Only 1% of Americans Have a Perfect Credit Score. Here’s How to Join Them
How many people do you think have an absolutely perfect, flawless credit score? And do you think you could be one of them?
Here’s your answer: About 1% of Americans have a perfect credit score. And yes, you could be one of them — if you play your cards right.
How to Get a Perfect 850 Credit Score
At any given time, roughly 1% of people have perfect 850 credit scores. And Fair Isaac Corp., the company that created FICO scores back in the 1980s, tells The Penny Hoarder that just about 22% of U.S. consumers have scores above 800.
So let’s get those competitive juices flowing! You’re not going to let these people outdo you, are you?
Here are some simple steps you can take to join the cream of the crop:
1. Spot the Errors on Your Credit Report
Did you know your credit score could be inaccurate? One out of five credit reports have an error, according to the Federal Trade Commission.
To keep a close eye on your credit and easily catch any errors that are dragging down your score, get your credit score and a “credit report card” for free from Credit Sesame. It breaks down exactly what’s on your credit report in layman’s terms, how it affects your score and how to address it.
Because it simplifies everything, you should be able to spot and dispute any errors.
You can file a dispute online for free with the appropriate credit bureau. After you fill out an online form, most disputes get investigated within a month.
James Cooper, a motivational speaker, raised his credit score 277 points using Credit Sesame. Now he talks to high school students about the importance of having good credit and uses what he’s learned through Credit Sesame as a blueprint for his lessons.
“We want to touch the Z Generation,” Cooper says “We’re not in the business of fixing credit. We want to get to you before you have to fix your credit.”
Like Cooper, 60% of Credit Sesame members see an increase in their credit score; 50% see at least a 10-point increase, and 20% see at least a 50-point increase after 180 days.*
2. Use Less Than 30% of Your Available Credit
An important part of your credit score is “credit utilization.” That’s a fancy-pants way of saying “how much of your available credit you’re actually using.”
Let’s say you have a credit card with a $2,000 limit on it, and you have a balance of $1,000 that you haven’t paid off. You’re using half your credit. Your credit utilization is 50%.
Many experts suggest keeping your ratio no higher than 30%. But the lower, the better.
This makes more difference than you might think — it accounts for 30% of your credit score.
Jerry Morgan of New Port Richey, Florida, raised his credit score by 120 points in six months after following Credit Sesame’s advice on how to improve his credit utilization rate.
One option was to open another credit card. That seemed counterintuitive, but he was actually able to transfer some of his higher balances onto a new card and level out the ratio, which helped his score.
3. Stick Old Credit Cards in the Freezer
The length of your credit history accounts for 15% of your credit score, so closing old credit cards could actually hurt your score. Instead, when you’re ready to stop using an old card, freeze it.
Literally — in the freezer it’ll go.
Sure, it sounds extreme, but making it unavailable can help your credit utilization and help you save money without losing your aged credit history. When you’re tempted to spend, you’ll have to wait for the card to thaw, requiring you to think through your spending decision.
4. Don’t Apply for New Credit Too Often
Be choosy when applying for new credit cards and loans. Once you’re signed up, Credit Sesame will let you know your chances of being accepted for credit cards, mortgages and other loans.
Cooper applied for his first credit card based on Credit Sesame’s guidance. It told him which credit cards were most likely to approve him, so his credit report wouldn’t be dinged for rejected applications.
Credit Sesame does not guarantee any of these results, and some may even see a decrease in their credit score. Any score improvement is the result of many factors, including paying bills on time, keeping credit balances low, avoiding unnecessary inquiries, appropriate financial planning and developing better credit habits.
Mike Brassfield ([email protected]) is a senior writer at The Penny Hoarder. His current credit score is way better than it used to be.