Harder to raise score from 832 to 850 than you might think

This post originally appeared March 1, 2018 on CreditCards.com as “Why can’t I reach a perfect credit score of 850 points?

By Barry Paperno

Dear Speaking of Credit,
My credit scores generally run from 825 to 832, but appear to ding from the utilization percentage on my cards.

I carry no balance forward ever, using and paying my primary reward card in full every month. I also use a couple other cards and always pay in full just to keep active.

I have 40-plus years of never missing a payment on anything, two mortgages paid in full, auto loans always paid off early, and I still can’t seem to get it any higher than 832. Am I doing anything wrong?  – Mike

Dear Mike,
Yours is a good problem to have. Should you be successful at raising your score above 832, that’s great.

If not, and you’re forced to live with scores in the 825-to-832 range – well, that’s great, too. In fact, with scores that high, why even care, let alone obsess, about a perfect score?

In credit scoring, is there a difference between 850 and 825?
After all, there is rarely anything to be gained from an 850 versus an 825 score. Or a 760 score for that matter, as almost any score above 760 can qualify for the best terms on a mortgage, auto loan, credit card or any other kind of credit.

Still you can hardly be blamed for wanting to know what it takes to reach a higher score, despite not needing to.

It is for high achievers like you then that we will learn how best to spot the factors keeping your already high score from reaching that perfect 850.

Factors that might keep you from getting a perfect credit score
Predictably, score variations within the lower scoring ranges – below 700 – tend to reflect how effectively you manage credit. In particular, the timeliness of your payments and the amount you owe.

However, in the upper ranges – above 750 – where a stellar payment history and low credit card debt are a given, identifying some of the less-consequential factors suppressing your score can be as elusive as that 850 itself.

The keys to unlocking such score mysteries lie with the “reason codes,” also known as “score factors” and “adverse action codes,” that accompany most credit scores to explain why the score isn’t higher.

Believe it or not, these often ignored bits of information can provide some of the most valuable informational links between the score and the formula that produced it.

What ‘reason codes’ reveal about your credit score
Specifically, the various reason codes indicate which scoring calculations have given you the fewest points compared to the total possible – listed in order of their impact on your score.

In other words, the first reason code represents the factor that costs you the most points, the second indicates the factor responsible for the next highest point loss, and so on.

Whereas scores the lower ranges tend to deliver reason codes such as “Time since delinquency is too recent” and “Proportion of balances to limits on credit cards is too high,” high achievers are more apt to see reason codes from the less influential scoring categories: length of credit history, new accounts and types of credit.

‘Reason codes’ often found in high credit scores
Let’s take a sampling of some reason codes you could encounter with high scores like yours, and see what can and can’t be done about them:

  • Length of time accounts have been established.
    While you have 40-plus years of credit experience, some of your oldest credit accounts may have been removed from your credit report and score due to inactivity. Preventing any further purging of this positive credit history is simply a matter of continuing to keep all your credit cards open and active, while paying in full each month.
  • Too many inquiries in the past 12 months.
    Though typically only amounting to a score drop of about five points or so per hard inquiry, just one credit pull during the past year can be enough to keep your score just shy of 850. This is just one of many reasons – including a reduced average account age and shorter time since the newest account – to avoid opening new accounts.
  • Lack of recent installment loan information.
    You mentioned having paid off multiple mortgages and car loans. If this has led to an absence of any open loans on your credit report, you might be missing out on some points from the calculations that favor multiple types of credit being used. Yet taking out a new loan to claim those points is likely to be more counterproductive than helpful, given the aforementioned score damage that often follows a new account opening.

Taking a look at the ‘reason codes’ on your credit score
Now take a look at the reason codes you received with your latest score.

Consider it a reflection of your excellent credit that there is not likely to be much opportunity left to accelerate that score growth.

Instead, your best results will probably come from just the passage of time while you continue to do exactly what you’ve been doing all along.

Eventually, you could see that 850. Or you may simply have to “settle” for scores in the lower 800s. If so, it’s still a good problem to have!

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