850 credit score: What it means

A credit score of 850 or above is considered excellent and puts you in the top tier of borrowers. According to Experian, only 23% of the population has a credit score this high. This makes you part of a select group of people who are financially responsible and trustworthy. When it comes to borrowing money, you're in a great position to get the best terms and rates available.

Let’s get started to understand what it means, why 850 credit score helps and how to get one.

There are many benefits that come with having excellent credit score, and the good news is that you don’t need a perfect 850 score to start enjoying them. Just getting your credit score over 850 – which is officially considered excellent – gives you the same advantages and benefits as having a perfect score.

When you have an 850 credit score, you’ve done everything you need to do to prove that you are a responsible borrower. Banks and credit card issuers will be eager to loan you money, often at very favorable terms. People with 800+ credit rarely hear the word “no,” whether they’re asking for a mortgage preapproval letter or turning in a rental application.

How to improve your credit score

A FICO® Score of 850 is excellent—well above the average credit score of 711. It's nearly as good as credit scores can get, but you still may be able to improve it a bit.

More importantly, your score is on the low end of the Exceptional range and fairly close to the Very Good credit score range (740-799). A Very Good score is hardly caused for alarm, but staying in the Exceptional range can mean better chances of approval on the very best credit offers. So it's worth taking steps to try to improve your score even further.

It's important to keep your credit utilization rate at or below 30%. This is the percentage of your credit limit that you're using, and it's a good indicator of how close you are to maxing out your credit cards. If you keep your utilization rate low, you're less likely to lower your credit score. So it's a good idea to stay below 30% on all your accounts, and on each individual account.

Length of credit history is one of the most important factors in determining your credit score. If all other factors are equal, a longer credit history will result in a higher credit score than a shorter one. Therefore, it's important to build up your credit history over time to ensure a good score.

Although there may be a temporary dip in your credit score when you open a new credit account or take on additional debt, it is not causing for alarm. Credit-scoring systems flag you as being at greater risk of defaulting on your payments when you engage in new credit activity, which causes your score to drop a small amount. However, as long as you make all your payments on time, your score should rebound within a few months. In fact, new credit activity can contribute up to 10% of your overall credit score. So don't let a temporary dip discourage you from taking advantage of opportunities to improve your financial health.

850 Credit Score: What does it mean to have it?

An 850 FICO score is an excellent indication of positive credit history. There are no missed payments or credit utilization issues to lower your credit score from its exceptional ranking. You’ve likely been using credit successfully for many years, and probably have a healthy mix of credit accounts that includes both revolving credit (like credit cards) and installment credit (like a mortgage).

This is why you should be happy with your exceptional credit score

A credit score in the Exceptional range means you have a long history of managing your credit well. Your record of on-time bill payments and prudent debt management is essentially flawless.

People with Exceptional credit scores are very attractive to banks and credit card issuers, who typically offer their best lending terms to borrowers like you. This may include opportunities to refinance older loans at better rates than you were able to get in years past, and excellent odds of approval for credit cards with premium rewards programs and the lowest-available interest rates.

What does a 850 credit score get you?

Credit Cards For 850 Credit Score

The benefits of exceptional credit score

Higher credit limits

When you have an 850 credit score, you'll likely gain access to higher credit limits. This is beneficial because it increases your purchasing power and makes it easier to maintain a low credit utilization ratio—both of which are important factors in maintaining a near-perfect credit score.

Better credit offers

One of the best things about having an 850 credit score is that you'll have access to better credit offers. With such a high credit score, you'll be able to get all of today's best credit cards, including credit cards for people with excellent credit.

People with a credit score over 850 are also likely to be accepted for other lines of credit, including personal loans, mortgages, and car loans. Not only will most banks and credit issuers be eager to loan money to someone with a near-perfect credit score, but the terms of the loan will often be more favorable than the terms offered to people with lower credit scores.

Better credit approval odds

It's comforting to know that your 850 credit score is likely higher than any minimum credit score requirements set by lenders. As long as you meet other eligibility requirements, like income and employment stability, you have a good chance of being approved for the credit you're seeking.

Lower interest rates

If you have an excellent credit score, you can reap many benefits, including lower interest rates. You're likely to be offered rates that are significantly below the national average if your credit score is high. This can save you a lot of money over time, especially if you get a low fixed interest rate on a long-term loan like a 30-year mortgage.

Lower interest rates can translate into big savings on mortgages, car loans, credit card balances, and personal loans. Over the course of a long loan, the difference in interest rates can add up to hundreds or even thousands of dollars.

Better insurance rates

If your state allows it, your insurance provider may take your credit score into account when calculating your insurance premium. Having a good credit score could help you get a lower premium on your homeowners or auto insurance. So if you have a near-perfect credit score, make sure to take advantage of it!

How to get an 850 Credit Score

One of the best ways to demonstrate to lenders that you're a responsible borrower is to always pay your bills on time. Payment history is the most important factor in FICO credit scoring models, accounting for 35% of your credit score. So, it's crucial that you make timely payments on all of your bills.

If you do happen to miss a payment, don't worry – you can correct the mistake and avoid any negative consequences to your credit score. Usually, lenders don't report missed payments to the credit bureaus until they're 30 days past due. So as long as you pay any outstanding bills before then, you should be fine.

Adding a new credit account to your portfolio can help diversify your credit mix, which makes up 10% of your credit score. This is especially beneficial if you don't already have a lot of experience with the type of credit you're considering. For example, if you only have installment loans, like a car loan or a personal loan, adding a new credit card can help improve your credit score. Additionally, by increasing your credit limit, you can also reduce your overall credit utilization ratio.

Monitoring your credit score regularly is important in order to keep track of your financial health. Many credit monitoring services will provide you with an updated credit score every week, as well as an analysis of any factors that might have caused a change in your score. By understanding what affects your credit score, you can make choices that will help to improve your score and avoid anything that would lower it.

It's important to keep your credit utilization low in order to avoid a serious hit to your credit score. The general rule of thumb is to keep your credit utilization ratio under 30%.

You should review your credit reports from Equifax, Experian, and TransUnion. Many Americans have errors on their credit reports without even realizing it. These errors could lower your credit score without you knowing. So it's important to check that all the information on your credit report is accurate. If you find any errors, you can dispute them with the credit bureau.