In Search of Credit Score Nirvana

Overachievers perpetually strive for higher numbers, with little gain

Jeff Rose, a 34-year-old financial planner in Carbondale, Ill., is the kind of guy who has a top-drawer credit score of 780, which is 69 points above the median—and still he wants more. Bent on nudging his score past 800, Rose applied for a second credit card last year, even though he doesn’t need one. “Some hiccups could happen and I get whacked and I’m a 720, so you shouldn’t be too comfortable,” says the founder and chief executive officer of Alliance Wealth Management.

In the three years since the credit crisis ushered in an era of household budget austerity, a gold-plated credit score has become a source of comfort, even a status symbol for many people. Consumers with elevated scores typically get the lowest rates on mortgages and car loans, along with elite credit card offers. “Given the importance of credit scores in borrowing, job searches, and even insurance premiums, it’s no surprise that some consumers look at their credit scores as a way to keep score against the Joneses,” said Greg McBride, senior financial analyst at, a website that aggregates rate information from thousands of institutions, in an e-mail.

The model most commonly used to gauge a consumer’s financial health was established by Minneapolis-based FICO, formerly known as Fair Isaac Corp. FICO ranks a borrower’s default risk on a scale ranging from 300 to 850 based on debt levels, payment timeliness, the length of credit history, and other factors. Punctual payments and low debt relative to credit help boost scores, while late payments and constantly opening new lines of credit can hurt them. Yet for the most part the nation’s banks and credit-card companies treat a consumer with a FICO score in the 750 to 760 range the same as one with an 850 when it comes to interest rates on home mortgages and credit cards, says McBride. “There is clearly a subset of consumers who are obsessed with maximizing their credit scores even if it has no real-world value,” says Kenneth Lin, CEO and founder of Credit Karma, a San Francisco outfit that offers free score reports. “If you’re at 780-plus, it’s all bragging rights from there.”

The percentage of consumers with credit scores of 750 or more has fluctuated only slightly during the past five years, according to Barry Paperno, consumer affairs manager for Individuals with high scores tended to maintain their good behaviors during the credit crisis, paying down debt and cutting expenses. The score that’s considered the cutoff to qualify for the best rates, however, has changed. Before the recession, it was generally 720; now it’s at least 750, says Ben Woolsey, director of marketing and consumer research at, a website for cardholders.

About 18 percent of 200 million consumers in the U.S. with credit scores, or 36 million Americans, were rated 800 or higher in 2011, according to estimates from FICO.

Mayank Maheshwari also aspires to join the ranks of the credit aristocracy. The 26-year-old business analyst, who lives in Jersey City, N.J., has a student loan he hasn’t paid off, although he can afford to, because he thinks making the monthly payments on time will help increase his score of 780. Says Maheshwari: “I think the better the score, the better the benefit is for me in the long run.”


    The bottom line: In the eyes of mortgage lenders and credit-card issuers, there’s not much difference between a credit score of about 750 and 850.

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