Everyone dreams of having an 850 credit score. It’s the highest score possible under most FICO scoring formulas. It’s been listed as one of the most common wishes that American adults would make. Get to know the benefits of 850 credit score?
Very few people in the United States actually have a credit score of 850, though. So we set out to answer the question: what does an 850 credit score actually get you? But first, let’s break down some information about credit scores and why an 850 is so good.
What Makes A Good Credit Score?
A good credit score tells lenders that you are a low risk borrower. It means that you’re very likely to pay your debts, on time, and in full. Lenders are generally looking to reserve their lowest interest loans for the lowest risk borrowers.
Here are the general guidelines from Experian, one of the big three bureaus, for how they consider credit scores:
- 300 – 579: Very Poor
- 580 – 669: Fair
- 670 – 739: Good
- 740 – 799: Very Good
- 800 – 850: Exceptional
If your credit score is below 580, it could be preventing you from numerous opportunities. You may be unable to get many loans because of your credit score.
Learn about what your credit score contains by checking out the following articles:
What Are The Benefits Of 850 Credit Score?
If you have an 850 credit score, congratulations! It means you’re one of the most creditworthy people in America, with very few people having such a high score.
Here’s what you get with an 850 credit score.
You will be able to get the lowest interest rates on mortgages, car loans, and personal loans. As a result, this lowers the overall cost of any loans you take out and could really help your cash flow situation. Learn how to prepare your credit for a mortgage.
You will be able to qualify for any credit card that accepts your income level. Someone with an 850 credit score will not get rejected for a credit card, and some people may be able to get a card with no limit.
You will get the most favorable terms, allowing you to stretch out your financing over a long period of time. People with poor credit often can’t get a mortgage for a long enough term for it to make financial sense.
You will be able to personally guarantee initial business loans, and getting a loan from a bank will be very easy. Taking advantage of your ability to get more credit can give you a leg up financially in a business.
However, there are two caveats.
A 850 credit score doesn’t give you much of an advantage over someone with an 800 credit score. Pretty much anyone with an ‘exceptional’ credit score will get the same interest rates and terms from lenders, no matter where in the range they fall.
Even if you have a perfect credit score, you may still be unable to take out a loan of a certain size. Your limits will be the amount of debt you carry, and what your yearly income is. Many lenders take into account your total yearly income and your debt-to-income ratio to assess how large of a loan you qualify for.
How Do You Build A Good Credit Score?
Building a good credit score requires good credit practices. Here’s the five things you will need to do in order to have an excellent credit score.
- Make all your payments on time. Don’t miss payments. If you are unable to afford a payment, call your lender and let them know of the situation to see if they’re able to work something out with you. This is a much better option than simply ignoring it!
- Don’t take out loans that you can’t afford to pay down. This is simple and obvious, but many people miss this and end up in financial straits.
- Use your credit cards responsibly. Don’t carry large balances month over month. If you can afford to, pay off your credit cards in full every month. Contrary to popular belief, you don’t need to carry a balance over to maximize your benefit: you just need to use it and pay the payment when it’s due.
- Build a good mix of credit over time. This doesn’t mean go out and get a student loan, car loan, and a mortgage all at the same time (this will hurt your credit score!) Instead, you’ll want to take on different types of debt one at a time, while having various types of debt within 7 years.
- Keep old credit card accounts open. If you want a new card with better points or cash back benefits, call your bank and see if they’ll upgrade your card on the same account.
My Credit Is Far From Perfect. What Do I Do?
Following the tips above will improve your credit over time. Your credit will improve as you get more financially responsible. Paying down debt will help, too.
If your credit has been marred from years of financial mistakes, errors on your credit report, and bad luck, there could be help for you. You may benefit from credit repair.
Credit repair services like The Credit Pros help people dispute errors on their credit report, help them get bad marks on their credit removed, and give financial guidance to help them build their credit score.
The Credit Pros has years of experience dealing with credit bureaus and lenders and helping people repair their credit. Our credit experts will help you through any situation, and we’re only a phone call away.
Give a call to The Credit Pros to see how they can help repair your credit: no matter what your situation is!
I Need Help With A Specific Situation!
Got items in collections that are damaging your credit score? Check out this article about how to handle collections accounts!
Errors on your credit report? Learn about the Fair Credit Reporting Act and how you can use it to get the bureaus to correct their mistakes!
Just had a divorce? Moving on is hard, but getting back on your feet financially can be even tougher. Check out this article about how to recover from the financial blow of a divorce!
New creditholder that wants to build credit? Check out our official guide on building credit for new creditholders!