Achieving a perfect FICO 850 credit score isn’t easy, but after years of good credit, Personal Finance Coach Lynnette Khalfani-Cox has 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‘ Achieving a perfect score wasn’t necessarily a specific goal.

Previously, her score was “in the high 800s.” And she’s been fine with it ever since any FICO score of 800 or higher is classified as “exceptional” by the big three credit bureaus. Even without a perfect score, every exceptional borrower qualifies for loans and credit cards at the lowest possible interest rates.

However, receiving an email notification of her perfect score in 2021 was still an “oh, wow” milestone for Khalfani-Cox, who has written about her past experience dealing with debt when her credit score was in the 400s lay.

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

One of the easiest ways to increase your balance is simply not to miss a payment.

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

A late payment can’t be reported to the credit bureaus until it’s at least 30 days overdue, but a 30-day late payment can reduce a very good or excellent rating by 63 to 83 points FICO data. It can also stay on your credit report for up to seven years.

“Only apply for a loan if you really need it because you don’t want to have a whole series of requests that unnecessarily lower your credit score,” says Khalfani-Cox. This is especially true if you plan to apply for a large loan soon, e.g. B. a mortgage.

A request is a request to verify your credit history made with your consent, typically as part of a loan or credit card application.

These requests are often referred to as “hard requests” or “hard checks” of your credit history. They can negatively impact your FICO score for up to a year, as excessive requests for new credit can be a red flag about your trustworthiness as a borrower.

How much credit you have available compared to what you actually use is called the credit utilization ratio and accounts for 30% of your credit score. The more funds you have available, the higher your credit rating will be. Experts generally recommend Keep your occupancy below 10%.

“A turning point in terms of wanting to monitor and improve my credit score came after I started working out of debt,” says Khalfani-Cox. Earlier in her life, she owed $100,000 in debt that took three years to repay.

“My credit score went up 100 points after I finally paid my credit card bills. That’s when I realized the really strong connection between how I was dealing with the debt side of the equation – especially my credit card bills – and my credit score. ” She says.

The length of your credit history accounts for 15% of your score. In general, the longer a loan or credit card has been active, the better it is for your credit score. Because of this, closing an account may temporarily hurt your credit score by a few points.

This happened to Khalfani-Cox shortly after she achieved perfect credit. She had just paid off a mortgage and her score subsequently dropped seven points from 850 to 843.

A long credit history may not be possible for younger borrowers, but they can start building it by keeping their longest-standing account open.

If you account for 10% of your credit score and have a mix of different types of credit accounts, including home loans, installment loans, and revolving loans like credit cards, your score will improve. Khalfani-Cox had a good mix of credit, including multiple mortgages, which boosted her credit rating.

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

Of course, you probably shouldn’t sign up for a mortgage or personal loan just to get a perfect score. But it’s a factor to keep in mind when thinking about how your credit score is calculated.

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