Whether or not we admit it, at one point in time or another, all of us have wondered about what is the highest credit score anyone can achieve? It is not as much of a secret as a matter of unawareness. Most people while all have a credit score, good, bad or ugly, may not necessarily be in the know of this much sought after fact. Well, to unlock the mystery, the FICO score of 850 is the highest credit score any borrower can achieve. And oh what a score it is!
850 is the perfect credit score whose acquirer finds himself being in the middle of credit offers and being approved by lenders for all sorts of financing that he may apply for. The highest range lies in the area of 720 to 850 and is considered to be the perfect and excellent credit. While any credit score above 720 is very good, lenders look for a higher credit score due to many reasons. Not only that but when a borrower seeks what is the highest credit score and then tries to match it in his own credit ratings, he gets entitled for the best benefits and interest rates that lenders have to offer a borrower. This is what makes the understanding of what is the highest credit score so important for anyone who wishes to borrow as well as hopes to improve his credit score.
Accumulation of Credit Score
The credit score is also referred to as FICO score, which stands for Fait Isaac Corporation. This is the company that generated the formula for credit score calculator. The FICO score is indicative of the spending patterns and payment rituals of a person as the overall burden they carry 9in terms of debt. Since all the transactions we make are recorded and all our financial decisions are registered, they all go into contributing towards our credit score as we have it today. These financial transactions we make are recorded by any of the three reporting agencies that are recognized. However, getting a certain credit score from one agency does not mean that the borrower will have the same score from all agencies. That is why lending companies take an average of the highest numbers from all agencies. These reporting agencies make it their business to provide the credit scores of people to lenders and banks etc.
Calculation of Credit Score
The FICO credit score is calculated by giving specific weightage to certain factors that affect the credit rating of an individual. This includes 35% for bill payment on time, another 35% for total credit balance on cards and other borrowing as compared to the credit limit, a 15% weightage to the lengthy of history, 10% for recent applications for financing and their approval/rejection, and the last 10% for the type of credit acquired and used, that is house mortgages vs. auto loans vs. credit cards etc.
This should not only answer the question what is the highest credit score but will also tell borrowers about how to improve their credit score.