Only about 1.6% of the 232 million U.S. consumers with a credit score have a perfect 850, according to FICO's most recent statistics. But it might not matter as much as you may think.
According to some experts CNBC Select spoke to, a perfect credit score is not necessary to qualify for the best credit cards, loans and interest rates. In fact, reaching a credit score of 760 will likely get you all the same benefits — and the best deals — on everything from home mortgages and car loans to credit card rewards.
Below, we ask them why a 760 score is the only one that matters and reveal what it takes for lenders to see you as creditworthy.
Why experts say 760 is the best credit score to aim for
It might be exciting for some to aim to achieve the highest credit score of 850. However, it comes with no additional benefits that you likely won't already get with a 760 score.
"The best published interest rates for auto loans are 720+ and for mortgages 760+," financial expert John Ulzheimer, formerly of FICO and Equifax, tells Select. "As such, I always tell people, shoot for 760 or better. That way, they're safe for all loan types and cards."
For Jim Droske, president of the credit counseling company Illinois Credit Services (and someone who actually has a perfect credit score of 850), the threshold is 760 as well. But he says aiming for 780 is even better to be "the safest" in any type of lending situation. Anything higher, though, won't be more beneficial, nor would it get you a better offer with more favorable terms.
"If you're above 760, or 780, certainly you're already getting the best you can get," Droske tells Select. "You're already hitting that pinnacle of what [lenders] care about." A high enough credit score shows lenders and credit card issuers that you are less of a risk and more likely to pay back the loan, versus if you had a lower credit score.
"Anything above that is really just maybe a little pride," says Droske. "When you have already reached the summit, no need to look for a ladder."
What FICO says about having the perfect credit score
Even a representative at FICO — thescoring model most lenders use to check applicants' creditworthiness — saysthat having a credit score in the top 2% of the U.S. population won't further benefit you, so there's no need to stress. It's also important to remember that it's impossible to earn a credit score above 850.
"The reality is that, from the standpoint of qualifying for credit, it doesn't matter whether you have a perfect 850 or a score just below that," Ethan Dornhelm, VP of FICO® scores and predictive analytics, tells Select. "To lenders, a consumer with a score in the 800s is a sparkling applicant."
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Why having a good credit score still matters and how to check yours for free
It's OK if you haven't yet reached a 760 credit score. The national average FICO® score has steadily risen over the years and hit a record high of 703 in 2019, so many are in the same boat. The good news is that, whether you have a good credit score (670 and above) or even an excellent one, you will most likely qualify for some of the best cards and even cards with the best rewards.You can also still buy a house or car without an excellent credit score.
The American Express® Gold Card was voted Select's best overall rewards card for giving cardholders 4X points per dollar spent at restaurants and at U.S. supermarkets (on up to $25,000 per year in purchases, then 1X). Plus, the option to earn 3X points on flights booked directly with airlines or on Amextravel.com. Applicants can qualify with good or excellent credit. Terms Apply.
American Express® Gold Card
On the American Express secure site
Rewards
4X Membership Rewards® points at Restaurants (plus takeout and delivery in the U.S.) and at U.S. supermarkets (on up to $25,000 per calendar year in purchases, then 1X), 3X points on flights booked directly with airlines or on amextravel.com, 1X points on all other purchases
Welcome bonus
Earn 60,000 Membership Rewards® points after you spend $6,000 on eligible purchases with your new Card within the first 6 months of Card Membership.
Annual fee
$250
Intro APR
Not applicable
Regular APR
See Pay Over Time APR
Balance transfer fee
N/A
Foreign transaction fee
None
Credit needed
Excellent/Good
See rates and fees, terms apply.
Read our American Express® Gold Card review.
And the Blue Cash Preferred® Card from American Express ranked as the best rewards credit card for groceries, as cardholders earn 6% cash back at U.S. supermarkets on up to $6,000 per year in purchases (then 1%). This card also offers 6% cash back on select U.S. streaming subscriptions, 3% cash back at U.S. gas stations, 3% cash back on transit and 1% cash back on other purchases. Applicants can qualify with good or excellent credit. Terms apply.
Blue Cash Preferred® Card from American Express
On the American Express secure site
Rewards
6% cash back at U.S. supermarkets on up to $6,000 per year in purchases (then 1%), 6% cash back on select U.S. streaming subscriptions, 3% cash back at U.S. gas stations, 3% cash back on transit (including taxis/rideshare, parking, tolls, trains, buses and more) and 1% cash back on other purchases. Cash Back is received in the form of Reward Dollars that can be redeemed as a statement credit.
