Is There a Perfect Credit Score?

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Starting as early as elementary school we’re pretty much encouraged  to go for the gold and to shoot for the 100% mark. A perfect score on a test isn’t just considered a number,  but has come to represent hard work and excellence. So it’s no wonder that anyone looking at a low credit score – or even an above average credit score – would set their eyes on financial perfection. After all, if you’re going to have credit, the higher the score the better, right?

While good credit is important, credit scores don’t actually adhere to the traditional standard of perfection. That’s because there is no such thing as a perfect credit score. What’s more, there’s not really just one credit score to begin with.

The tricky thing about credit scores is that they’re often marketed as a single number. But in actuality there are tens if not hundreds of potential scores that can be pulled. Depending on the contributing sources, your number might range from good to excellent simply depending on which credit company you ask. To shoot for the elusive “perfect score” would mean that you’re shooting to attain “perfect scores” across a very extensive scoreboard. It’d be a little like trying to bowl a perfect score in 40 bowling alleys… simultaneously.

Most people think the perfect credit score is 850 because the most common credit scoring models (FICO and VantageScore) use a range of scores from 300 to 850. And in a narrow sense, it’s true that an 850 is a perfect score by one measure – but since there are many credit scores it doesn’t make sense to think of having one perfect score.

You have hundreds of potential Credit Scores – and they’re all different!

Yes – hundreds! A credit score is actually a reflection of many different bits of information about a potential borrower. A selection of this information is then compiled and analyzed to create a kind of rating – or a credit score – with the intent of indicating the person’s creditworthiness. Because not every single element of a borrower’s information is interesting to each lender, that means credit scores are calculated using various scoring methods. These different scoring methods take different information into account, which in turn means that they all yield different scores. For example, an auto lender may use a different scoring model than a mortgage lender, and so on.

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Aim for the ideal “range”

The most commonly used credit scores come with a ranking system in place. Anyone whose score falls within a certain range of numbers will be assigned the corresponding label. When you receive a credit score, you might see that your score is categorized as poor, below average, average, above average, or excellent. Another option is that you might see it “graded” with traditional letter grades (Vantage Score uses this) to show where you fall on the scale of scores. Some lenders look at your range more than your actual score, so aiming for the highest range (instead of a perfect score) is a healthy goal that’s not based on perfection alone.

Focus on improving financial habits

While your credit score is a great way to keep in touch with your finances and even act as a motivator to improve your financial habits – it shouldn’t be the sole motivator for your financial change. Credit is supposed to reflect good financial habits – in this case, good borrowing habits. Trying to achieve a perfect score – an impossible task – might actually derail you from putting attention on other aspects of your finances that benefit from equal time and attention. Instead, it’s important to focus on ways to improve your financial habits, particularly as they pertain to borrowing.

Creating (and maintaining) good financial habits is the ultimate goal. A good (or even great) credit score does have it’s advantages (lower interest rates, more reasonable lending terms) but it’s important to remember that it’s also not necessarily the marker of financial health. A person with a lower score but excellent financial habits is still ahead of the game compared to a person with a high credit score and dangerous borrowing habits.

Use one score as a way to track your financial changes

To stay clued in to potential identity theft or any major changes in your credit, it’s helpful to choose one credit score to use as a tracker. To compare different credit scores against one another won’t give you the same insight. Consistently checking in with one means that you’re comparing a score against the same set of circumstances.  While it’s not essential to check in everyday with your score every day, or even every week, checking in on a monthly basis is a great way to keep tabs on any big changes. ReadyForZero uses the Vantage 3.0 Credit score which you can see when you log-in using ReadyForZero PLUS.

Bottom line

So, is there a perfect score? No. Not one that applies to every lender or every situation.

But can you make sure you have a good score, or even a great score? Yes!

As always, your best bet in achieving your financial goals is to work towards creating sustainable and positive financial habits. For more information about credit scores, check out our Credit Score Resource Center.

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