Profitable?

If you already have excellent credit, you don't stand to gain very much from the gamble. While different lenders usually have different requirements, a score of 720 is often high enough to get you the best rates and opportunities available. You don't need a perfect score to have access to the best that healthy credit has to offer -- you just need to demonstrate that you are a reliable borrower.

Bottom Line

You should always strive to make responsible financial decisions, but if you aren't careful, obsessing over the perfect credit score can actually harm your credit. Making a series of changes to your credit profile in an attempt to boost your score could potentially backfire, and if your score has broken 720, you may already have access to the best borrowing opportunities.

Be patient with yourself and your credit. Good credit is a long-term goal, and if you fixate on the numbers, you might miss the bigger picture. If you already have good credit, congratulations! Continue the great work by checking your credit report on a regular basis.

About the Author: has been a Member Support Specialist at Credit Karma since December 2013. She can usually be found riding bikes around town late at night, communing with animals and eating sweets.

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As my profile name suggests, I have been "aloof" for many years about how credit scoring works....lol. I bought a house 17 years ago with a 650 score, bought a vehicle and paid it off 4 years later, had a couple of credit cards....one with an enormous credit limit that I maxxed out, paid it off twice, then finally took a home equity loan to pay it off a third time! Then, when wanting to purchase another car, didn't understand why I couldn't get a decent interest rate? Also, I always paid my bills on time?

Now, I realize that my debt to income ratio was too high, my card utilization was too high, and I was over-extended or borderline. Credit Karma is a wonderful tool for someone like me who never understood how credit scoring works. These articles are very helpful in making sense of it all. Thank You!

Credit Karma Team
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That's a wonderful compliment, thank you "Aloof"! Glad to hear you enjoy these resources. 

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Reply by
ernestf01

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Actually a lot of lenders have cut back over the last few years. Heck over the last 12 united states has been buying up their dept along with a lot of small foreign countrys dept. Yet we owe the international banks money lol. So if we owe them money then why are we giving them free money is whats always confused me.

Reply by
Nickyta

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dude creditkarma took me from 30g in debt to 0 debt in one year because of mishaps in medical bills i was unaware of- i have always had medical insurance and they just never connected- now im learning in one year what credit even is through creditkarma- whoever made that site is a saint in the credit world :)

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Here's the biggest problem with credit scores, and why there needs to be legislation to change this and make it more transparent and allow the consumers have control:

"The portions of your credit that are most important when applying for a mortgage aren't going to be the most important when you apply for a credit card. Those are very different kinds of borrowing, so those lenders will receive different scores."

This shouldn't be, your score should be the same for EVERY lender, and it should be EXACTLY the same as the consumer can get from any free, or paid, credit score site. There should be no surprises to the consumer when applying for a car loan, mortgage, and credit card, you should know what your score is, and that score should be what a lender gets. It shouldn't depend on whether or not that lender is pulling your score on a Wednesday when the moon is full, which is often what it seems like it is.

Reply by
9warloc9

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I could not have said it any better.

The scores need to be more transparent to everyone across the board especially to the person applying for the credit

Reply by
mrjjwiley

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Ok.... I get that. Then tell me are the scores on this site what a credit card company would use or a real estate broker for a mortgage would use? Sincen there is different ways they pull and calculate your score someone should let us know what type of algoithm is being used. Right?

Reply by
industrialvalve

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This is true, as consumers we would expect to be treated equally, but in reality we are not.  I had a career in mortgage lending during the real estate implosion.  During this time, I had learned that not only do we have 3 different credit companies with their own scoring model, but that each one had 3 to 4 different models.  One for basic consumer debt such as credit cards, one for auto loans, one for mortgages, and one for consumers to get an "Idea" of their scores. 

I used to get it all the time; a client would call in and let me know that they have a credit score of xxx.  I would ask them where they got it, and they would say they paid for it via the credit scoring company.  I would let them know, that if I pull their credit, there was a very good chance that the scores would not be the same or even close.  Sure enough, I would pull it and there may be a 40-50 point difference.

There needs to be some kind of guideline for consumers to understand how their credit score can change and the components that make that change.  Sure we all know that we need to make our payments on time, but what about this case?  During the housing bubble bursting, and before there was a change in the bankruptcy laws, I used to see many bk's, both chapter 7 (complete charge off) and chapter 11 (payment plan/restructuring), and a lot of foreclosures, sometimes multiple times.  So how it is it that someone could have gone through a ch 7 with forclosure, and a couple months after it being recorded have a 700+ credit score?  Why does someone that you can see, bust their butts to keep their home and do the responsible thing by not filing a bankruptsy get penalized for it, and have sub 500 scores?

