The credit score also depends on your creditworthiness and can mean the difference between being denied or accepted for credit and getting a high or low interest rate. Good credit can help you qualify for a home rental contract and even obtain resources without a deposit.

What does it consist of?
Your credit score contains a 3-digit number statistically developed from your credit rating data. It is developed to predict threats, particularly the possibility of you becoming a serious defaulter of your credit responsibilities within 2 years of scoring.

Today there are different credit scoring models, but there is one that guides the market: fico score. According to a statement from myFICO.com, the client site of the FICO score developer, “90% of U.S. banking organizations use FICO scores in your decision-making process. FICO scores range from 300 to 850, with a higher range indicating reduced threat. A customer has 3 FICO scores, one for each credit report offered by the 3 major credit bureaus: Experian, TransUnion, and Equifax. Unfortunately, customers currently only have access to their FICO scores from TransUnion and Equifax. Experian terminated its contract with myFICO.com in 2009.

In an excellent article on LearnVest, Jacqui Kenyon explains her quest to improve her credit, checking it regularly and reshaping her investing and saving habits each time she discovered new patterns or learned more about the strange magic arithmetic that FICO uses to calculate it. . He aspired to a perfect 850, but he easily discovered that there is the fine point:

Anthony Sprauve, director of public relations for FICO, says that “if you have a FICO score above 760, you will get the best rates and odds,” the statistical organization whose credit scores They are most frequently used to determine the stability of a lender. “While it’s great to aspire to, it’s not necessary,” he says.

Bingham says a perfect 850 isn’t even possible.

“The highest I’ve ever seen was an 847,” says Bingham, who monitored 1,500 credit scores over many decades while exploring scoring techniques. Sprauve says that when FICO looks at creditworthiness, it does it in a mixed way, so even if someone had 850, you would never see it.

So the bottom line of the story is that while there is nothing wrong with trying to build your credit, especially if you are in a place where your past investing habits or aging financial debt has left your credit a little thin, the best benefits of a higher score are around 760, and that’s a much more obtainable number than 850. Sure, a higher score gets you better rates on cards credit, loans, financing, and more, but not necessarily.