The highest credit rating according to the widely accepted Fair Isaac Corporation (FICO) method of reporting is 850. The scale ranges from 300 to 850. Several factors influence a person’s credit score, and in order to achieve the highest credit rating, several things are evaluated. FICO uses many factors to calculate an individual’s credit score, but the primary ones are payment history, amount owed, length of history, new credit and types of credit. The closer a person’s credit rating is to 850, the easier it might be for him or her to obtain credit with a low interest rate.
Payment history and amounts owed on various credit products make up the largest part of the FICO score equation, accounting for more than half of the score computation. As a result, these items most influence achieving the highest credit rating. Ensuring that payments are made on time and that the amounts owed on credit products are not close to the limit are both ways to positively affect a score.
Length of credit history is the next contributing factor to obtaining the highest credit rating. The longer an individual has used credit, the more that FICO has on which to base its rating. New credit holders do not have a proven track record and therefore might be considered a credit risk.
The amount of new credit applied for in a given time period also affects a credit score. In order to achieve the highest credit rating, a person should avoid applying for lots of new credit at once. It might signal a warning sign for credit bureaus that something might be wrong or will be in the near future.
A variety of credit being used is another major indicator when computing a credit score. FICO likes to see a variety of accounts, such as a mortgage, car loan, installments loans and credit cards. A person should be careful that he or she does not use too many credit options, because this might make it easy to get in trouble with credit, which can lead to a lower score.
More subtle factors are involved in computing a credit score as well. The number of times an inquiry appears on the credit account is one factor. If an individual checks his or her own credit report, however, his or her score is not affected. The proportion of credit used to credit available is another factor. Using credit wisely will help contribute to an individual obtaining the highest credit rating possible.