The credit bureau's look at us in this light, you are guilty until proven innocent.  The scoring models do not factor in nor is there any concession for the one who abuses credit, versus the one who is working hard to be a responsible and ethical person.  I saw may good people loose their homes, doing the best they could with what they had.  Lifes circumstance sometimes throws us a curve ball and we need to react.  Some take the easy way out and some will fight and prosper. 

I am one who fought and prospered.  It has taken a very long time, ie about 5 years, but I fought for keeping my home, I fought for not loosing my cars, I fought for not loosing my family....I fought for it all.  Yes it has taken a very long time to recover, but I can at least say I fought and won.  I did not give in to foreclosure, nor did I choose the bk route.  I pushed harder, did whatever I needed to do job wise so to be able to pay the bills that I created and I alone.  For this the scoring models should be able to account and see what is happening, but they don't and if you want a score, you must play by their game.  Fair or unfair it is what it is.

Reply by
Hillarysummer

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You are not correct.  As you wrote, there are different types of loans.  Therefore there are different sets of criteria which are examined for each type of loan.  A five year car loan is far different than a thirty year mortgage.  This makes business sense.

Each of the three credit agencies have slighlty different algorithims to compute credit scores.  And each has a variety of scores for every person.  That is why slight variations is scores between the three agencies are not viewed to be significant when applying for a loan.  And anytime you apply for a loan, you are entitled to the credit scores which were pulled.  Just ask.

If you note one score is significantly lower, you should immediately pull that agency's credit report on you to verify there are no errors.  

Credit scores are tabulated on a specific date.  Every person may have a different situation every day.  For example, on Monday a person may have a credit card balance of $1,000 out of a credit limit of $2,000.  That shows a 50 percent used rate, which will lower the credit score.  On Tuesday, the person may make a $700 payment which results in a 15 percent used rate.  This should improve the credit score.  

Should you be in such a situation may be better to wait until the payment is applied to the credit card balance to apply for a car loan, allowing the percentage of credit used to drop and the credit score to increase.  

Finally, there is really no need for anyone to pay for a credit score.  Many credit cards, such as Discover and Am Ex, provide a free monthly FICO and Credit Karma provides a free estimate of you credit score.  In may case, Credit Karma is always 20 or so points lower than my actual score, though both are well over 800.

Reply by
Ivonnee

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I agreed, there is no transparency to where do lenders come up with different scores.  Bu I think all lenders are scans, when they want to get you, they will get you no matter what!

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my credit score went from 725 to 692 in one week,and i did not miss any payment on account of anything,why was that.

Reply by
irishfrec

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That happen to me as well

Reply by
Anvilbreaker

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This happened to me as well, could have been you had an account close by either paying it off or by inactivity. That lowers your score significantly try to keep revolving credit open. Such as credit cards if you finance a bed or a sofa those accounts will close boosting your credit while paying on them but damaging you when you pay them off. I've thought of a way to help it a little, when I have an account such as my bed one year before pay off I will get another credit card and start using it. This way my credit won't take such a hit when the other one closes. I know this defeats the purpose of becoming debt free, buy sadly you need debt to maintain a high credit score it's a vicious cycle but that's how it works.

Reply by
benaserena

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In Dec, 2012 I turned in my leased vehicle and got another
Which I've done several time without issue, but this time, for some reason
My score dropped by 53 points stating I closed an account with the bank
That is obnoxious! ..this never happened with my previous leases
This has hurt me in so many ways...I went from a 699 to 646
Just flipping my lease...which, I had to do...

Reply by
1amboss

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Enter Your Reply this happened to me to! CK is full of shi8. 

Reply by
kim3cute

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Enter Your ReplyMy score dropped 61 ponts down to 698 in one week. Nothing I did but Best Buy closed my account due to inactivity and the bank I had a morgtgage through & paid off 10 yrs ago this month, reported it as closed. :(

Reply by
stefanieperu

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I got married and both of our cards and scores combined.. The ones that we shared before getting married.. i went from 725 to 674.. i think its because more debt :(

Reply by
syllylou

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I got the same shock. Mine went from 760 to 699 in a week. No payments missed, always early & paid more than I had to. My bank offered a free virtual wallet which I love. But as it turned out they had to do a credit inquiry. That took it to 750. Then they gave me another credit card which gave me money instead of points. That took my score to 700 because it lowered the average  length of time I had credit. Plus my bank canceling a card that was compromised by the bank & another company going bankrupt. Neither of these were my fault & I never canceled them, only the bank did. Also I discovered those stores you have credit with cancel the card after 6 months of not using it. True, you can go in & they'll start it back up with no problem. What they don't tell you is all that does is make you look like you have more new credit. Again that lowers your score. Finally I bought a photoelectric fire alarm on credit because I live in a home over 100 yrs. old. $25. a month is no big deal. But guess what? It was enough to lower my score to 699. So here I sit with an house & car insurance score at 880 (yeah, 880). Every bill paid before & more than due for the 10 yrs. I've had credit. Yet my rating is only fair? Those banks & credit card companies got whatever they deserved. No wonder they went under. They trusted only in credit scores.

