In search of the perfect score
Most Americans have a credit score above 660, but how many have a perfect score? Reporter Rico Gagliano finds out how difficult it is to get a perfect 850.
Giving yourself a credit check (iStockPhoto.com)
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TEXT OF STORY
TESS VIGELAND: So we've spoken a lot about low FICO scores -- what having one can cost you, how to fix it. But we haven't said much about high scores. Specifically, the highest one. This week Marketplace's Rico Gagliano found himself obsessed with exactly that.
Rico Gagliano: The other day on my lunch break, I went online to check my FICO score. I do it twice yearly. Of course because it's a good thing to keep an eye on. But also because, I kind of like it. Because I've got a nice high score.
Ah, 795 out of 850. Now I have a confession to make: I'm a competitive person. And when I hear the word "score," here's what comes to mind:
SPORTSCASTER: He's in, he shoots -- he scores!
SPORTSCASTER: Kehoe's shot -- he scores!
You know? Winning! The guy with the higher score wins. And what is a FICO score if not your score in the game called credit? So I challenged my colleagues to a FICO match.SPORTSCASTER: He has scored!
Gagliano: Paddy Hirsch, senior editor at Marketplace. What is your credit score?
Paddy Hirsch: What's a credit score?
Gagliano: No, I'm serious, what is your credit score?
Hirsch: I believe it's 792.
Gagliano: 792? I beat you!!! HAHAHAHA!
Hirsch: That's because you're ten years younger than me and you haven't had the chance to make any mistakes.
Gagliano: Stacey Vanek-Smith, senior reporter for Marketplace and Marketplace Money, what is your credit score?
Vanek-Smith: It's pretty good. I think it's like in the 700s.
Gagliano: But is it in the upper 700s?
Vanek-Smith: I don't think it is, no.
Gagliano: So it wouldn't be, like, say, above 795?
Vanek-Smith: Rico, no one's score is in the upper 700s--
Gagliano: Mine is. I win. Goodbye!
Gagliano: George Judson, Managing Editor at Marketplace. What is your credit score?
GEORGE Judson: 820.
Gagliano: What?
Judson: 820.
Gagliano: How do you do that?
Judson: I've had and paid off six mortgages, I pay off my credit cards, I have many, many years of paying bills, I guess.
Gagliano: I have many years of paying bills--
Judson: I have more years.
It was a brutal defeat. But here's the thing: George has all that going for him, right? Perfect payment record, long credit history. And he still scored an 820. FICO's top score is 850.
So is it even possible to get that score? Is Fico's 850 the fiscal version of that A+ my college logic professor said he was never going to give out? Because I hated that guy!
JORDAN GOODMAN: I think 850s do exist.
That's not my college logic professor, that's credit expert Jordan Goodman.
GOODMAN: They're very rare, becoming more and more rare as the economy slides down.
Gagliano: Are you sure that they exist or is this just, like, your hunch?
GOODMAN: I have met people who say they've got 850, but I've never actually confirmed it -- it's not the kind of thing you normally show somebody.
Gagliano: For a second opinion, I asked Greg McBride of Bankrate.com.
Greg McBride: Now if your credit score is above 760, you're already qualifying for the very best rate, so obsessing about pushing it even higher is largely a waste of time.
Gagliano: But that's not my questions, Greg! Is that 850 out there? Can I win the FICO game?
MCBRIDE: I don't think attaining the perfect credit score is possible.
Gagliano: Really? You don't think anybody has an 850.
MCBRIDE: FICO is the party to ask.
So I did. I went to Oz and I spoke to the wizard. Or at least the wizard's spokesman: FICO's PR director Craig Watts.
Craig Watts: In rare circumstances it is possible to get a FICO score of 850.
That's the good news. Here's the bad:
Watts: For a broad section of the population, it probably isn't possible, even if they do everything right.
That's because there's not one formula for calculating your FICO score. There are ten. Each is a "scorecard," that gives different items in your credit history slightly different weight. Your scorecard depends on where you are in your economic life.
Watts: For example, if you are college student, you're brand new to credit. The FICO formula is only comparing you to other people who also have very short credit histories.
There's a scorecard for people who've been through, say, bankruptcy -- they may be printing extras of those these days. But here's the point: every scorecard has its own score range. If your scorecard's top range isn't 850? You can't get an 850, period. Now, what scorecard applies to you, or when you'll move out of one and into another? That's a secret. All Watts would tell me is how to get the best score possible.
Watts: Pay everybody on time, keep your account balances low on credit cards, take on new credit obligations sparingly, and then continue managing credit for a long time. Typically people who score in the mid-800s have been managing credit for at least a couple of decades.
