It's human nature to go for a high score. Nobody remembers the person with the second-highest score on the local "Galaga" machine. Maybe they don't remember the person with the highest score, either, but I worked hard for it.
Credit scores range from 300 to 850 under the most widely used scoring systems. Lots of people think that it's important to get the highest possible credit score, but you actually don't need a perfect 850.
Here's the ideal credit score
The optimal credit score is a 760 or higher under the FICO scoring system. FICO® Scores are the most widely used type of credit score by lenders. Some credit card companies have free FICO® Score tools. If yours doesn't, you can check your FICO® Score free of charge online with Experian CreditWorks℠ Basic.
Why a 760 or higher? At that point, you've effectively maxed out the benefits you can get from a high credit score. A score in that range is more than enough to qualify for top credit cards. It's also good enough to qualify for the lowest interest rates on loans, including mortgages.
This is because creditors generally use credit score ranges, not exact scores, to make decisions. The highest FICO® Score range for lending decisions is 760 to 850, according to MyFICO.
So, if you raise your credit score from 700 to 760, that could have financial benefits. It may help you qualify for more credit cards and get lower interest rates on loans. Raising your credit score from 760 to 850 likely wouldn't benefit you in any way.
How to improve your credit
A 760 is still a high credit score, and it takes good financial habits to get there. If you're not there yet, here's what you can do to build your credit score:
- Always pay your bills on time. This is what's most important, as your payment history is the biggest factor in your credit score. In particular, make sure to pay credit cards and loans on time, because these payments get reported on your credit history.
- Have at least one credit card that you use regularly. To build credit, you need to borrow money and pay it back. The simplest way to do this is to use a credit card every month and pay the bill on time.
- Stay out of credit card debt. If you avoid charging too much to your credit card, it's good for your credit utilization ratio, another key factor in your credit score. You'll also avoid interest charges if you pay your credit card in full every month.
- Be careful about opening new credit accounts. Each credit application has a small impact on your credit score. The occasional new credit card or loan is fine, but if you apply for too many, it could hurt your credit.
What to do once your credit is good enough
If you consistently use a credit card and pay the bill on time, you'll eventually have a credit score of at least 760. You might wonder what you should do then.
You don't need to make any changes. All those good financial habits mentioned above work well for building and maintaining your credit score. It's also important to continue paying on time and avoiding credit card debt, no matter what your score is. Late payments can cause a massive drop in your credit score, and credit card debt costs you money, so it's best to avoid both of those.
Once you're there, you can just keep doing what you're doing -- with the knowledge that your credit score is good enough. Make sure you're taking full advantage of that credit score, too. If you haven't already, check out highly rated credit cards to find one that can add value to your life. That could be one of the many travel rewards cards if you like to travel, a cash back card, or any of the other excellent cards reserved for consumers with high credit scores.
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FAQs
According to Ramsey, a credit score is really an "I love debt" score. He's against credit scores because he believes they're tied to being in debt.
What credit score do you need for a Target red card? ›
How hard is it to get the Target Credit Card? It is not hard to get the Target Credit Card because you only need fair credit to qualify, which means you should have good approval odds with a credit score of 640 or higher. You also need to have a steady income, an SSN and a valid ID, which is standard.
Does anyone have an 850 credit score? ›
And when it comes to credit, 850 is the highest the FICO Score scale goes. For more and more U.S. consumers, practice is making perfect. According to recent Experian data, 1.54% of consumers have a "perfect" FICO Score of 850. That's up from 1.31% two years earlier.
Is a 900 credit score possible? ›
Highlights: While older models of credit scores used to go as high as 900, you can no longer achieve a 900 credit score. The highest score you can receive today is 850. Anything above 800 is considered an excellent credit score.
What credit score is needed to buy a house with no money down? ›
You'll usually need a credit score of at least 640 for the zero-down USDA loan program. VA loans with no money down usually require a minimum credit score of 580 to 620. Low-down-payment mortgages, including conforming loans and FHA loans, also require FICO scores of 580 to 620.
Does Dave Ramsey have a FICO score? ›
(Just in case you're wondering: Yes, Dave Ramsey's credit score is indeterminable. And he wears that accomplishment with pride!)
What credit score is needed for an Amazon credit card? ›
Both the Amazon Credit Card and the Prime Visa are for people with good or excellent credit scores of 700+, while the Amazon Store Card accepts fair credit (640+ credit score) and the Amazon Secured Credit Card is for bad credit (300+ credit score).
What credit score do I need for a Walmart credit card? ›
To get approved for the Walmart Credit Card, you will need a credit score of 640 or above (fair credit or better). Other requirements include a monthly income that's at least $425 more than your monthly housing payment, a valid SSN or Tax ID number and a physical U.S. address.
What bank backs a Target Credit Card? ›
Target offers a RedCard credit card issued by TD Bank USA.
How rare is 825 credit score? ›
Membership in the 800+ credit score club is quite exclusive, with fewer than 1 in 6 people boasting a score that high, according to WalletHub data.
What is the average credit score? The average FICO credit score in the US is 717, according to the latest FICO data. The average VantageScore is 701 as of January 2024.
How rare is an 800 credit score? ›
According to a report by FICO, only 23% of the scorable population has a credit score of 800 or above.
What is the highest credit score in the world? ›
FICO scores range from 300 to 850.
Does anyone have a 1000 credit score? ›
Although a 1,000 score isn't possible, an excellent credit score is attainable.
Can I buy a house with a 705 credit score? ›
Home loans
Your credit score might be only one piece of your home mortgage application, but it's among the most critical. With a 705 credit score, you're well above the 620 baseline score needed to qualify for most home loans, but borrowers with a 740 score or higher will typically get a better interest rate.
Why does Dave Ramsey say not to get a credit card? ›
If you can't pay off the card every month, you may start carrying a balance and find yourself getting stuck in credit card debt. In addition to carrying a balance, you'll also rack up interest and ultimately wind up paying back more money than you spent.
Do you actually need a credit score? ›
Your credit score is a three-digit number representing your credit history that lenders use to evaluate your risk as a borrower. Having no credit score makes it more difficult to access financing for anything from a cellphone to a car or home.
Do you need credit for Dave? ›
Even though the Dave app doesn't do credit checks, there are still requirements to be eligible for a cash advance. And, again, even if you're approved, you're not guaranteed to get the full $500. To qualify for an ExtraCash advance, you need: A bank account you've had for at least 60 days.
Do you need a credit score to borrow money? ›
Lenders use your credit score (or credit rating) to decide whether to give you credit or lend you money. Knowing this can help you negotiate better deals, or understand why a lender rejected you.
