Although credit scores fall in a range from 300 to 850, most of us never see the very top or the very bottom of that range -- the majority of us fall somewhere in the middle. But some Americans see that 850 as a fiscal mountain to climb, and they set about getting as close to the summit as possible.
Take a look at Ben Broner, for instance. Broner (at right), a grant development professional in Alabama, bought a foreclosed house at auction for his two grown children to spare them the cost of rent while they save up for their own down payments. Broner was able to combine the new mortgage with his existing one at a rate of 3.9% in less than a week, and he just closed on the property.
"It actually happened very fast," he says. The reason why? Broner thinks it has a lot to do with his 812 credit score.
It's worth noting that you don't need an 850 -- or even an 812 -- to enjoy the perks of good credit. Most lenders' best rates go to anyone who has a score over 750. But if you want the bragging rights of of a perfect score, read on.
WalletPop talked to Broner and others like him who are shooting for that "holy grail," then we asked a credit score expert what they were doing right -- and what they could be doing better in their quest."I rarely carry over a balance from one month to the next," says Broner. While carrying a balance in and of itself isn't a super-smart fiscal move, doing so isn't bad for your score. Paying late, however, does wallop your score, a fate Broner says he avoids with some judicious pre-planning. "I use my computer's calendar feature to note all payments due monthly and pay at least five days prior to the due date," he says.
Depending on how early you pay credit card bills, your score could get a boost, says Barry Paperno, manager of consumer operations for MyFICO.com. A balance of zero could give a boost -- possibly a big one -- to your credit utilization ratio. But Paperno points out that most scores draw on your most recent credit card statements, so you'd have to pay a bill off early enough that the statement reflects your payment.
"We have only had two credit cards at any one time, and we use them judiciously," says Broner. Only having a few revolving credit accounts is fine if those accounts all have high limits; otherwise, even a modest purchase could skew your utilization ratio. And while Broner says he's contacted his card issuers and asked for reductions in his credit limits, Paperno says this is the opposite of what you should do if you're trying to boost your score.
"That's not recommended. You can have a very high score in spite of having done that, but it could hurt you in the utilization," explains Paperno. Of course, if your utilization is at zero, this won't make a difference, but if you plan to use your cards -- even if you pay the balance in full every month -- you should actually contact your issuers and ask them for increases in your credit limits. Remember, the idea isn't to actually use this credit; it's to show lenders that while you have access to it, you also have the means and the discipline to stay away from it.
Another American shooting for a credit score of 850 is Christine Clifford, a professional speaker in Minnesota, who spoke with WalletPop about her quest. "It's been a goal of mine to have a perfect credit rating," Clifford says, "but it hasn't been easy."
Despite some setbacks, such as buying and selling a house in rapid succession (which led to multiple inquiries on her credit file), Clifford has an enviable credit score of 814. Several years ago, she says, she took a look at her credit report and was shocked to see errors on it. When she contacted the appropriate parties to have them corrected, her score shot up 40 points.
According to Paperno, Clifford's action is the best thing she could have done for her score. "You should always do that," he says. "That's probably the number-one reason for looking at your credit report at least once a year, which I think everyone should do." If, for instance, the debts or delinquencies of another person with a name similar to yours pop up on your credit report, it could have a serious impact on your score.
Clifford also sold a house at a loss in a down real estate market after her divorce to avoid foreclosure -- and the devastating blow that would have been dealt to her credit score. While it was tough for her to take that hit, Paperno says she absolutely did the right thing as far as her credit is concerned.
"We did a study on the MyFICO forums and found if someone with a 780 is foreclosed on, you could be looking at a 140 to 160 point drop. If you're at 680, it could fall anywhere from 85 to 105 points," Paperno says. Plus, the foreclosure will stay on your report for seven years (although you can start rebuilding your credit well before that).
WalletPop also chatted with Sam Mattingly, a New Jersey-based public relations professional, who currently boasts a score of 798. Like Clifford, Mattingly has protected her score by correcting errors on her report, including one, long-standing mixup with another woman who had a very similar name and a very checkered payment history.
Mattingly credits her high score to her diligence fixing these kinds of errors as well as strong financial discipline, telling WalletPop that she closed all her store credit card accounts. While this may help her (or anyone) get a better handle on spending, it can actually be detrimental for a credit score because the absence of available credit can tip your credit utilization ratio in the wrong direction. What's more, Paperno points out, while closing store cards might not hurt your score, it definitely won't raise it. (If you don't already have store cards, though, don't go run out and open a bunch. Not only does each credit inquiry from a would-be lender drop your score by a few points, but store cards are generally a raw deal.)
Following all these guidelines may not get you to a perfect 850, but even a smaller boost in your score is something worth working toward. With a higher score, not only will getting credit be easier, but you'll be eligible for better rates and terms.
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