What is a 850 Credit Score Worth?

A credit score of 850 is the highest score possible on the FICO scoring model, which ranges from 300 to 850 Achieving a score of 850 indicates you have exceptional credit and are an extremely low credit risk to lenders. But what benefits does this top score actually get you when it comes to borrowing money or getting approved for credit? Here’s an in-depth look at what an 850 credit score is worth

Overview of 850 Credit Scores

• The FICO score is the most commonly used credit score model by lenders. It was created by the Fair Isaac Corporation

• Scores range from 300 to 850. The higher the score, the lower the perceived credit risk.

• As of Q3 2022, only 1.4% of consumers had achieved the pinnacle 850 FICO score, according to Experian data.

• Key traits of 850 scoreholders include low balances, high credit limits, lengthy credit history, and no missed payments.

• 850 scores are most prevalent among older generations like baby boomers, not millennials.

• Certain U.S. states and metropolitan areas have higher concentrations of consumers with 850 scores.

What a Perfect 850 Credit Score Can Get You

Obtaining the perfect 850 credit score shows lenders you are an extremely dependable borrower who pays back debts reliably. While it doesn’t necessarily guarantee you the most favorable loan terms, it can qualify you for top-tier offers.

Mortgages

• Lower interest rates: An 850 score will qualify you for the very best mortgage rates available, saving you significantly on interest over the life of the loan. Expect at least a 0.25% – 0.5% discount compared to those with scores in the 700s.

• Larger loan amounts: Exceptional credit means lenders will be more willing to approve larger mortgages because you pose little risk of default. This allows you to purchase more expensive homes.

• Lower down payment requirements: Many lenders reduce down payment requirements for borrowers with higher credit scores. While a 20% down payment is standard, 850 scores may qualify you for 10% down or less.

• Waived mortgage insurance: Lenders often waive the requirement for private mortgage insurance (PMI) if your credit score is high enough, saving you these monthly premiums.

Auto Loans

• Lower interest rates: Like mortgages, an 850 score will qualify you for the lowest auto loan interest rates, potentially saving thousands over the loan term. You can expect to see discounts of 1% or more compared to average scores.

• Larger loan amounts: A perfect credit score makes lenders comfortable approving larger auto loans. This allows you to purchase more expensive vehicles.

• Better terms: Exceptional credit means you can negotiate loan terms like longer repayment periods or flexible payment options. Lower monthly payments make buying that luxury car more affordable.

Credit Cards

• Higher credit limits: Credit card issuers will approve those with 850 scores for higher limits. This raises your total available credit and keeps utilization low.

• Lower interest rates: Perfect credit qualifies you for the lowest credit card interest rates, saving substantially on finance charges each month. Average APR discounts can be 5% or more compared to average scores.

• Better rewards offers: Issuers offer premium credit card reward programs and sign-up bonuses to consumers with excellent credit to acquire their business. Expect valuable perks like airport lounge access.

• Instant approval: That 850 FICO puts you in prime position for instant approval of a new credit card application. Save time and get access to credit faster.

Other Loans

• Personal loans – Those with 850 credit secure the largest loans with the lowest rates. Expect APR discounts of 2% or more compared to average scores.

• Student loans – While federal student loan terms don’t vary with credit, private student loans will offer exceptionally low rates to perfect scorers.

• Business loans – An 850 score means lenders will eagerly approve financing for new businesses or expansion plans with great terms.

When an 850 Score Isn’t Necessary

Realistically, a credit score of 850 often provides minimal tangible benefit over a score that’s slightly lower:

• Most lenders offer their top rates at 760: You’ll get the same mortgage rates and offers with a 760 that you would with an 850 credit score or higher.

• Diminishing returns above 800: Interest rates and loan terms start to level off once you reach the 800-850 range. A 850 vs an 820 score won’t make a major cost difference.

• Not all lenders use FICO scores: Some lenders use their own internal credit models or alternative scores like VantageScore instead of FICO. An 850 won’t matter as much here.

• Scores vary between models: Your FICO at one credit bureau may not match your score at another. Different FICO versions (FICO 8 vs FICO 9) can also produce different numbers.

Tips for Reaching an 850 Credit Score

Though obtaining a perfect 850 credit score is difficult, it is achievable with diligent financial habits over time:

• Keep credit card balances low compared to limits

• Pay all bills on time each month

• Limit new credit applications

• Maintain a lengthy average account age

• Minimize credit inquiries

• Verify all information on your credit reports

• Enroll in credit monitoring to track your scores

• Consider contacting creditors for goodwill adjustments if you have any negative items

The Bottom Line

A perfect credit score of 850 is the gold standard of FICO scoring, indicating negligible risk of default to lenders. While not required to get approved for credit, it can qualify you for the very best interest rates and loan terms, potentially saving you thousands. But once you’re in the “exceptional” credit range, small score differences matter very little. More important than obsessing over a perfect score is maintaining consistently strong credit habits.

Yes, a credit score of 850, which is considered excellent, significantly increases your chances of securing a mortgage and potentially qualifying for the best interest rates and loan terms.