2 Reasons Why Perfect Credit Scores Are Overrated

Getting an excellent credit score is not impossible. As of the third quarter of 2023, 1.54% of U.S. consumers had a perfect score of 850, according to Experian. But what this tells us is that with enough effort, you can potentially join the elite few with perfect credit scores.

However, if your score is already in excellent shape, you don’t need to push yourself to achieve perfect credit. And if you’re wondering what’s considered perfect shape, Experian says a score of 800 or above is outstanding. We will use this as our reference.

With that in mind, here’s why you should be happy with a score of 800 or above and why you shouldn’t chase 850.

1. You won’t necessarily increase your chances of getting loan approval

The higher your credit score, the more likely you are to get loan approval. But a credit score of 850 won’t improve your chances of approval any more than an 800, 810, or 825.

Once your credit score reaches 800, you have a good chance of getting approved to borrow money at any time. turns out There is another factor getting in your way. For example, let’s say mortgage lenders in your area require an income of $100,000 to qualify for the loan amount you need.

If you only make $65,000 a year, you may be rejected. However, in this case, it is not due to your credit score. Also, in this case, a credit score of 850 probably won’t persuade the lender to lower the income requirement to $35,000.

2. You can’t always get a better loan rate

Having an outstanding loan may result in you getting a lower interest rate on the next loan you sign, whether it’s an auto loan, mortgage, or personal loan. But again, with an excellent credit score you won’t necessarily get a better rate than a score between 800 and 849.

now you will You’ll likely get a better interest rate for a loan with a score of 800 or higher compared to 600. So, if your credit score is nowhere near perfect, then it pays to try to improve it. You can do this by paying your bills on time, reducing the balance on your credit cards, and regularly reviewing your credit report for errors (fortunately, you can do this for free every week if you want).

But there is something big The difference between a credit score around 600 and a credit score around 800. And if you managed to get around 800, then you don’t need to stress about going from there to a perfect score.

How to maintain an already strong credit score?

Although perfect credit is overrated, perfect credit is not. Having great credit not only saves you money on credit, but also allows you to qualify for some of the best credit card offers. And if you’re not sure what any of this means, Check out the list of the best credit cards to learn more.

But if you have a credit score of 800 or higher, your goal should be to largely stay where you are rather than striving for perfection. The steps discussed earlier to improve your credit score are the same steps that should be taken to maintain an already excellent credit score – pay your bills on time, keep outstanding credit card balances low, and make sure your credit report does not contain false information. This might work against you.

Remember, it is common for credit scores to fluctuate from month to month. So even if you manage to hit that perfect 850 at some point, it may be short-lived.

Something as innocent as applying for a new credit card can cause your score to drop a few points, leaving you without excellent credit. Rather than pushing for 850, a better use of your time and energy is to take the steps above to keep your currently outstanding credit score as intact as possible.