Is a Credit Score of 850 Good? Understanding the Benefits of a Perfect FICO Score

Your credit score is one of the most important numbers in your financial life. It determines whether you can get approved for credit cards, loans, mortgages, and other products – and at what interest rate.

The FICO score created by the Fair Isaac Corporation, is the most commonly used credit score. It ranges from 300 to 850. The higher your score, the better.

So what happens when your credit score hits the max of 850? Is there any real benefit to having a “perfect” credit score compared to one that’s just excellent, like 800?

In this article, we’ll explain what an 850 credit score means, the key perks you can get, and whether it’s worth obsessing over.

What Does a Credit Score of 850 Mean?

A FICO score of 850 means you have exceptional credit according to scoring models. It’s the highest score possible, indicating you pose virtually no risk of default to lenders.

Specifically, an 850 score reflects:

• No missed payments or other derogatory marks on your credit reports
• A long history of responsible credit usage
• Low credit utilization (using a very small percentage of available credit)
• A wide mix of credit types, like mortgages, credit cards, auto loans, etc.

In short a score of 850 shows you manage credit perfectly. Only around 1.5% of consumers have credit scores this high.

It’s important to note that any score above 800 is already considered “excellent” credit You don’t need a perfect 850 score to get approved for credit at great rates

What Are the Benefits of a 850 Credit Score?

While an 850 isn’t required for the best offers, it does come with some nice perks:

1. Approved for Any Credit Cards or Loans

With an 850 score, you can rest assured knowing no credit card or lender will deny you because of your credit. Even exclusive cards like the Chase Sapphire Reserve won’t be off limits.

You’ll also have your pick of the top rewards credit cards and their juicy welcome bonuses worth $500, $750, even $1,500 or more.

2. Lower Interest Rates

A perfect credit score guarantees you the lowest possible interest rates from lenders. For example, on a $300,000 30-year mortgage, you could save $50,000+ over the life of the loan compared to a rate with good credit.

3. Higher Credit Limits

Issuers will reward your creditworthiness with higher limits. This gives you more purchasing power and helps keep your credit utilization low.

4. Easier Approval for Apartment Rentals

Landlords often check applicant credit scores. An 850 score means you’re virtually guaranteed approval and won’t have to fork over extra security deposits.

5. Better Car Insurance Rates

Insurers charge higher premiums to those with poor credit due to a perceived higher risk. But a perfect credit score means you’ll pay the lowest rates.

6. No Security Deposit for Utilities

Some utility companies require security deposits from customers with poor credit to offset the risk of nonpayment. But a flawless 850 score means no deposit needed.

7. Greater Financial Trustworthiness

A credit score of 850 demonstrates extreme financial responsibility. Friends and family looking to borrow money may prefer you over other options.

8. Bragging Rights

Let’s be honest: It feels good to have a perfect credit score. You can flex it on social media and among friends. Just don’t be obnoxious about it.

Is a 850 Credit Score Worth Chasing?

A perfect credit score certainly has some nice benefits. But the reality is, once you’re above 800, there’s very little practical difference in what you can get approved for and at what rates.

You can still qualify for the lowest interest rates on mortgages, auto loans, and credit cards with a score in the 800s.

Plus, trying obsessively to achieve a perfect score can backfire. For example, opening a bunch of new credit cards just to have a wider mix of credit types will actually lower your score temporarily.

A better approach is to focus on continuing the habits that got you an excellent score:

• Pay all bills on time
• Keep balances low
• Check credit reports for errors
• Only apply for credit you need

Do this, and your score will rise naturally towards 850 without unnecessary effort.

Tips to Reach and Maintain a 850 Credit Score

If you do have your eye on a perfect score, these tips can help:

• Let your accounts age: Older accounts have more weight, so avoid closing old cards you don’t use.

• Increase your available credit: Requesting higher limits shows lenders you can handle more.

• Keep balances below 10% of limits: Anything under 30% is good, under 10% is ideal.

• Have credit variety: Mix types like mortgages, credit cards, auto loans, and student loans.

• Only open new accounts you need: New inquiries require some recovery time.

• Review all 3 credit reports annually: Dispute any errors you find.

• Set up automatic payments: Avoid late payments and human error.

• Pay down balances before applying for credit: Lower utilization helps approval odds.

• Sign up for credit monitoring: Regularly review your scores from all bureaus.

The Bottom Line

While achieving the “perfect” 850 credit score is certainly rewarding, it’s not essential to get approved for credit or loans at the best rates. As long as you have great credit habits, your score will rise over time.

Rather than obsessing over 850, focus on continuing responsible habits. Your credit access and opportunities will still be plentiful even if your score is an 800 instead.

Approximately 22% of Americans have a FICO credit score of 800 or higher, which is considered exceptional credit.