Do I Need a Perfect Credit Score?

When I checked my credit score early this month, I was very happy to see it inch toward the 800 mark, despite the huge balance and the large number of accounts on file. I don’t know if it could help push my score from 788 to over 800 if I pay off all the balance (more than 80% of the outstanding balance will be gone in November), but the temptation of joining the “800 club” is hard to resist when I am already so close.

There’s hardly any doubt that credit scores matter more and more nowadays. From lenders to credit card issuers, from landlords to (some) employers, they all check credit score to get a sense of a person’s trustworthiness. A good score can potentially save tons of money. But is it necessary to always “shoot to the top”?

In fact, except that a 800 score makes me look good on paper, it really won’t help much in saving me money if, for example, I want to get a loan. Following is table on MyFICO website showing the relationship between loan rates and credit scores.

It’s very clear that people at the top tier score from 760 to 850 enjoy the same lowest rate. For me, a 800 score or above won’t lower my borrowing cost from my current level. In fact, any scores that are above 700 are considered as good credit scores that can lead to good mortgage rates. Even if I could get a perfect 850, nobody is going to lend me money for free for sure A high score is good. A higher score is not going to be better.

But I still want a 800, not that I need it

Now, what does it take to get to 800?

It won’t be difficult to find suggestions from experts on how to improve credit score. From my own experience, the most important factors are:

• Payment history: I never paid a penny on interests on any of my credit cards, nor did I pay any financial charges. Ever since my got my first credit card, I always pay the balance in full every much. Even for cards with nothing but 0% balance, I always pay more than the minimum required amount.
• Credit history: I got my first credit card in late 1997. It was an AT&T Universal card with a credit limit of $500. Since then, I have been using plastics to pay almost every purchase, from a couple of coffee to car downpayment. However, credit history is not something one can build with a short cut. I feel that the best way to build credit history is use credit cards, but use them responsibly.

I am a live example of the number of cards doesn’t matter and once I have established a (relative) long credit history, I can afford to have a couple of new cards every year without hurting my credit score.

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