Welcome bonus
Earn a $250 statement credit after you spend $3,000 in purchases on your new card within the first 6 months.
Annual fee
$0 intro annual fee for the first year, then $95.
Intro APR
0% for 12 months on purchases from the date of account opening
Regular APR
19.24% - 29.99% variable. Variable APRs will not exceed 29.99%.
Balance transfer fee
Either $5 or 3% of the amount of each transfer, whichever is greater.
Foreign transaction fee
2.7%
Credit needed
Excellent/Good
See rates and fees,terms apply.
To track your own credit progress, make sure you routinely check your credit score. It's smart to monitor your credit, and your score will not be affected by doing so (which is a common misconception). You can check your score for free with most card issuers, using apps such as Chase's Credit Journey, Discover's Credit Scorecard and CreditWise from Capital One, which are available to all card users.
Chase Credit Journey
Cost
Free
Credit bureaus monitored
Experian
Credit scoring model used
VantageScore
Dark web scan
Yes
Identity theft insurance
Yes, up to $1 million
Terms apply.
If you have a less than stellar credit score, there are steps you can take to raise your score. For instance, Experian Boost™ allows you to connect your utility, telecom and streaming (i.e. Netflix) accounts to your Experian credit report, which can potentially raise your credit score.* Plus the service is free to use.
Experian Boost™
On Experian's secure site
Cost
Free
Average credit score increase
13 points, though results vary
Credit report affected
Experian®
Credit scoring model used
FICO® Score
Results will vary. See website for details.
How to sign up for Experian Boost:
- Connect the bank account(s) you use to pay your bills
- Choose and verify the positive payment data you want added to your Experian credit file
- Receive an updatedFICO® Score
Learn more about eligible payments and how Experian Boost works.
Read more
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*Results may vary. Some may not see improved scores or approval odds. Not all lenders use Experian credit files, and not all lenders use scores impacted by Experian Boost.
For rates and fees of the American Express® Gold Card, click here.
For rates and fees of the Blue Cash Preferred® Card from American Express, click here.
Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.
The article delves into the nuances of credit scores, particularly emphasizing the significance of aiming for a credit score around 760, which is considered optimal for obtaining the best deals on loans, mortgages, and credit cards. As someone well-versed in financial matters, including credit scoring, I can provide insights and additional information that complement the article's points.
Key Concepts Covered:
1. Credit Score Importance & Thresholds
- 760 Threshold: Financial experts like John Ulzheimer and Jim Droske highlight the significance of reaching or exceeding a credit score of 760. They suggest this score ensures favorable terms across various lending types.
- Beyond 760: While aiming higher may seem appealing, according to Droske and FICO representatives like Ethan Dornhelm, surpassing the 760 mark doesn't yield substantial additional benefits concerning creditworthiness.
2. Lender Perspective on Credit Scores
- Lenders' Perception: Lenders view scores in the 800s favorably, considering applicants with scores in this range as strong candidates for credit.
- Risk Assessment: Higher scores indicate lower risk for lenders, showcasing a borrower's reliability in repaying loans.
3. Credit Score Impact on Loans & Cards
- Loan Types: Different loan types have varying credit score requirements, with mortgages typically requiring higher scores (760+) for the best rates.
- Credit Card Offers: Good or excellent credit scores (670+) often qualify individuals for the best credit card offers, including rewards cards like the American Express® Gold Card and Blue Cash Preferred® Card.
4. Monitoring & Improving Credit Scores
- Monitoring Scores: Regularly checking your credit score is advised. Several apps and card issuers offer free score checks without impacting the score itself.
- Improving Scores: Strategies like using Experian Boost™ to incorporate positive payment data and raise credit scores are mentioned as effective steps for improvement.
5. Credit Score Myths
- Impact of Checking Scores: Contrary to a common misconception, checking your credit score frequently does not negatively impact the score itself.
- Maximum Attainable Score: The maximum achievable credit score is capped at 850, with scores in the 800s already signaling excellent creditworthiness to lenders.
6. Credit Cards & Rewards
- Card Options: The article highlights specific credit cards like the American Express® Gold Card and Blue Cash Preferred® Card, emphasizing their rewards and qualification criteria for applicants with good or excellent credit.
7. Tools for Credit Monitoring & Improvement
- Credit Monitoring Apps: Various apps and services like Chase's Credit Journey, Discover's Credit Scorecard, and Experian's tools offer users free access to credit scores and monitoring services.
This comprehensive breakdown emphasizes the importance of understanding credit scores, aiming for an optimal score range, and utilizing tools available to monitor and improve one's creditworthiness, all of which align with the broader financial literacy goals and strategies for responsible financial management.
