What Is a Perfect Credit Score?

A perfect credit score is almost unknown. A rating of 800 is theoretically possible, but even many people who have never missed a credit payment, always paid their bills on time, never had an altercation with the law or even had an error on their report do not reach perfect credit after demonstrating exemplary behavior for years.

Significance

Credit scores generally stop mattering for most purposes after 775, but that doesn't stop many completion-obsessed people from struggling to bring their score up to those lofty heights. Its only real value is a badge of achievement and potentially a subject of conversation. Naturally, people are more likely to look at you cock-eyed if you bring up your perfect credit score in casual conversation. Even so, it's nice to be known as having a rock-solid credit reputation.

Function

What many people do not realize is that it becomes easier to drop in credit score as the score approaches 800. Even minor errors on the credit report can end up docking the score by 10 to 20 points or more and are hard to erase and recover from quickly. Of course, those losses won't matter much, but it is still a bit of an irritant if you have struggled to get a perfect credit score.

Features

The best way to get a perfect credit score is to pay off credit card balances in full each month, never miss a bill payment, have a good mix of debt--credit, student, auto and mortgage--and pay off large outstanding balances in a relatively short time frame. Credit bureaus like to see behavior like paying off mortgages in unusually short periods of time. Avoid taking out personal loans; generally, credit bureaus prefer it when people stick to revolving credit accounts and secured debt like mortgages and auto loans.

Effects

A perfect credit score is not as important as many people would think. For major loans, creditors take into account a wide variety of factors of which credit score plays a relatively small part. For a small business loan, for example, a lender is more interested in seeing credible evidence to demonstrate that the borrower will be able to generate a profit using the lent capital. A mortgage lender will not finance a $10 million mansion for a family who makes $100,000 a year, but has perfect credit.

Benefits

The primary benefit of having perfect or close-to-perfect credit is peace of mind and the ability to negotiate with lenders from a position of strength. A perfect credit score demonstrates a clear history of financial intelligence. It is the 4.0 grade average of personal finance. Another pleasant thing about it is that it takes away excuses that people who judge you based on credit rating (such as co-op boards) might otherwise be able to use. Perfect credit is objective evidence of a commitment to financial integrity, which is an asset that never stops appreciating.