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Reply by
DancesWithWords

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7 People Helped

Ugh, the same just happened to me! I was cruising along at 757 (per the "fake" FICO scores on two different credit cards, Barclay and Citi), and then suddenly it plummeted to 721! :-O  

I wish credit reporting agencies HAD to let you know when you score dropped/rose, and had to explain WHY it happened, and how you can fix it (if possible). Why do we have to frantically dig through our credit reports trying to figure it out? And that's assuming you even KNOW that your score has changed -- most people don't, until they apply for something and are turned down, or have credit cards that let you know when this happens. 

I still haven't figured out what happened to my credit scores ... and I haven't a clue how to find out. Nothing has changed, and in fact, I've actually paid down some of my accounts, so the score really should have improved :-/

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Thanks for the great article Laura!  I'm FLoridabiker77's wife & we have been a big fan of paying for everything.  Then we wanted to build our dream home & we had NO credit!  It has been 3 yrs since we moved in, bought a used car & made the payments, opened a secured card & a couple of Cap One's with low limits.  We were charging & paying.  Finally our score went to 742.  So we cancelled the low limits, changed the Cap Ones, & got the "good" cards with decent limits.  I am striving for the almighty 850 but the doors do open when your credit is good.  Right now, our score went down because of the hard inquiries & all the new cc's.  It is slowly going back up & we are enjoying the fact that it's there.  Thanks for all of the helpful articles and advice.  I check here every week.  And yes, all but Restoration Hardware(bought some chandeliers with 12 mos same as cash) is getting rotated & used on a regular basis.  Good to know I can pay these in full every month & it will still have an affect on our credit.  Rose  :-)

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Reply by
caligeekgrrl

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You could have asked Cap One for higher credit limits instead of closing them... But getting new cards with into 0% APR is always nice.

Reply by
livingfree222

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Capital One is a great credit card company! I started with a $300 limit in 2013 and now have a $6000 limit on the same card just by paying on time as well as keeping my utilization under 20%. My credit score is 667 now however, I am striving for 720 or higher which is totally within my reach at ths point. Thank you Credit Karma for this tool which allows me to monitor and create strategies for increasing my credit score.

Reply by
gobbly1337

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The problem with closing accounts is that account age plays a significant part in your score.  You are better off keeping your older cards (might as well see if they will raise your limit), charge a few small things to them each month and setup auto pay for the whole balance (capital one has a great autopay system).  You can still get some new cards and will end up with more avail credit (which will help your score).  Just be responsible and don't overuse them, setup auto pays for the full balance monthly, and rotate through them for a few bucks of spending a month.

Reply by
rruiter

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You made a mistake by closing the existing cards. Should have just asked for a credit increase. Now you have newer credit and the older ones will fall off in 7 years, lowering your score. 850 is not in your future.

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the credit score is designed for lenders. Not us. Its a penalty system. Ok one margin over all accounts for a 850. 21 open and closed accounts paid on time. To get that many accounts you would half to apply for a new line of credit every six months  And just one to allow hard inquirys to fall off over the course of ten years. So were your score climbs in one area its dropping in another. You can't go over 20 percent on a revolving line of credit without droping your score. Yet if you don't go over 20 percent most lenders will not increase your limit. So you can have a 850 score and most your cards 500 dollar limits. As for loans which the lenders encourage. Most are half the revolving accounts interests rates. But after application fee's appraisal and every thing else they want. Not counting on alot of loans its fixed payments which means you cant make extra payments to lower the amount of interest bye paying off the principle. A revolving credit line better. As for other end of a loan it show lenders your in coming in income is tied up in monthly payments. Home loans that you have something you haft to keep repaired. Bottom line is your credit report is actually designed to allow them to charge you higher rates. Or else landlords,phone companys and places that do not loan money or government backed student loans would not be allowed. Guess to put it bluntly unless you have a million bucks dont ever espect a 850 credit score

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Reply by
kjarrett1991

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Very helpful thank you

Reply by
Researcher0628

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I agree 100% with Ernest.  Great article and Credit Karma is a great service but the fact is credit scoring is designed to increase lender's yields.  They love it when people stress over every point.  They love letting most people know they don't qualify for the best rate.  They are happy, however, to offer you a loan that carries a higher interest rate and higher fees.  How nice of them!

