If you imagine that life with an 820 credit score is sunny and beautiful, you’re mostly right. There’s no doubt that such a stellar credit score has its benefits, but there are some surprising reasons why having a credit score that high isn’t necessary.
What Does a FICO Score Over 800 Mean?
There are different types of credit scores, including FICO and VantageScore, but the FICO model is still used by a majority of credit institutions. On the FICO Scale of 300 to 850, any score over 800 is considered “exceptional.” This means that you’re among the 18 percent of people with 800-plus FICO scores who receive the most favorable rates and terms on any kind of credit.
If you’ve reached this level of financial responsibility, sit back and be proud. You’ve worked hard and earned it. But don’t lose sight that there may be a downside.
The Risks and Drawbacks of an Exceptional Credit Rating
Earning a credit score of 820 requires a high degree of fiscal conservatism. You have to do more than just keep your finances under close watch and pay all of your bills on time. Unfortunately, this level of credit doesn’t earn much more benefit than a score of 750; although, it does give you flexibility in times of need.
DID YOU KNOW? A higher credit score may cause credit companies to overlook you for various bonus opportunities. That’s because opening any new credit lines or generating inquiries will bring your rating down without providing any meaningful rewards. A high rating could also make you a more attractive target for identity thieves.
The Trade-Offs of Exceptional Credit Are Worth the Effort
The advantages of keeping pristine credit are generally worth the sacrifices. Finding a personal loan may not be an issue because you’ll have credibility on your side. You may even qualify for zero-interest loans and lower insurance premiums.
Is There a Way to Get a Perfect FICO Score?
Just adding a few extra elements to your already awe-inspiring credit management can move you closer to perfect credit. If you haven’t already, automate recurring payments to ensure they are never missed. It’s important to lower your debt-to-income ratio by paying down any loans or credit card balances. Leave cards you aren’t using open instead of closing them, (which can lower your score), and don’t respond to new credit offers.
These tips for achieving a perfect score will also help those with less than stellar credit. If you’re ready to reach the pinnacle of creditworthiness, get started by clicking here to check your credit score for free.