What Your Credit Score Should Be

You are highly unlikely to have the perfect credit score, but don't worry, because you are not alone and you have a good chance of receiving all the same benefits as someone with perfect credit. Ideally, you want the highest score possible, but you can settle for a few dozen or more points less.

Highest Score Possible

The FICO scoring system is the most dominant risk model in the consumer credit industry and has a maximum score of 850, so you should aim for that. At 850, you are theoretically the least risky customer a lender can have. Unfortunately, getting there is nearly impossible, because something usually drags down your score. To get an 850, you would probably have had to successfully pay off dozens of loans over several decades without missing a payment. Even then, you may not get an 850 due to something such as applying for a loan in the past year.

760 or Better

Most lenders realize a score of 850 is impossible, so they settle for less. The ideal reasonable credit score shifts over time. Since 2010, lenders consider a 760 the optimal score. A few years before, a 720 sufficed, but the credit crisis hit, so lending standards became extremely tight. Going beyond 760 probably won't get you anything other than self-satisfaction or a very minuscule interest rate reduction.

Considerations

You do not always need a score of 760 because lending standards vary between creditors and what type of account you need. Retail credit cards, for example, usually require far less than a 760. If you apply for a mortgage, a 760 gives you the best chance at the lowest rate. Shop around and find a lender willing to give the best terms for a score lower than 760.

Tip

Never stop trying to improve your credit score. Doing nothing but paying down debt and sending your monthly bills on time is probably enough to get you a great score, maybe even above 760, over time. Make sure you have at least one credit card and one installment loan, such as a mortgage or auto loan. Most important to maintaining good credit is having no negative items, such as missing payments, settling a debt, having an account in collections or maxing out a credit card.