What is the perfect credit score and how do I get it?

What is the perfect credit score and how do I get it?
About this post

Many people don’t give a lot of thought to their credit score until they need to borrow money.

When you apply for credit, a lender will take into account your existing credit score to determine whether you are a high risk customer and how much money they should lend you. If they deem you to be high risk you could potentially be hit with higher interest rates or a straight-out refusal of your application.

So if you see a home loan in your future, making sure you build up your credit score early will give you one extra bargaining chip when it comes to discussing credit with a lender.  

What is the perfect score?

According to credit score providers, Veda, the perfect credit score is 1200 but anywhere from 833 upwards is considered to be excellent so don’t get too caught up in reaching the top. Scores from 622 – 832 are considered good and 510 – 621 is in the average range. Having a score below 510 will seriously deter lenders from giving you credit, unless you take steps to improve your rating.

Where do I start?

Check your score

First and foremost you need to check your credit score to see what you’re working with. The process has never been faster or easier than it is now with multiple sites offering a free immediate credit score check. A quick Google search will provide you with plenty of options such as creditsavvy so there’s no longer any need to pay for your credit score.

Have debt

While it may seem counterproductive, having some form of debt that you pay off consistently and steadily is important in establishing a good credit score. Getting a low-rate credit card that you pay off diligently each month is one option. Another option could be a bill that you regularly pay to show that you are capable of keeping up financial commitments.

Related links

Always pay it back

Consistency is also critical to maintaining your credit score. Failing to pay your debts on time scorching a black mark on your credit report. Setting phone reminders to pay bills or setting up direct debits can be a great way of getting payments made on time, or you can use the services of apps such as Money Brilliant. If the problem is that you don’t have the money, then a revaluation of your budget is in order.

Make sure there are no errors

It’s not uncommon for credit scores to include mistakes. Make sure you check any negative marks on your report and verify whether or not they are a true reflection of your credit history. If you think a mistake has been made, clearing it up with the institution responsible will see an immediate lift in your score.

Don't change jobs or addresses

If you’re really serious about getting to a perfect credit score then stability is important. The less you move jobs and house the more likely banks are to perceive you as steadfast and reliable.  Of course, the pursuit of a perfect credit score shouldn’t stop you living your life and a move or two won’t be too detrimental. It is only a consistent pattern of job and address changes that could raise eyebrows.

Don’t apply for too much credit

Applying for multiple loans or credit cards will damage your credit score and reduce your chances of reaching the perfect number. To stop multiple credit applications having an adverse effect on your score only apply for products that you really need. Research and compare products such as credit cards to make sure you are applying for one that suits your needs to avoid having to apply for multiple cards. Similarly, don’t apply for cards that are beyond your means that you are likely to get knocked back from. Instead apply for cards with credit limits you could easily meet with your annual salary even though they might not have the most attractive rewards. 

Related links

This is an information service. By browsing on the website and/or using our search tools, you are asking RateCity to provide you with information about products from multiple financial institutions. We will try to show you a range of products in response to your request for information. The search results do not include all providers and may not compare all features relevant to you, for further details refer to our FSCG. The rating shown is only one factor to take into account when considering these products. We are not a credit provider, and in giving you product information we are not making any suggestion or recommendation to you about a particular credit product. If you decide to apply for a product, you will deal directly with a financial institution, and not with RateCity. Rates and product information should be confirmed with the relevant financial institution, and you should review the PDS before you decide to purchase. See our terms of use for further details. This advice is general and has not taken into account your objectives, financial situation or needs. Consider whether this advice is right for you.