How High Can Your Credit Score Go?

I received a question from a reader this week who is concerned about closing credit card accounts she doesn’t use and lowering her incredibly strong FICO credit score of 780. The fact is, closing many credit accounts (even if you don’t use them) probably will lower her score a little bit, but when your score’s already that high, should you worry?

The Best Credit Scores

Depending on the exact scoring methodology used (FICO or other), your credit score may be as high as 830. The reality is, very few consumers–even those with impeccable payment histories–will ever crest a credit score of 800. It’s not for lack of trying; it’s simply because credit scoring is so complicated that nobody knows exactly what it takes to have perfect credit–and even if we knew, chances are few people would want to go through the trouble.

How to Get There

We do know, however, that these three simple factors build very, very good credit scores of 700, 720, 750, or 780 or more:

• No missed payments in many, many years
• A long credit history (if you don’t make mistakes, the older you get, the better you credit will get)
• High credit limits and low utilization

People are often surprised to learn that some of the wealthiest people in the country–Warren Buffet, for example–have fairly average credit scores. Conversely, somebody earning very average wages can develop near-perfect credit. The key is a applying for a good amount of credit, paying on time, increasing your limits, and then rarely using that credit.

It’s a situation most people never get into unless they are deliberately trying to build their credit score as high as it can go. After all, why apply for credit you don’t need?

Back to my reader who wants to cancel all but one of her credit cards. Yes, it will lower your credit score a bit. Your credit score will still be “excellent”, it just won’t be 780. It comes down to a personal choice. What’s more important to you? The highest possible credit score or the peace of mind of only having credit open that you actually use?