Gagliano: So, be a financial rock star, and become old.
Watts: Yeah, be the Mick Jagger of the credit world!
You hear that, George Judson? Yeah, you with your 820 FICO score? Rematch in ten years, buddy. Bring your game face.
In Los Angeles, I'm Rico Gagliano for Marketplace Money.
Comments
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From Louisville, KY, 05/20/2009
Great piece. I laughed out loud...and it spurred me to check my own score. Equifax report...809. Boom. Posterized.
From annandale, VA, 05/12/2009
it may be apples and oranges, but i bought a new car today, and the guy showed me the credit score that came up for me. 833!!! but, maybe car scores are different? in any case, let me say it again, 833!!!
From UT, 04/29/2009
The problem with the credit reporting companies is the lack of any sort of convenience when correcting errors. Both TransUnion and Equifax require written notification through snail mail and they take their sweet time updating the documentation. If you're trying to refi during this downturn of the interest rates, this time crunch could cost you money.
One other point to consider if you have a CC: Watch that you don't go over the allocation ratio, which is about 30%. This ratio is the amount of the total credit allowance you carry and if you're over 30%, your FICO score will suffer. The reason I mention this is that CC companies are presently being found to be adjusting customers' allowable credit line downward and this will affect where your 30% falls. So, Joe BagO'Donuts has a card with at $10k limit and has been paying on his $2500 balance religiously but his CC company "reviews" his credit and decides to lower the limit to $7500. Immediately, he is now at the 33% level and his FICO score gets dinged without him doing anything wrong. Watch your statements and your balances!
From CA, 04/22/2009
In response to previous comments asking about where to obtain your FICO score:
www.myfico.com is the only official site. Click on Products at top left corner. Two scores are available - one from Equifax and one from TransUnion. Each score costs $15.95. The website is owned by Fair Isaac (the maker of the FICO score) and you're not required to sign up for any subscription in order to see your score.
If you're looking to get your free annual credit report from each of the 3 bureaus, the official site is www.annualcreditreport.com
Don't fall for those commercials advertising www.freecreditreport.com. It's not really free.
Check out this article on The Washington Post:
http://voices.washingtonpost.com/securityfix/2009/03/ftc_takes_on_freecreditreportc.html
From Honolulu, HI, 04/21/2009
What happens to my score if I cancel five of the tens cards I have but never use (all high credit limit from the free for all 'lender's spree' mid decade)
From Grand Rapids, MI, 04/20/2009
I think I'm somewhere in the low-mid 700s and honestly couldn't care less.
I'm 32 years old, my only debt is $113K on my house, which will be paid off in 15 years. I have no credit cards, and I have a $15K cash reserve.
You can have your 795, boss. Enjoy being in debt the rest of your life.
From New York, NY, 04/19/2009
I was able to get a free credit report at (no payment/subscription required):
https://www.annualcreditreport.com
this does not include a credit score (you have to pay for that), but I can monitor my credit activity by spacing out my credit reports over the year.
From ME, 04/19/2009
I, too, would like to know the best online site to get my credit score.
From NY, 04/19/2009
Hey, Rico--my Experian score is 797, Equifax is 805, TransUnion is 805.
BOOYA, I WIN!
From Salem, OR, 04/19/2009
It would be helpful to know what site Rico used to check his score. I found MyFico.com but am not sure it is the right place. They have paid subscriptions (30-day free trial). My bank used to have my FICO score monthly as a free account benefit, but they were bought by JPMorgan Chase and the account features were changed. I looked for a FICO link on your site but did not find one.
From Newton, NJ, 04/18/2009
having a high FICO score is great, but it is extremely FRAGILE and PERISHABLE. Even ONE LATE PAYMENT can dump it from 800 to high 600's.
Also, being a victim of identity theft or credit card theft can seriously damage your score, even if you report the incident. New credit cards have to be issued to replace the stolen ones, and some credit reporting agencies consider this to be a "brand new" card with no history behind it. This can also hit a high credit score down a couple dozen points.
I'd also like to hear a bit more about the differences between business and personal credit (D&B and paydex will probably be mentioned), and what ways to increase the business side of your credit. Thanks for the great stories.
By the way, even after a credit card theft last July, it's back up to 802. Nyah nyah :P
From VT, 04/18/2009
803. Nailed ya!!
Thanks for encouraging me to check mine and order my free annual reports. All it took was a little friendly competition!
From NV, 04/18/2009
Gagliano, NICE!! That was very entertaining and made me laugh! Can you tackle the question of why the big 3 are never the same score? It may have to do with the scorecard you mentioned but transunion must be using unlike the others.
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