Q: Dear CreditCardGuru, I thought the credit score range only went up to 850 but when I checked mine on Experian, it said I have a 857?! Now I’m totally confused. What is the highest credit score you can get?
A: You are correct in that the highest credit score possible is 850 for FICO. However, there is another credit scoring formula, VantageScore, which goes all the way up to 990. Here’s what you need to know about them.
Fair Isaac Corporation developed the FICO score nearly 25 years ago (1987 to be exact). Since that time, it has definitely been the gold standard for credit scoring, as it is by far the most widely used formula.
When you check your score, make sure it’s the real deal. As of November 2013 there are only TWO websites where you can buy real FICO scores and those are Equifax and MyFICO. All the other hundreds (or thousands?) of scoring websites sell knockoffs because they don’t have a license for using the FICO formula.
But those two sites that do provide them charge about $20 every time you check it! Rather than pay, you can actually get free access to your FICO score thru these two cards from Barclays:Most websites also get the average wrong, too. A FICO score can range from 300 to 850. There is a lot of misinformation out there as to what the average score is (many sources cite numbers in the 670’s). While that may be technically correct, those with ultra-low scores are dragging down the average (mean) big time. To get a better idea of what the average person has, you should be looking at the median instead – the number which is exactly in the middle (50% are lower and 50% are higher).
So what’s the median credit score? Well for years, FICO reported it as being 723. However in 2010 they decided this statistic was now “proprietary information” and stopped publicly releasing it. So anyone that claims to know this nowadays is not getting it from the horse’s mouth. That being said, it’s safe to assume the median still hovers around 723. Here’s a look at how many people have each tier of credit score…
Even though the highest credit score you can have is 850 for FICO, it’s nearly impossible to attain. Just getting to 800 is quite the feat to accomplish since that puts you in the top 13%.
Being that Fair Isaac was making money hand over fist with their FICO, it comes as no surprise that others wanted a piece of the action. The three credit bureaus – Experian, TransUnion, and Equifax – launched the VantageScore in 2006 to compete with FICO.
Comparing the VantageScore vs FICO score
So what is the highest credit score you can have on VantageScore? It’s 990. The lowest? 501. Obviously this means your score will vary greatly between the two formulas. To give you an idea of how good (or bad) a given VantageScore is, they have a convenient letter-grade system to go along with the numbers:
The exact algorithms used for both FICO and VantageScore are secret, so beyond an educated guess, no one can say with 100% certainty how they are calculated. However some of the components which go into the scoring formula are made public and I’ve created this table so you can compare them side-by-side:
As you see the VantageScore formula uses 6 components, versus the FICO formula which consists of 5. What you need to keep in mind though is that each major component consists of several sub-components (of which the percentages for each aren’t publicly available). So actually the two formulas are more similar than they may appear at first glance. Let me give you an example:
According to FICO’s website, the “Amount Owed” category consists of:
- Number of accounts with balances
- Amount owed on accounts
- Amount owed on specific account types
- Proportion of credit lines used
- Proportion of installment debt which is owed
- Lack of a specific type of balance, in some cases
Those 6 sub-components, when combined, equal 30% of your credit score.
On the other hand, VantageScore doesn’t have an “Amounts Owed” category but judging from their category names, one can make an educated guess that they still look at those 6 sub-components. The difference is that it appears they aren’t all grouped under the same mother category.
Are they apples to apples?
Obviously the credit score range is not the same on each but aside from that, is there a formula to convert them for an apples to apples comparison? Unfortunately not, since the formulas inevitably do differ slightly. With that said, you can use this rough approximation to estimate your FICO based on your VantageScore (which is what most credit scoring websites will provide).
850/990 = 0.86. So for an estimate, you can multiple your VantageScore by 0.86 to give you an idea of what neighborhood your FICO score would be in.
Example: If your VantageScore was 851, you would multiply that by 0.86 and the number you would get back would be around 732. But please keep in mind this is just an estimate since both formulas are different.
The Bottom Line?
Of course we all want the best, but what is the highest possible credit score – the 850 for FICO – is almost unattainable. In fact, there are many loan officers that have been in the business for years who have said they’ve never seen a perfect 850 credit score before. Furthermore, you can have a credit score in the high 700′s and it will usually get you the best rates anyway. Ultimately, instead of focusing on reaching the highest credit score possible, concentrate your efforts on having:
- A good mix of credit (revolving accounts like credit cards as well as installment accounts, like mortgages, student loans, or car loans)
- Keep your credit utilization on revolving accounts low (no more than 30% of your limit, but ideally, under 10%)
- The older the accounts, the better! If you have an old credit card you hate, don’t cancel it. Keep it open and use it occasionally since that account may be helpful for your score given its age. However if the card has an annual fee and you’re not using it, then usually it does make sense to cancel.
How I reached an 800 FICO by my mid 20′s
I was able to achieve a very high score quite early. By my 21st birthday I was already in the mid 700′s and a few years later I hit the 800 mark.
What’s my secret? Credit cards and a lot of them! In fact up until age 26 (when I got my first loan) card accounts were the only thing on my report.
When managed responsibly, credit cards can be a powerful tool for increasing your score. My advice would be to have 7-10 different cards. Don’t worry, you don’t have to use all of them at once! Just use a couple at a time and then every 3-4 months, rotate to a couple of your other cards. Rinse and repeat. That’s what I’ve been doing and it has obviously worked great!
My advice would be for you to choose cards that have no annual fee. That way you won’t mind keeping them open for the long term (and doing that will increase the average age of your accounts).
Need a good suggestion for a new card or two? Here are some I’m a big fan of because they offer excellent rewards and no annual fee (or a $0 intro annual fee).