This credit score is optimal for most Americans, says this CFP

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A credit score of 850 is a coveted achievement for many because it signifies a “perfect” borrower. But very few Americans are able to achieve a perfect credit score, and according to Faron Daugs, CFP, founder and CEO of Harrison Wallace Financial Group, it’s really not necessary.

In fact, Daugs told Select that a score of 850 is “almost impossible,” but reassures consumers that anyone can achieve a strong credit score to earn the same financial opportunities.

To select details what is the most optimal credit score to get the best financial products and interest rates available, how to get your credit score up to par, and how you can get started today.

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Here is the most “optimal” credit score

All Americans are rated on their FICO credit score, which ranges from 300 to 850. The higher your score, the more likely you are to obtain favorable financing options for a home, car or credit card.

But Daugs is a firm believer that an 850 credit score is an unnecessary benchmark for Americans. Instead, he says that 760 is the most optimal credit score.

Daugs told Select, “The optimal score that will give you the highest credit limits and lowest interest rates is actually 760. Once you reach a score of 760 (according to FICO ), you will receive the same rates and limits as someone with an 800, 825 or even the ultimate 850.”

That’s a little contrary to popular belief, as a credit score of 760 is considered “very good,” according to Equifax according to their credit score ranges on their website. The ranges are:

By having at least a “very good” credit rating, you demonstrate to financial institutions that you pay your bills on time, that you maintain a low rate of credit utilization and that you have a good credit history. And in doing so, a credit score of 760 is just as valuable as a score of 800 or any higher when it comes to applying for financing options.

In short, anything over 760 is just icing on the cake.

How to Get That Credit Score

Earning a credit score of 760 doesn’t happen overnight. It takes persistent effort and strong personal finance skills to establish your credit history without any blemish, but it can be done.

In fact, the average credit score in America in 2020 was 710, according to Experian. So, wherever you are on the path to building (or rebuilding) credit, there are several things you can do to move your credit score in the right direction:

  • Pay off or refinance credit card debt: One of the largest parts of your credit score is made up of all debts owed (30%). So, if you have a lot of credit card debt, it will significantly increase your credit score. You may want to consider a balance transfer credit card to avoid compound interest charges. Or if you have multiple credit cards with balances, consider applying for a personal loan to consolidate your debt.
  • Dispute credit report errors: Millions of Americans have errors on their credit report that can negatively affect their overall score. Be sure to check your credit report and consider using a credit monitoring service to track any new credit applications or potential fraud.
  • Apply for higher credit limits: Each of your credit cards has a credit limit you can spend, and the amount of credit you use against that limit affects your overall credit score. This is called your credit utilization rate, and if you keep the amount of credit you use low relative to your credit limit, the more your credit score can rise. The best part is that you can request a higher line of credit from your card issuer and it won’t create a new request on your credit report.

For more tips, read our guide on how to build and get good credit. And consider a credit monitoring service for more information on your score:

Capital One CreditWise®

Information on CreditWise was independently collected by CNBC and was not reviewed or provided by the company prior to publication.

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  • Credit score model used

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At the end of the line

Your credit score is the foundation of many financial opportunities. Without a strong credit score, you risk being denied opportunities to obtain affordable financing for a major purchase, possibly being rejected for a new job, not being approved for housing options and other fundamental decisions.

However, if your credit score isn’t perfect, there’s concrete steps you can take today to improve it. And once your credit score is up to snuff, you can start making more important financial decisions to increase your net worth and prepare for retirement.

Check out Select’s in-depth coverage at personal finance, technology and tools, The well-being and more, and follow us on Facebook, instagram and Twitter to stay up to date.

Editorial note: Any opinions, analyses, criticisms or recommendations expressed in this article are those of Select’s editorial staff only and have not been reviewed, endorsed or otherwise endorsed by any third party.

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