Younger credit card users are unlikely to achieve a perfect 850 credit score — even with the best credit usage habits, credit expert John Ulzheimer tells CNBC Make it.
That’s because the length of your credit history accounts for a sizable 15% of how your credit score is calculated. Since younger consumers likely haven’t been using credit for very long, their credit history will be shorter than that of older consumers who have been using it longer, he says.
“You can pay your bills on time, you can keep your credit card debt modest, you can apply for credit only when you need it,” Ulzheimer says. “But you can’t control how old you are.”
Your FICO score, which is the credit score used by the majority of lenders, can range from 300 to 850 and is calculated based on several weighted categories.
- Payment history (35%): Whether you’ve regularly paid your credit card bills on time
- Amounts owed (30%): How much of your overall available credit you’re currently using
- Length of credit history (15%): How long you’ve been using your credit
- Credit mix (10%): The various types of credit you’re maintaining, such as bank credit cards, retail credit cards and installment loans
- New credit (10%): How recently you’ve applied for new lines of credit
And keep in mind that very few people have a perfect credit score to begin with. Just 1.54% of U.S. consumers reached that score, according to a May report from Experian. The majority of them were between the ages of 60 and 78.
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However, you don’t necessarily need a perfect score to reap the best benefits. “If you do all the other things properly, banks are going to be throwing money at you,” Ulzheimer says.
A perfect 850 may earn you bragging rights, but you can unlock the same benefits, including the most favorable interest rates on mortgage loans and new lines of credit, with a score of 760 or above, Ulzheimer says.
“That’s 90 points off the perfect score and very attainable regardless of how old you are,” he says.
But don’t fret if you’re not in that credit range just yet. The average credit score is 717, according to FICO.
While there’s no way to boost your score by hundreds of points overnight, one of the key moves you can make is to consistently pay your bills on time, Tommy Lee, FICO’s senior director of analytics and scores, told CNBC Make It in August.
“The good news is your FICO score is dynamic and changes with your credit behavior,” Lee says. “Your FICO score today doesn’t have to be your FICO score tomorrow.”
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