Your credit score is a simple three-digit number that has a huge impact on your ability to get loans and open new accounts. If you are able to get credit, it can also affect the interest rate you will be required to pay. Many people have no idea what a perfect credit score would be, if it can even be achieved and whether it's really necessary. While there is such a thing as a perfect score, you only need to be within a certain range to be considered among the best credit risks.
Definition
By definition, a perfect credit score from FICO (formerly Fair Isaac Corp.) would be 850. That is the best score that can be achieved, but Dana Dratch of Bank Rate says that the best scores in real life typically reach about 825.
Range
Your credit score affects your ability to get loans and the interest rate you will be charged. Low scores tend to bottom out around 300, and people in that range usually cannot get credit at all. People with scores from the 600s up can usually get credit, but they may pay a higher interest rate. If your score is above 775, Bank Rate's Dratch says that you will receive the best terms even though you don't have a perfect score.
Major Factors
Many factors play into your credit score. According to FICO, your payment history makes up more than a third of your overall score. If you tend to make late payments, you won't be able to achieve a perfect or near perfect score. The amounts you owe on your loans, credit cards and other accounts make up 30 percent of your score. If you have high balances, your FICO score can't be perfect.
Other Factors
Other factors that affect your FICO score include the amount of time you've had credit, the number of accounts you've opened recently and the types of accounts you have. If all of your credit is relatively new, or if you don't have a good mix accounts that is balanced between credit cards and installment loans, you won't have a perfect or near perfect credit score.
Time Frame
Your credit score changes continually based on the information in your credit report. If you had a string of late payments several years ago, that information will continue to bring down your credit score until it drops off your credit report after seven years. However, its impact will lessen over time. If you maintain a good payment history, your credit score will rise. You will eventually be able to achieve a near perfect score as long as you don't accrue any other negative information.
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