It’s told to us throughout our lives that we should strive for total and absolute perfection – give more than 100%. Give 110%, and then give a little more. Perfect test scores aren’t just a number for students; it’s an achievement, something which you can pin to your chest with pride. With this kind of attitude starting so early in life, it’s not hard to see why anyone looking over their credit score – whether it’s low or average – will look beyond the clouds and to financial perfection. It only makes sense: if you must have credit, the higher your score is, the better it is. Right?
While a solid credit score is something to strive for, a credit score doesn’t actually keep to the convention of perfection we grow used to, where higher numbers are always better. It might seem confusing, and it is a little complex – there isn’t such a thing as credit score which is perfect. Even stranger, there’s not really just one score for your credit rating. There are many.
It’s the trickiest part of how credit scores are shown to us. It’s always just one number, but when you look at reality, there are so much more. There are actually many tens, if not multiple hundreds of scores that could potentially be pulled. It depends on what the source is – if you ask one credit company, they might say your score is good or excellent, while another might give an entirely different answer. Make your score perfect is a lot like trying to get a perfect bowling game 40 times – all at the same time.
Although most people have been told that the perfect score is 850, that’s only true for the most common scoring models (FICO or VantageScore) which use a range between 300 and 850. In a very narrow sense of speaking, it’s true. 850 might be a perfect score – but only by that one measure. There are so many credit scores that it hardly makes sense thinking about it as a single perfect score.
You have hundreds of potential Credit Scores – and each one is all different!
Credit scores are actually reflections of lots of different pieces of information about and from a potential borrower. Some of these bits of information are collected, and then combed through, to create a rating – a credit score – with the goal of determining just how creditworthy a single person is. But not every piece of information from a borrower is important to every lender, which results in a number of different scoring methods. Each scoring method pulls different information and uses that to determine a score, which means that each one will create a different score. An auto lender might use something different than what a mortgage lender will use.
Aiming for your ideal “range”
Most common credit scores have ranking systems to determine where you fall in the order. You might see your score listed as poor, or below average, or average, or above average, or even excellent, or you might see that your score has been ‘graded’ with letters, like Vantage Score does. You want to aim for a perfect range, not a perfect score. Not only do some lenders look at your range rather than looking for a single perfect score, it is a far more reasonable goal to have – one which is based in reality, and not only on an ideal of perfection.
Improve your financial habits
Although looking at your credit score may be an excellent way to understand your finances, and one that can even motivate you to improve your habits, it should not be the only motivator you have for a financial change. Your credit score is meant to reflect a healthy financial ethic – in the case of a credit score, your borrowing habits. The idea of a perfect score is an impossible one – and trying to achieve it might cause harm in your other financial habits, as other parts in your financial situation go without attention or time.
The real goal here is to create and maintain a solid financial ethic. It’s true that a good credit score has many of advantages, like more reasonable lending cycles or reduced interest rates; you have to remember that it is not the sole marker of your financial health. Someone with a low credit score, but fantastic financial habits, will do better than someone with a ‘perfect’ credit score, but uncertain or unsure borrowing habits.
Tracking financial change with one score
Selecting one credit score can keep you privy to possible identity theft or radical changes in credit. If you constantly check in with one score, it means you are observing a single number which is observing a controlled amount of information – it is far more helpful than viewing a dozen different scores, because the only thing changing is your finances, not the scale used. You don’t have to check every day, but checking every week, or even once a month, is an excellent manner of keeping yourself in the know.
The bottom line
Does perfection for a credit score exist? No. At least, not a perfect credit score that can apply to every situation.
Does this mean you can’t strive to have a good, or even great, score? No! You can certainly have one.