Only about 1.6% of the U.S. population with a credit score has a perfect 850, according to FICO’s most recent statistics. But it might not matter as much as you may think.
According to some experts CNBC Select spoke to, a perfect credit score is not necessary to qualify for the best credit cards, loans and interest rates. In fact, reaching a credit score of 760 will likely get you all the same benefits — and the best deals — on everything from mortgages and car loans to credit card rewards.
Below, we ask them why a 760 score is the only one that matters and reveal what it takes for lenders to see you as creditworthy.
Why experts say 760 is the credit score to aim for
While it might be exciting for some to aim to join the 850 club, it comes with no additional benefits that you likely won’t already get with a 760 score.
“The best published interest rates for auto loans are 720+ and for mortgages 760+,” financial expert John Ulzheimer, formerly of FICO and Equifax, tells CNBC Select. “As such, I always tell people, shoot for 760 or better. That way, they’re safe for all loan types and cards.”
For Jim Droske, president of the credit counseling company Illinois Credit Services (and someone who actually has a perfect credit score), the threshold is 760 as well. But he says aiming for 780 is even better to be “the safest” in any type of lending situation. Anything higher, though, won’t be more beneficial, nor would it get you a better offer with more favorable terms.
“If you’re above 760, or 780, certainly you’re already getting the best you can get,” Droske tells CNBC Select. “You’re already hitting that pinnacle of what [lenders]care about.” A high enough credit score shows lenders and credit card issuers that you are less of a risk and more likely to pay back the loan, versus if you had a lower credit score.
“Anything above that is really just maybe a little pride,” says Droske. “When you have already reached the summit, no need to look for a ladder.”
What FICO says about having the perfect credit score
Even a representative at FICO — the scoring model most lenders use to check applicants’ creditworthiness — saysthat having a credit score in the top 2% of the U.S. population won’t further benefit you, so there’s no need to stress.
“The reality is that, from the standpoint of qualifying for credit, it doesn’t matter whether you have a perfect 850 or a score just below that,” Ethan Dornhelm, VP of FICO scores and predictive analytics, tells CNBC Select. “To lenders, a consumer with a score in the 800s is a sparkling applicant.”
Why having a good credit score still matters and how to check yours for free
It’s OK if you haven’t yet reached a 760 credit score. The national average FICO score has steadily risen over the years and hit a record high of 703 in 2019, so many are in the same boat. The good news is that, whether you have a good credit score (670 and above) or even an excellent one, you will most likely qualify for some of the best credit cards and even cards with the best rewards.
The American Express® Gold Card was voted CNBC Select’s best overall rewards card for giving cardholders 4X points per dollar spent at restaurants worldwide and at U.S. supermarkets (on up to $25,000 per year in purchases, then 1X). Plus, the option to earn 3X points on flights booked directly with airlines or on Amextravel.com. Applicants can qualify with good or excellent credit.
And the Blue Cash Preferred® Card from American Express ranked as the best rewards credit card for groceries, as cardholders earn 6% cash back at U.S. supermarkets on up to $6,000 per year in purchases (then 1%). This card also offers 6% cash back on select U.S. streaming subscriptions, 3% cash back at U.S. gas stations, 3% cash back on transit and 1% cash back on other purchases. Applicants can qualify with good or excellent credit.
To track your own credit progress, make sure you routinely check your credit score. It’s smart to monitor your credit, and your score will not be affected by doing so (which is a common misconception). You can check your score for free with most card issuers, using apps such as Discover’s Credit Scorecard and Chase’s Credit Journey, which are available to all card users.
