Short answer: yes, it is possible to get a perfect credit score.
But it’s very rare, quite difficult to maintain, and probably won’t get you anything you wouldn’t get with a slightly lower score.
The very concept of credit scores might seem confusing, even overwhelming. Why does this three-number code decide so much of my financial wellbeing? Who decides it? And how can I improve it?
What do credit score ranges mean?
Credit scores play a crucial role in determining financial stability and credibility.
In Canada, credit scores are computed using various factors such as payment history, credit utilization, length of credit history, and more.
These scores, ranging from poor to excellent, indicate a person's creditworthiness.
The scores themselves range from 300 to 900. So what is a good credit score?
Scores up to around 600 are generally seen as poor. An okay score is around 700. Getting into the mid-to-late 700s is good, and anything above 800 is excellent.
A poor credit score suggests a higher risk for lenders, making it difficult to secure loans or obtain favourable interest rates.
On the other hand, a higher credit score, such as very good or excellent, shows a strong financial track record and makes it easier to access loans and better interest rates.
It's important to note that different lenders might interpret these bands in slightly different ways, so it's beneficial to be aware of the specific criteria lenders use to assess creditworthiness.
What is considered a perfect credit score?
A perfect credit score in Canada would be 900. Achieving a perfect score is not impossible, but there is always something that can cause a mark against your credit at any given time.
Data is hard to come by in Canada, but in the United States, just 1.6 percent of credit-score-having Americans achieved a perfect score.
It requires consistently excellent financial habits over an extended period. However, it's essential to understand that aiming for perfection isn't necessary for most individuals.
While a perfect credit score might be a desirable goal, it is not the determining factor for most types of loans or financial opportunities.
With a credit score of 760 or up — marking you as having “excellent” credit — you should have no trouble getting approved for the most hard-to-get loans and credit cards.
How to improve your credit scores
If you find yourself with a less than ideal credit score, don't worry. There are several steps you can take to improve it.
Start by making timely bill payments, as payment history plays a significant role in credit scores.
Secondly, maintain a low balance on your credit cards by making regular payments.
Additionally, avoid actions that can damage your credit, such as taking on excessive debt or making late payments.
Patience and consistency are key when it comes to improving your credit score. It may take time, but with responsible financial habits, you can see improvement over time.
Benefits of high credit scores
Having a high credit score comes with numerous advantages.
For instance, when applying for loans, such as mortgages or car loans, a higher credit score can result in better interest rates and more favorable terms.
Additionally, a high credit score can make rental applications easier since landlords often consider credit scores as an indicator of financial responsibility.
Overall, a high credit score demonstrates creditworthiness and responsibility, opening doors to better financial opportunities.