For a lot of people, their goal is to achieve a perfect credit score of 850. There are a few beliefs associated with a perfect credit score:
- You'll receive better interest rates for a mortgage, which is true (bear with me).
- Lower interest rates on your credit cards.
With mortgages, the rule of thumb is you need a 750 or above to get the best interest rates. These interest rates are crucial because adding a few points to an interest rate can translate to a few thousand dollars.
Even if you have a credit score of 800 or 820, you're still going to receive the same interest rate as someone with a score of 750. After consulting with a few experts in the space (my local bankers), they recommended a credit score between 720-740.
A good analogy for this is to imagine that you're in college and the highest test score in the class was an 89. Even if you scored a 90 or 100, it doesn't matter because the class would be graded on a bell curve. With a score of 89+, you're at already at the top of the class, and any number above will still grant a 4.0 GPA.
The second reason people want to achieve a higher credit score is to receive lower credit card interest rates. In most cases, credit card interest rates shouldn't matter because you should not keep a balance on your credit card in the first place.
Factors that impact your credit score the most
The factors that impact your credit score the most are credit card utilization, payment history, and derogatory marks.
What surprises most people about total number of accounts is 0-5 cards is considered very poor. Most people who have an 800+ credit score have 15+ credit cards.
Want to get the Southwest Companion Pass for 2018-2019? Here's when to apply and how to time the minimum spend requirements.
Is Bora Bora on your wishlist of places to visit in 2018? Costco Travel is having a deal for Bora Bora. Here's our analysis.
Want to get a $15-$20 gift card every time you dine at select restaurants? Here's our review of the Seated app.
A step-by-step guide on how to use transfer partners with Chase Ultimate Rewards.
Want to get free hotel upgrades and skip the check-in lines in Las Vegas? Here's how to status match your way to free upgrades.
Timberline Steaks & Grille at Denver International Airport was recently added to the Priority Pass restaurant network. Here's our review.
How much time should you spend researching credit cards and cash back? Here's our formula to calculate your ROI.
For Q4 2017, the Discover It 5x cash back categories are Amazon.com and Target. Here's how to get the maximum cash back.
Walmart and department stores are the Q4 5X categories for the Chase Freedom card. Here's the optimal strategy to earn maximum cash back.
Priority Pass recently added Timberline Steaks & Grille to their network of restaurants. Here's how to get a "free" steak the next time you visit Denver Airport.