How to achieve a perfect credit score (and why you don't really need it)

As Lynnette Khlafani-Cox looked at her credit score back in 2022, she couldn’t believe what she was seeing. The number that popped up on her screen: 850.

To others that might not be surprising, since she is a renowned money expert (known as ‘The Money Coach’) and author of books like “Zero Debt”. But Khalfani-Cox remembers very well just 20 years earlier, when she was struggling with over $100,000 in credit-card bills.

Now, after years of being hyper-diligent about her credit, she had finally reached the magic number: 850, the highest you can go in the FICO scoring system.

“I even took screenshots,” she laughs. “It definitely gives you bragging rights.”

Khalfani-Cox is hardly alone in striving for 850. Only 1.76% of Americans make it to that number, the kind of score that opens the door to lower car payments, cheaper mortgages, and readily available personal loans. 

Score an 850, and most lenders would be only too happy to extend you credit, because they are virtually guaranteed that you will pay it back.

But to some consumers, it’s almost like a final exam at school. They see it as a personal reflection on them, and want to get an A+ on their report card.

“In my experience, for the people achieving that hard-won status, it is top-of-mind for them,” says Khalfani-Cox. “They are like Type-A personalities, go-getters, who want to be the best.”

Of course, getting a top credit score is a laudable goal, which can even help secure jobs and apartments. But keep in mind that you don’t have to be perfect. Positive momentum is the healthier approach, which happens one small step at a time.

Some tips on jump-starting your score, and understanding the mysterious data-crunching behind the magical 850:

-Track your progress. You can’t get serious about an improved number, if you don’t know where you stand. That’s why Khalfani-Cox suggests credit monitoring services, which let you peek under the hood and know when and why your score is going up (or down).

“You can sign up for free services, but it can even be well worth it to pay for it if necessary,” she says. Nowadays many banks and card companies will keep you apprised whenever you log in to your accounts; you can also get a free roundup at AnnualCreditReport.com.

“Credit monitoring was probably the single most valuable form of education I received about how the system works.”

-Think different. While the old standbys like car loans and mortgages and traditional credit cards are all critical to building credit, it’s important to remember that the credit landscape is changing – and there are now other ways to boost your score, as well. 

“If you’re just starting out, open a secured credit card – a deposit-backed account designed to help you build credit,” suggests Thomas Ravert, a financial planner in Nyack, N.Y. “Some modern cards also consider alternative data, like your bank activity.”

With Current’s secured charge card, the Build Card, it connects to a members’ existing spending balance (no need to transfer funds to another account). As you spend, funds are held in reserve and used to pay your bill at the end of the month (which can be set to autopay) and Current then reports these as on-time payments to the three major credit bureaus. 

-Your score will change – and that’s okay. If you do make it to that perfect number, you won’t automatically stay there. It’s a dynamic number that changes all the time, based on any number of factors. For instance, opening a new credit card or two – or even paying off an installment loan, like a car – will likely temporarily drop it down.

Even Khalfani-Cox herself saw her score fall occasionally, after hitting 850. But remember that lenders aren’t looking for perfection. Anything in the high 700s or above, and you will be getting the best possible interest rates on loans.

-Don’t be fixated on FICO. Yes, the so-called FICO score is the most prominent credit scoring system around. But it’s not the only one.

You might have seen in the news recently how the VantageScore (backed by the credit agencies Experian, TransUnion and Equifax) has been approved for use on all Fannie Mae and Freddie Mac mortgages, which paves the way for even wider usage.

That means you would be wise to keep on top of that score, too. Here’s a roundup of how that score is calculated in its most recent 4.0 model: 41% payment history, 20% depth of credit, 20% credit utilization, 11% recent credit, 6% balances, and 2% available credit.

Its top score, by the way? You guessed it: 850. 

Get even close to that number, and a whole lot of financial possibilities open up.

“As both a financial psychologist and financial planner, I often see credit scores not just as numbers, but as deeply emotional touchpoints in people’s financial lives,” says JW Harris, a financial psychologist and planner in Moore, S.C. “A low score can stir up feelings of shame or regret, while a high score can boost confidence and financial flexibility.”