The three major consumer reporting agencies TransUnion, Experian, and Equifax compile your credit report on the data based on your borrowing habit history and how diligently you have paid back outstanding amounts or loans. The Fair Isaac Corp (also known as FICO), which is a major producer of credit scores, takes these 3 credit reports, applies their formula to your credit history, and comes up with one credit score ranging from 300 to 850.
So, 850 is the highest credit score you can have. The top-tier ranges from 760 to 850; borrowers who are in this range benefit from lowest interest rates on credit offered to them and more desirable credit options. People who have a credit score below 760 fit in the ‘subprime category’ presenting a higher risk of non-payment, subjecting them to a higher interest rate and not many loan choices.
To get a credit score of 850, one must have a perfect payment record which include zero credit card balances and consistent, timely payments. Another factor is the length of time, one holds these accords. For instance, if you have a credit card account which is ten years old or more; it is a definite plus.
So does that mean having a credit score of 850 is the coolest thing ever? Naah, it doesn’t really give you any tangible benefits, besides giving you the power to brag about it. From a mortage perspective, a borrowing has a credit score of 740 or above, can stand to get pretty good deals. If one is looking for mortgage insurance, the lowest rate is a score of 760.