I had a very low score a couple years ago.  I've worked to increase my income and pay off my debts while watching my score make slow (very slow) but steady upward progress.  What I've realized is that living debt free is GREAT!  I still have a car loan with 12 months left to run.  Once that's paid I'll live within my means from here on out.  If I can't pay for something I won't buy it.  My score has edged over 700 now and I'm sure lenders would love to offer me their "not quite prime" rate products ... thanks, but no ... not interested.  

I'll keep my two credit cards purely for convenience (with zero balances always.)  I'm sure it's not the result that lenders anticipate cosidering hw much stress and effort we as consumers put into our credit profiles but the lesson I've learned is that I don't need them.  The only consumer item worth borrowing for is a house, in my opinion.

Okay, rant over! LOL

Reply by
MIFNP

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Hello "ernetf01."  I have 20 "open" accounts because I am a doctoral student, and have past student loans.  When your loans go through several different "hands," each one of them is a bonafide account.  Thankfully, all of those accounts are paid.  But, I just wanted to comment that this happens when people have a lot of school under their belt (in addition to the "regular" accounts most people have, etc...)

Having an 850 credit score is not necessarily wise. From what I am reading, keeping your score above 720 is enough to get you the best rates on insurance, auto loans, etc...

The irony is I read a bunch of threads where folks with credit scores as high as 780s were applying for the credit cards that Credit Karma "recommended,' and ended up being denied for stupid reasons! Now, they have to wait two years for the hard inquiry to be removed from their record! Ugh.

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I had a horrible credit report and did not understand in the least how credit scoring works. After I started using credit karma, I was informed, made better decisions and now I own my own home! There is no way I would have been anywhere near the right track unless I "obsessed" About my credit and started checking and disputing as often as possible. I went from a 560 to a 727 in a year and half thanks to this site! Thanks guys

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I paid off my car loan with a cash back credit card. the total was 3500 dollars. two days later I paid the 3500 dollars off on my credit card. The 3500 dollar balance was immediately posted to my credit card. its been 3 weeks since I paid it off and it still showing the 3500 dollar balance on my credit report. I'm just wondering why it takes so long for them to report when you pay something but it seems immediate when you charge something. My scores dropped about 20 points because of this and my increased utilization.

Reply by
lakeesha81

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Your credit card reported your balance to bureau on a certain day. They report on or around that day every month. Call you cc company and ask what day they report to the balance. Also a car loan account was closed so that will lower your score. Try to pay your cc 5 days prior to them reporting to bureau.

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How often should you utilize a credit card for instance say you have three but one is the one you use most.  How much should you utilize and how often?  Also is it super important to stay below 20% credit utilzation?

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Reply by
Designlmc

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It is super important to actually stay below 10% overall. That is the new  'magic number' for "Excellent" utilization. You can probably do 20% utilization on a card, as long as your overall utilization is below 10%. I had a 40 pt, bump when my utilization went below 10%.

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Reply by
caligeekgrrl

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I like to carry higher debt on 0% intro APR rate cards with higher credit limits, and then make a single charge on other cards that have higher ARPs and pay them off every month. And yes, staying below the 20% is important. If you've had any of the cards a while and start using them regularly, you can always ask the card company for a credit limit increase. That is a way to carry a larger amount of debt and still be able to keep it below 20%. Just don't spend outside your means, it can be trouble in the long run.

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Rule No. 1 Dont Drive Yourself crazy worring about Going up or down ,A couple of points this is insane to check credit everyday what did you do before credit karma ,did you still have credit? Please Think about it ,Before Its to late late late!!!!!!!!!!!!!!!!!

8 Contributions
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Helpful to 5 out of 5 people

Building a good credit score is like turning a battleship.  It takes time.  Many years ago I had a situation with a medical emergency.  Before insurance my bills hit one million dollars.  I could not work for several years.  My husband's employer insurance paid the claims then fired my husband.  Our monthly obligations were low so only medical posted deliquent. .  But every medical person posted negatives on my or my husband's credit.  Many were wrong.  Some insurance paid others we slowly paid off.   It took over 3 years to geet them all off our credit.  At one point my score dropped as low as 435.  Now my score is over 750.  My husband's  score who used to be higher than mine is now at 650.  Credit cards I barely got a few years ago now have continuely lowerd the interest rate  and one just converted itself to a very good rewards card from a "bad" card.  Most have raised the limits once or twice a year with out me asking.   

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