845 Credit Score

In general, financial institutions use categories of credit to decide to whom they extend available credit, and the price at which they extend it. It would therefore be optimal to have "excellent" credit, i.e., the top category financial institutions create within the credit score range, so as to maximize the chance of attaining credit and to minimize the cost of that credit. Assuming one is assigned to that top category, in theory there is no benefit from attaining a perfect score. That written, given a limited amount of financial institution credit to extent to clientele, higher within that top category could be beneficial on the margin.

It is always good to have a high credit score; however, it may take years to achieve a perfect score. We are talking about a lot of effort here. Of course, you can save money with an excellent FICO credit score. A good example would be a mortgage loan -- with an excellent credit score, you can get low interest rates, thus you can save money on the interest that you pay back.

No. I have never heard of any lender offering better terms for a perfect score over a near-perfect score. Would reaching the highest possible credit score save someone with excellent credit any money? Certainly not much, and probably not any.

As long as you’re north of 800, you are considered an excellent risk. Someone in the low 800’s might want to try to improve their score just to stay on the right side, but those granting credit know that you are splitting hairs when comparing 825 to 850 -- both are going to pay back any credit granted.

In almost all instances, a score above 760 makes no difference. It is like the difference between a student receiving a 90 percent or 99 percent -- they are both As (for most schools). While different lenders use different cutoff points, some are 720, some are 740 and some are 760 -- going for anything above that does nothing but give you additional cushion in your score, but no financial advantage.

One point may be for an individual to feel the satisfaction of achieving a score of 850. However, once a score gets past 720, I see no benefit to increasing the score for the sake of increasing it. Granted, a high score is ideal, but once an individual is in the "excellent" rage (720-850), there's little more they can do to get access to great interest rates and financing.

Generally, there would be very little difference (if at all) in interest rates for someone at or above 800 credit score.

From a financial standpoint, I don't believe there is much value in trying to reach a FICO score of 850, since most lenders will put you in the "Excellent" category when you reach 800. Most credit providers use such "ranges" to categorize borrowers, and base the lending rate on the category (Excellent, Good Fair, Poor, etc.) that their unique credit history earns them.

Yes, a consumer’s credit score determines what their interest rate will be on loans, notes and debt securities. Trying to reach an 850 credit score can reduce your interest rate on debt. Would reaching the highest possible credit score save someone with excellent credit any money? Yes, it would. Consumers with credit scores of 800 or higher will be offered low or 0 percent interest rates on loans, notes debt securities or refinancing options. The chance for consumers to pay off debt with 0 percent or low interest rates is an excellent saving opportunity.

While higher scores are definitely preferred to lower ones, it’s likely more important to take consistent care of your credit quality than to make the maximum 850 a specific goal. To get a concrete example, I asked Casey Bacon, CEO of Statewide Federal Credit Union about that institution’s lending policies as influenced by credit scores. As with many lenders, that one assigns letter grades based on borrowers' credit scores in ranges of points. A grade of A+ would be assigned to scores of 730 and above; A for scores between 680 and 729; B from 640-679, and so on. According to Mr. Bacon, scores between 750 and 850 generally pay the same rates at his institution. It’s likely that most consumer credit would be treated similarly, if not the same, across financial institutions.

Improving your credit score can yield many benefits to a consumer, not the least of which is favorable interest rates and other terms on loans (as well as making more potential loans available). In addition, many employers look at potential hires’ credit reports, and insurance companies often use credit scores in setting rates and terms of their products as well. So, there is clearly a benefit to having an “excellent” credit rating, as opposed to a rating considered to be merely “good” or worse (these terms are subjective and don’t correspond to any particular level consistently across the industry).

The highest FICO score is 850. Most banks would consider any score above 800 to be excellent, and above 700 to be very creditworthy. It is probably meaningless to try to get a score of 850, as that is determined by some factors that may be out of your control -- like your outstanding balances, the length of your credit history, how many credit cards you have, how many times you have applied for credit, number of inquires they get about you, etc. Even if you have a perfect payback record, you are unlikely to get a score of 850.

It is always good to have high score, especially if someone intends to borrow money to buy property, such as house or car. But the credit scores are ordinal rankings, they don’t translate into any particular probability of default. In general, the higher the score, the lower the probability of default. The higher the credit score, the lower the interest rate is and the more favorable the credit terms are to the borrower. Users look at range of scores instead of a particular score to make those decisions. Score above 800 is considered exceptional. Scores in the range of 750-800 are considered excellent. In terms of credit decision and the interest rate that would be charged, I don’t believe there would be any difference between a person with a score of 800 and that with 850. But still, the higher the score the better.

There is usually no point in aspiring to get a FICO score of 850. All the good stuff happens starting at 800 -- interest rates on loans are better, credit card offers are better, etc. But some people see it as a “personal achievement.” It requires a lot of monitoring and “hacking” -- like knowing when to apply to which credit card or loan, etc. I am not sure it is worth the time (at least for me).