The FICO® Score system assigns a highest possible score of 850, with only 1.54% of Americans achieving a perfect 850 credit score, as per recent research by Experian.
While a perfect credit score isn’t necessary, having a high credit score offers numerous advantages. It can enhance your chances of qualifying for premium credit cards, low-interest loans, and even reduced insurance premiums.
Experian’s study also examined the traits of Americans with an 850 credit score. Understanding how this group manages credit can provide insights into improving your own credit habits. Here are four common characteristics they share.
1. They have more credit cards
On average, consumers hold 3.9 credit cards each. However, those with a perfect credit rating have an average of 5.8 credit cards.
Contrary to the belief that having numerous credit cards is detrimental, the number of credit cards you own doesn’t directly impact your credit score. Many individuals with top credit scores opt for multiple credit cards to maximize rewards, such as travel perks or cash back offers.
While maintaining multiple credit cards isn’t essential for a high credit score, it can lead to financial benefits. Opening new cards often comes with welcome bonuses, providing more opportunities to earn rewards.
Despite the challenge of managing multiple cards, this isn’t a concern for those with perfect credit.
2. They keep their balances low
Although individuals with perfect credit tend to have more credit cards, they carry significantly smaller balances. The average credit card balance among Americans is $6,501, yet it’s less than half that amount for those with top credit scores at $3,028.
This group also maintains lower credit utilization rates, a crucial factor in determining credit scores. By spending less and having more available credit due to owning additional cards, their average credit utilization is as low as 4% compared to the national average of 29%.
Both spending habits and the number of credit cards contribute to their low credit utilization.
3. They have perfect payment history
Your payment history has the greatest impact on your credit score. Individuals with perfect credit have never missed a payment on their credit cards or loans.
Late payments only affect your credit score when they are at least 30 days past due. Thus, maintaining a flawless payment record is crucial for achieving and preserving a high credit score.
In the event of a late payment, ensuring it’s settled before the 30-day mark is essential to prevent negative impacts on your credit score.
4. They’re older
The majority of individuals with perfect credit belong to the baby boomer or older age groups, comprising 66% of this demographic. Generation X represents another 26%, indicating that 92% of individuals with top credit scores are in their mid-40s or older.
Apart from credit management, the length of your credit history influences your credit score. Achieving a perfect credit score requires a long track record of responsible credit use.
For those new to credit, patience is key. By focusing on timely payments and maintaining low credit utilization, you can gradually build a high credit score over time.
Building and sustaining a high credit score revolves around your payment history, credit utilization, and credit history length. Individuals with perfect credit excel in all these areas, demonstrating prudent credit management practices.
