Your credit score can make the difference between being denied or approved for credit—and between paying a high or low interest rate. A strong score can help you qualify to rent an apartment and even get utilities turned on without a deposit.
What is it?
Your score is a three-digit number calculated using statistical criteria based on information in your credit history. It’s designed to predict risk—in particular, the likelihood you’ll become seriously delinquent on your obligations within two years of the assessment.
There are several scoring models, but the market is dominated by FICO. According to myFICO.com, the consumer site for the FICO developer, 90% of U.S. financial institutions use FICO scores in their decision-making process.
FICO ranges from 300 to 850 (higher score = lower risk). Each person has three FICO scores, one for each major bureau (Experian, TransUnion, and Equifax). Unfortunately, consumers currently can access only their TransUnion and Equifax FICO scores; Experian ended its agreement with myFICO.com in 2009.
If your goal is to reach the level that unlocks the best rates, perks, and offers, 760 is the magic number.
In an excellent piece at LearnVest, Jacqui Kenyon describes her quest to raise her score—checking it regularly and adjusting her spending and saving habits as she learned more about FICO’s “mysterious” math. She aimed for 850, but discovered it doesn’t make much sense:
Anthony Sprauve, director of PR at FICO, says: “If you have a FICO score above 760, you’re going to get the best rates and opportunities. Aiming higher sounds nice, but it’s not necessary.”
Bingham noted that a perfect 850 may not even be possible:
“The highest I’ve ever seen was 847,” says Bingham, who monitored 1,500 scores for years while studying scoring methodologies. Sprauve adds that when FICO analyzes scores, it does so in ranges, so even if someone had 850, they wouldn’t actually see it as such.
The takeaway
There’s nothing wrong with wanting to raise your score, especially if past habits or old debts left it a bit battered. But the biggest benefits cluster around 760, a far more attainable goal than 850. Yes, even higher scores can get the absolute best terms on cards, loans, and financing—but you don’t need perfection to access those benefits.
Remember, scores are evaluated in bands: if something knocks you down from 760, your advantages might drop a notch. Even so, improving your score is worthwhile—just don’t obsess. As we’ve said, the people with the best scores treat credit as a tool they control, not a force they have to fight.
