An excellent credit score is a FICO® Score of 800 to 850 or a VantageScore of 781 to 850.
FICO is the credit scoring system that's most widely used by lenders. VantageScore isn't as popular, but it's often the score provided by free credit score tools.
Having a credit score in this range is great for your personal finances. With excellent credit, you're likely to qualify for the top credit cards and the lowest interest rate on loans. Whether you have excellent credit and you want to take advantage of it or you're trying to get there, here's everything you need to know.
What is an excellent credit score?
An excellent credit score is one that's in the highest credit score range. Under the FICO scoring model, it's technically referred to as exceptional credit, and it's from 800 to 850. Under the VantageScore model, excellent credit is between 781 and 850. Excellent credit isn't uncommon. According to research by The Ascent about the average credit score in the U.S., 23% of Americans have an exceptional credit score.
How credit scores are calculated
There are several factors that each credit bureau uses to calculate your credit score, and understanding them can help you maintain or improve your credit. These factors are:
- Payment history: The most important part of your credit score is your payment history. On-time payments that are reported to the three major credit bureaus help your credit score. Any payments that are late by 30 days or more do significant damage to your credit.
- Credit utilization ratio: The percentage of your credit limits that you use is your credit utilization ratio. A credit utilization of below 30% is the standard recommendation. So, if you have one credit card with a $1,000 credit limit, it's best to keep the balance below $300.
- Length of credit history: The average age of your credit accounts, age of your oldest credit account, and age of your youngest credit account all play a role here. Older accounts are better for your credit, so this is one scoring criteria that takes time to improve.
- New credit: This category includes the number of hard credit checks on your credit report in the last 12 months. A hard credit check occurs when a lender reviews your credit file. The time since you've opened a new credit account is also part of your new credit.
- Credit mix: The types of credit you're using makes up your credit mix. A healthy credit mix is when you have both revolving accounts (such as credit cards) and installment loans, compared to having just one of the two. But since this is a smaller part of your credit score, it's usually not a good idea to get a loan that will cost you interest solely to improve your credit. You can still have an excellent credit score even if you only carry credit cards.
Of those five categories, payment history and credit utilization carry the most weight. Length of credit history, new credit, and credit mix all play a smaller role. They're still important, but not as important as the top two.
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Benefits of an excellent credit score
Excellent credit makes life easier and less expensive. Here are the biggest benefits of having an excellent credit score:
- You can qualify for the best credit cards. These cards tend to have more perks than credit cards for consumers with lower credit scores. Your credit score doesn't guarantee an approval, but it's one of the most important factors credit card companies look at during the application process.
- You can get lower interest rates and potentially be approved for larger amounts on loans. This includes all types of loans, including personal loans, auto loans, and mortgages.
- Credit card companies may approve you for higher credit limits.
- You have a better chance of passing a credit check with a rental company, which helps when looking for a house or apartment to lease.
- In most states, car insurance companies can use your credit when determining your premiums. Excellent credit can get you lower car insurance rates.
- Utilities companies are less likely to require a security deposit to set up service with them.
Your credit score is almost certainly going to play a major role in your personal finances. That's why a high credit score is a smart financial goal.
Do you need excellent credit?
No, you don't need excellent credit. It doesn't hurt, but a good credit score can be more than enough.
A FICO® Score of at least 720, which is within FICO's good credit score range, will get you most of the same benefits as excellent credit. You should have no trouble passing a credit check or securing low interest rates on a loan. Your credit score will also be high enough to qualify for most credit cards on the market. Keep in mind that a high credit score never guarantees an approval.
The only area where an even higher credit score can help is a mortgage. To get the lowest mortgage interest rates, it typically takes a FICO® Score of 760 or higher. That's still below the threshold for excellent credit, though.
How to raise your credit score
If you want to increase your credit score, follow these tips:
- Always pay your bills on time. A rock-solid payment history is a must. Make sure you have at least one credit card that you use regularly and pay by the due date. Not every type of bill gets reported to the credit bureaus and counts towards your payment history, but credit card bills do.
- Keep your credit utilization ratio low. A credit utilization of below 30% is the most common recommendation. To figure out how much this is, add the credit limits on all your credit cards together. Multiply that number by 0.3. Try to keep your credit card balance below that amount at all times. Remember also that the lower your credit utilization is, the better.
- Build the length of your credit history. Avoid closing the credit cards that you've had the longest. If a card has an annual fee that you don't want to pay, see if you can downgrade the credit card instead of canceling it. It's fine to open new credit cards, but be selective, because each one will lower your average credit account age.
- Don't apply for new credit too often. Every time you apply for new credit, it results in a hard inquiry on your credit file. Too many hard inquiries can prevent your score from increasing. A good guideline is to not apply for new credit more often than every six to 12 months. See our guide on whether applying for a credit card will hurt your credit.
These financial tips work no matter what your current credit score is. The same advice applies to building credit whether your score currently sits in the bad credit or good credit range.
It does, however, take more work if your goal is excellent credit. You can stick to the same general rules, but it may be necessary to aim even higher with them. For example, instead of just keeping your credit utilization ratio below 30%, you could need to get it below 20%. You also might need to add a year or more to your credit history and maintain a track record of on-time payments.
Although excellent credit is nice to have, you probably don't need it. There aren't any new benefits that come along with having a FICO® Score of 800 instead of 760. But the steps you need to follow for an excellent credit score are smart financial habits regardless. Whether you end up with excellent credit or not, they'll get you a credit score high enough for everything you need.
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FAQs
Yes, but only about 1.2% of Americans who hold credit have a perfect 850 FICO® Score, according to Experian data. People with perfect credit scores held 6.4 credit cards and carried $3,000 of debt on average. By comparison, the same study found that the average American had 3.8 credit cards and about $6,500 in debt.
To bump up your credit score, make all payments on time and dispute any errors on your credit reports. Paying down debt and getting your revolving credit balances below 30% will also boost your credit. Your credit score also tends to increase over time since age of credit accounts for part of your score.
Yes, since an excellent credit score is a credit score of 800 or higher using the FICO credit scoring system. But for the VantageScore model, 781 or higher is considered excellent.
