Get the Marcus mobile banking app
Easy mobile access
Many will argue that perfection is overrated. Excellence, on the other hand, can be a worthwhile pursuit.
While this holds true for many things in life, it can be particularly true when it comes to credit scores. While an 850 is the perfect credit score, having a credit score that falls within the excellent range can be just as useful. With excellent credit scores, you generally can get more favorable interest rates and loan terms.
So, what is considered an excellent credit score – and how do you achieve one?
The Fair Isaac Corporation invented the algorithm most frequently applied to credit scoring back in 1958. The formula looks at several different aspects of your credit history to assign you a score based upon your past behaviors including:
When your credit activity is measured against these five factors, you’re issued a score. Most scores range from 300 on the low end to 850 on the high end.
To learn more about credit scoring, check out our credit score range guide.
So we’ve established that 850 can typically be the highest credit score you can reach. However, the range of an excellent score begins at 781.
The whole point of maintaining a strong credit rating is to qualify for low interest rates and the best loan terms. Lenders usually view consumers with higher credit scores as less risky. Getting lower interest rates can be hundreds to thousands of dollars saved on personal loans and mortgages, for example, over time.
And yes, if we’re being honest, there may be some pride involved as well in having a strong credit score.
As mentioned, a key benefit of an excellent credit score is the potential to receive lower interest rates on loans and other lines of credit.
Here are some of the other potential benefits of an excellent credit score:
Remember, your credit rating is based upon five factors. But not all factors are equal, and some matter more than others. Here’s how The Fair Isaac Corporation weights each of those elements:
The better your performance in each of these areas, chances are the higher your credit score will be. Granted, some of these require time to improve – such as the length of your credit history and the types of credit accounts you have. To improve your score, a great place to start may be reducing your credit utilization, the percentage of the total available revolving credit you use.
Looking for more credit score tips? See this guide on how you can improve your credit score. If you’ve struggled with maintaining a good credit score in the past, see this guide on how to repair credit.
This article is for informational purposes only and is not a substitute for individualized professional advice. Articles on this site were commissioned and approved by Marcus by Goldman Sachs®, but may not reflect the institutional opinions of The Goldman Sachs Group, Inc., Goldman Sachs Bank USA or any of their affiliates, subsidiaries or divisions.