Perfect Credit Score: Nothing but Bragging Rights?

The highest credit score that has ever crossed John Stearns' desk was 834. It belonged to his accountant who was refinancing his house with Stearns, a mortgage banker with American Fidelity Mortgage Services in Wisconsin.

"All three of his were over 800," says Stearns, noting that mortgage lenders require three credit scores to be pulled for an application. "And his wife's, too."

Stearns kept his accountant's credit report for a year, analyzing how he had achieved such a high score. The key, Stearns says, was his accountant used very little of his available credit on his credit cards.

"I can't forget that score," he says. "I'm jealous."

Getting an 850 FICO credit score is the grown-up version of a perfect SAT score. It's a personal finance milestone and helps fuel demand for credit score monitoring services and credit score estimators. Other than bragging rights, the effort to attain perfection is unnecessary for finances -- and possibly futile.

No lender distinguishes between a 780 and 850, for example, and the accomplishment is fleeting. Unlike an exam that is scored once, a credit score is calculated anew each time a request is made and reflects changes on your credit report, which is continually updated.

"Even if you got an 850, there's no guarantee you would stay there," says John Ulzheimer, the credit expert for CreditSesame.com. "You can't just ring the bell and say, 'I got it' because it could change this afternoon."

Is it even possible?

Even Ulzheimer, a nationally renowned credit expert who has worked at FICO and Equifax, has never personally gotten a perfect FICO score. He once got a 990 VantageScore, the highest possible score for that version. (VantageScore recently changed its score range to 300-850, just like FICO's, with its third-generation scoring model.)

"I don't obsess about it," he says.

An informal survey of a dozen mortgage professionals yielded no stories of perfect scores, either, which begs the question if it's even possible.

It is, says Frederic Hyunh, a senior principal scientist at FICO. The company didn't offer any examples or anecdotes, but it did release a study last year on characteristics of high credit score achievers, defined as those with scores more than 785. Among the findings:

Two-thirds have less than $8,500 in total debt balances, excluding mortgages.
96% have no missed payments on their credit reports.
High achievers use an average of 7% of their available credit on credit cards.

Those stats alone deal with factors that contribute 65% to a credit score. Payment history accounts for 35%, and amounts owed contribute 30%. The former is an easy concept: Pay at least your minimum payment on time, all the time. The latter is trickier, especially when it comes to utilization rates on revolving accounts.

The rule of thumb is to use less than 20% of your available credit on your credit cards. The highest achievers use even less -- just 7% or charging only $70 on a card with a $1,000 limit. That could make the difference between a good credit score and a great one, says Dick Lepre, a loan agent with RPM Mortgage in California.

"I have seen people with perfect payment histories, but they had five credit cards with $100,000 limits, and all the balances were more than 90% of the limit," Lepre says. "That hurt their scores."

Does it matter?

Lepre is quick to point out that a perfect credit score isn't necessary to get the lowest mortgage rates. In fact, borrowers need a 740 to secure the best home loan rates. Auto lenders and credit card issuers often set even lower bars -- credit score-wise -- for the best rates on their loan products. The requirements vary by lender.

In general, lenders aren't looking for perfect credit scores; they are looking for scores that indicate that you manage your debts well. As long as you meet their thresholds, you will qualify for the best rates.

For example, Rod Griffin, director of public education at Experian, recently got the best rates available for a mortgage even though his credit scores ranged from the high 700s to just above 800.

"As we say in Texas, that was plenty good enough," he says.

The ever-changing perfect credit score

Here's another wrench in getting the perfect FICO credit score: 850 may not be it after all. Lenders and credit reporting agencies can tweak FICO credit score ranges, even though the 300 to 850 range remains the most common, says Anthony Sprauve, spokesman for myFICO.com, the consumer education division of FICO.

For example, the range for TransUnion's Precision 2003 FICO Risk Score -- which, like other FICO credit scores, measures the likelihood of a 90-day delinquency within 24 months -- goes as high as 950. The range for its Classic 95 FICO Risk Score is 403 to 834.

That means Stearns' accountant may have actually achieved a perfect credit score, if the right model was used.

"That's interesting," Stearns says. "I would be amazed."