How I got a perfect credit score of 850

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Achieving a perfect FICO credit score of 850 isn’t easy, but after years of good credit behavior, personal finance coach Lynnette Khalfani-Cox achieved it in 2021.

A perfect score is rare — only 1.6% of Americans have one, according to FICO. And for Khalfani-Cox, The Money Coach and author of “Zero Debt: The Ultimate Guide to Financial Freedom,” getting a perfect score wasn’t necessarily a specific goal.

Previously, his score was “in the top 800”. And she was okay with that, since any FICO score of 800 or higher is considered “exceptional” by all three major credit bureaus. Even without a perfect score, any outstanding-status borrower qualifies for loans and credit cards at the lowest possible interest rates.

However, receiving an email alert in 2021 about his perfect score was still an “oh, wow” milestone for Khalfani-Cox, who wrote about his previous experiences with debt, back when his score credit was in the 400s.

Although getting a perfect score can take some time and a combination of different types of loans, Khalfani-Cox says the following steps helped her get there.

1. Pay all your bills on time

One of the easiest ways to increase your credit is to never miss a payment.

The largest chunk of your FICO credit score — 35% — is based on how often you make minimum debt payments on time, whether it’s for a credit card, personal loan, or car financing.

A late payment can only be reported to the credit bureaus after it is at least 30 days late, but a 30-day missed payment can reduce a very good or exceptional score by 63 to 83 points, according to FICO data. It can also stay on your credit report for up to seven years.

2. Avoid excessive credit inquiries

“Don’t apply for credit unless you really need to because you don’t want to have a whole bunch of inquiries that unnecessarily lower your credit score,” says Khalfani-Cox. This is especially true if you plan to apply for a large loan soon, such as a mortgage.

An inquiry is a request to check your credit history, done with your consent, usually as part of a loan or credit card application.

These inquiries are often referred to as “serious inquiries” or “serious complaints” about your credit history. They can negatively impact your FICO score for up to a year, as excessive applications for new credit can be a red flag about your reliability as a borrower.

3. Minimize the amount of your debts

The amount of credit you have compared to the amount you actually use is known as the credit utilization ratio and represents 30% of your credit score. The more credit you have available, the higher your credit score will be. Experts generally recommend keeping your utilization rate below 10%.

“A turning point in my drive to monitor and improve my credit rating came after I started getting out of debt,” Khalfani-Cox says. At some point earlier in her life, she had a $100,000 debt that took three years to pay off.

“My credit rating jumped 100 points after I finally paid my credit card bills. That’s when I noticed the really strong connection between how I handle the debt side of the equation — especially credit card bills — and my credit rating,” she says.

4. Have a long credit history

The length of your credit history counts for 15% of your score. Generally, the longer a loan or credit card has been active, the better it is for your credit score. For this reason, closing an account can temporarily reduce your credit score by a few points.

It happened to Khalfani-Cox shortly after getting a perfect credit score. She had just paid off a mortgage and her score then dropped seven points, from 850 to 843.

Having a long credit history may not be possible for young borrowers, but they can start accumulating it by leaving their oldest account open.

5. Have a good combination of credits

Counting for 10% of your credit score, having a combination of different types of credit accounts, including home loans, installment loans, and revolving loans like credit cards, will improve your score. Khalfani-Cox had a good mix of loans, including multiple mortgages, which boosted his credit rating.

“When you show that you can responsibly juggle all of these types of loans, you get brownie points for it,” Khalfani-Cox says.

Of course, you probably shouldn’t take out a mortgage or personal loan just to get a perfect score. But it’s a factor to be aware of when thinking about how your credit score is calculated.

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