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We recently published a post about why an 850 score doesn't matter, but ironically, the most common question we received was how to achieve an 850.

Today, we'll walk through all the variables that affect your credit score and how to optimize around it.

As a reminder, your credit score is based on 6 different factors:

If you haven't checked your credit score recently, Credit Karma is a free resource. A lot of credit card companies like American Express, Discover, and Citi offer free credit reports within your account portal.

The breakdown:

  • Utilization = 30%
  • Payment history and derogatory marks = 35%
  • Average age of accounts = 15%
  • Total accounts = 10%
  • Credit inquiries = 10%

To score an 850, you need to score excellent in each category.


Stay in the 0-9% range. Let's say you have a credit card with a $1,000 credit limit, and your statement is at the end of the month. If you wait until the end of the month to pay it off, it affects your utilization.

A good way to lower utilization without changing your spending habits is to pay off your balance before the statement closes.

If you do pre-pay your balance, don't zero out your utilization. Leave a small balance to pay off when the statement closes to have a balance due to reflect in the payment history.

Pre-paying your cards may seem unnecessary, but I think it makes sense because you're aware of your spending habits.

If you are someone who carries a balance every month, look at your expenses and try to see what you can cut back on.

Payment History

You need a 100% to score "Excellent." Payment history is relatively straightforward: pay your bills on time. Payment history can be hard if you missed payments in the past. As long as you pay the minimum balance required for the credit card, you'll be okay for this category.

If you miss one payment, then it already brings down the payment score to "Good."

On time payments
_______________________ = Payment history
Total number of payments

The problem with having only one credit card is that missing one payment puts you in "poor payment history": 23 on time payments/24 total payments = 96% (Very poor).

This means that a mistake you made two years ago is going to impact you today if you have one card. Even in the third year, the missed payment will still impact you. Only after the third year does the credit score recover: 35 on time payments/36 total payments = 97% (Poor)

If you run through the situation with five cards instead of 1 card, it's more forgiving:

59 on time payments/60 total number of payments = 98% (Fair)

The main takeaway is not to miss any payments. If you do miss a payment, you can get more credit cards to offset the damage (pay them off in full).

A good way to make sure you don't miss any payments is to automate them. You can choose to pay the card off in full or pay the minimum.

Derogatory Marks

Defaulting on a credit card is an easy way to destroy your credit score, as well as any banking relationships. For example, if you default on a card from an issuer, you might not be able to receive any other products from them. They could also end their banking relationship with you as well.

Unlike payment history, this is easier to fix. You may be able to negotiate a payment plan with the bank to get back on track.

Average Age of Credit History, Total Accounts, and Credit Inquiries

Average age of accounts: the higher is better. You should aim for 9+ years to score "Excellent."

Total accounts: You need 21+ accounts to score "Excellent." If you have 20 cards and low utilization, you're seen as more responsible to the credit agencies. I do realize that 21+ cards sound ridiculous, but hey, I don't make up the rules.

Credit Inquiries: Specifically hard inquiries whenever you apply for a new credit card. When you rent a house, and they run a credit check, that's a soft inquiry. Applying for a credit card or a car loan is a hard inquiry because you're going to accumulate debt. The interesting thing about credit inquiries is they fall off your report after two years.

For example, if I apply for 20 credit cards in one year, that's 20 inquiries. After two years, they fall off like they weren't there in the first place.

These three factors work together. You can take an approach to take one step back to take ten steps forward in the future.

How to achieve a perfect 850 credit score

If you're going after the 850 (again, a perfect score doesn't matter), then you'll want to get 21 credit cards as soon as possible and wait. You'll take 21 inquiries right away, which will pull your credit score down for the next two years. After the two year mark, all the inquiries will fall off.

With your 21 credit cards, be sure you don't miss any payments. Utilization wouldn't matter because you can fix that in the future. Set the 21 credit cards aside for nine years to factor into the average age of accounts.

Starting at the 8-year mark, be sure your utilization is low. Most likely, you are a financially responsible person if you can get approved for 21 cards.

At the nine year mark, you'll have a low utilization, 100% payment history, 0 derogatory marks, 9+ average age of accounts, 21+ total accounts, and 0 inquiries. It's like baking an elaborate birthday cake that you have to wait nine years to eat.

The big question: What do you get for having an 850 credit score?
Answer: Nothing. You'll receive the same benefits and interest rates as someone with a 750 credit score.

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