5 Rules in Achieving a Perfect Credit Score

by Emily Guy Birken · 9 comments

In college, I had more than one professor tell my class at the outset that he did not ever award A+ grades to his students. An A+ denoted perfection, and as students, we were not able to get a perfect score in these classes. There was always room for improvement.

For years, I assumed that the 850 credit score was a similar beast. I thought that you might be able to break the 800 range if you were some sort of financial rock star, but that no one really achieved a perfect score. However, while earning an 850 is certainly rare, it is not impossible. If you consistently follow all of these rules, you can improve your score and become one of elite few who have perfect credit:

1. Pay your bills on time. In order to qualify for the perfect score, you need to have seven years of on-time bill paying for each and every one of your accounts. That long history of on-time payments accounts for 35% of your points in your credit score, so being on top of this facet of your finances will help immensely. If you have trouble with regular bill payments, set them up to be paid automatically.

2. Only use a portion of your credit limit. In order to have good credit, you need to use credit. But credit cards can be difficult to keep under control if you don’t pay them off every month, so you need to be very careful with your credit. If you pay your bill in full each month, you are both protecting yourself from interest and showing that you are an excellent credit risk. In addition, just because you have a high credit limit does not mean you should use it. The rule of thumb is to never use more than 20% of your available credit.

3. Take the long view. One of the basic tenets of credit is stability. If you have kept your same credit card and loan accounts open, active and paid for over a decade, that will positively affect your score. Constantly opening and closing new accounts is not a good sign for your credit-worthiness.

4. Variety is the spice of life. In addition to stability, you will want to make sure you have multiple forms of credit in your name. Having a credit card, a student loan, a home loan and a car loan that are all open, active and being paid off will show that you are a responsible borrower. However, if you only have two types of credit, there is no need to open other accounts to improve your score, as it can sometimes backfire.

5. No new credit. Every credit inquiry made when you apply for a loan or credit card will negatively affect your credit score for up to six months. So if you are actively trying to improve your score, don’t apply for a new credit card or loan while you’re working on your score.

When trying to improve your score, you’ll find that most of the decisions that will be healthiest for your personal finances are also the ones that will improve your credit the most. These good choices will take time to reflect on your credit score, but they will help your bottom line as soon as you implement them.

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{ 9 comments… read them below or add one }

Patrick September 16, 2011 at 7:20 am

“In addition to stability, you will want to make sure you have multiple forms of credit in your name. Having a credit card, a student loan, a home loan and a car loan that are all open, active and being paid off will show that you are a responsible borrower.”

“When trying to improve your score, you’ll find that most of the decisions that will be healthiest for your personal finances are also the ones that will improve your credit the most.”

So you don’t pay off your loans in full because you want perfect credit because then you can easily qualify for even more loans? And this course of action is “healthiest for your personal finances”? If you apply for a mortgage, is there really going to be a difference between a 750 and an 850 credit score? At some point you’re just trying really hard to impress the banks.


Free Money Minute May 12, 2013 at 7:49 am

Why is good credit valuable? Only to borrow more money. Borrowing more money only leads to a life of slavery. Debt elimination should be the goal as it is what will help you build wealth, not good credit!


Emily Guy Birken September 16, 2011 at 7:45 am

@Patrick, I agree that there is some inherent ridiculousness to the idea of credit. However, overall it does help you financially to improve your score even if you never achieve a perfect score. Keeping your loans open and active does not necessarily mean that you don’t pay them off.

For example, I pay off my credit card each and every month and I send a double payment to my student loan each month in order to pay it off more quickly. However, keeping that credit card open and active and being on top of my student loan debt both help to raise my score. It is possible that I could personally never have a perfect score because I am trying to pay off my student loan more quickly, but I’m willing that take that chance. It might be better financially for me to pay less each month on my loan and invest the rest, but psychologically, I prefer the sense of paying off debt.

I hope this answers your concerns.


Patrick September 16, 2011 at 8:38 am

@Emily: I commend you for paying off your CC each month and sending double payments to your student loan. That’s awesome! I believe using money to pay off debt is better than using it to invest. When your debts are paid off, you’ll have a lot of money available to invest.

When you apply for a mortgage or car loan, I really don’t think they’ll care about an 850 versus a 750. You’ll get the best rate either way.


Ron - Bankverse September 16, 2011 at 10:12 pm

I’ve often thought that FICO uses some indicators that may be similar in nature to how a search engine does trust ranking. Say for instance, a person takes a new car loan every 2 years, with a balance high enough to indicate being upside down. Is that a positive or negative indicator for future financial position? Regardless if the payment is always on time, I would argue that it is a negative indicator. They may be introducing subtle aspects like that into the overall score.

If that is the case then, I would think stability is key to getting a perfect or extremely high score. Not just paying on time, keeping balances in a certain range, and other common, known indicators. A financial account history that shows, solid rock like behavior, over the long term. So if it’s a new car every two years, carry very little if any on the note.


Jason September 22, 2011 at 5:05 am

Same article regurgitated thousands of times a month by self-professed personal finance gurus and gobbled up by a naive population of half-wits.

Working on or worrying about your credit score is about as valuable a use of time as wasting it on Facebook or playing some stupid video game.

You want a great credit score (not that your credit score even matters) just do what common sense dictates. Pay your bills on time, minimize debts, live within your means, save as much as you can so you don’t have to finance anything.

If someone is still paying off a student loan, certainly the person will be one of the last I’d look to for financial advice.


Sam September 23, 2011 at 8:43 pm

The best way I follow is the following.
– Buy something bulk in your credit card such as $1000.
– Then pay triple your minimum payment (not full) and try to close the payment in 3 months.
– Continue this for 10 months and your credit score will sky rocket for sure.


KathyP December 6, 2011 at 8:22 pm

Get rid of or severely limit “Retail” credit cards such as dept stores, Best Buy etc. FICO HATES those types of cards.


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