In the world of FICO scores, absolute perfection is close to unattainable. The highest score possible in the FICO credit scoring system is 850, and very, very few people ever see such a number. If you're highly competitive or even a downright perfectionist, resist the urge to obsess over the never-never land of FICO perfection.
Decunstructing the Anatomy of a Great FICO Score
The good news is that, just as in horseshoes, close is good enough. A credit score over 760 will typically qualify a borrower for some of the lowest rates available.
The pursuit of a high credit score requires awareness of how various factors are weighted in FICO calculations. The five components of your credit history are evaluated as follows:
- Payment history - 35%
- Credit utilization - 30%
- Length of credit history - 15%
- New credit - 10%
- Credit mix - 10%
Length of Credit History
A prospective lender will often get nervous if there's evidence that a borrower has recently taken on a load of new debt or acquired new credit lines. This is because the lender has no effective way to assess how the borrower will handle this new credit.