None of the major credit bureaus release specific numbers, but it is believed that only 1%-2% of the US population has a perfect score of 850. Many have stated that even those numbers are exaggerated, as achieving such a result is almost impossible. However, there are certainly individuals with credit scores of 850. When a person somehow achieves it, it only lasts for a short time until the individual’s financial situation changes. Even the slightest changes in a credit report can affect a credit score and lower it to 849. However, having an 850 is not necessary to get the best deals anyway. In this article, we will briefly explain what a credit score is and provide a few suggestions on how to improve and properly maintain high numbers.
What is a credit score?
A credit score is a numerical representation assigned to every individual in the United States, intended to reflect the person’s ability to repay loans. The number that often fluctuates helps lenders decide whether it is risky to grant a loan to a specific individual. Credit scores in the USA range from 300 to 850, and it is considered that the higher the number, the better. Having a perfect 850 score is almost impossible to achieve, and even the wealthiest people in the country likely don’t have it. However, approximately 20% of the people have a score considered “excellent,” ranging between 800 and 850.
What are the different types?
There are three major credit bureaus and two scoring models that provide credit scores. The credit bureaus are Experian, TransUnion, and Equifax. The scoring models are known as VantageScore and FICO, also known as the Fair Isaac Corporation. All of the bureaus, as well as the two scoring models, use different metrics to come up with a number. Lenders usually pick one or two credit score providers to use as a tool to learn more about the financial habits of a potential customer.
Why do people need a high score?
Apart from being proof that a particular individual is a good payer, having a high score helps folks get better terms on loans. A person with a high credit score is more attractive for banks to work with, and the banks would be more willing to grant a loan. It is almost impossible to get financing for a car or real estate without having a credit check. The result of such credit checks is one of the factors that help financial institutions decide whether to do business with an individual.
How to improve a credit score?
Improving a credit score can be tricky, but it is generally advisable for people to prove good financial behavior by paying loans and credit cards back on time. Being a good loan payer does not necessarily mean that the score will continue to rise, as other factors are also crucial to the scoring system. These include credit factors such as the number of open and closed accounts, the length of credit history, amounts owed, and credit mix (including credit cards, student loans, car financing, mortgages, etc.).
Benefits of a high credit score?
A person with an excellent score can brag to friends and family. They can also get loans with the best terms from banks or financial institutions. Having a high credit score allows a car buyer to leave the dealership with a brand-new car. They only need to show a form of identification. A high score proves to banks that an individual is trustworthy. High credit scores can also lead to preferential treatment. They may even open the door to negotiations for even better loan terms with the financial institution of choice. The perks come in other forms too. For instance, a high number could help folks skip utility deposits. It may also lead to improved job prospects, as employers sometimes conduct credit checks during candidate pre-screening.
If you want your credit score to stay great, protect your identity and smart devices properly. Proper antivirus coverage reduces the chance of being a victim and helps defend against personal cyberattacks. Most protection solutions are affordable compared to the troubles caused by identity theft crimes. Even if it’s not your fault, a cybercriminal ruining your credit score can haunt you for years. If you have an excellent score, protecting all your smart devices is absolutely necessary.