12 October 2011

The Search for the Golden Unicorn

Having a good credit score is important, but for some people it just isn’t enough. They want perfection. The goal may be as elusive as a perfect game in baseball or a perfect SAT score, but that doesn’t faze these folks.

Credit scores range from 300 – 850. The score is calculated based on a formula developed by the Fair Isaac, Co., and considers five factors: payment history, amount  of available credit in use, types of credit used, amount of new credit, and length of credit history. Having a high score can save consumers money by giving them access to lower interest mortgages, car loans, and credit cards than people with less than stellar credit scores.

However, the additional benefit to be gleaned from having a perfect credit score as opposed to just an excellent one may not be worth the additional effort. Perfect score junkies invest a fair amount of time and, sometimes, money to continually monitor their credit. According to one expert cited in the article, a score of 780 will grant a consumer access to the best rates. Doing additional credit score gymnastics will not get you better rates.
Monitoring credit is still very important. Prior to the personal credit crisis starting in 2008, the best rates were available to those with scores of 720 and above. Any errors or discrepancies in your credit report should be addressed as soon as they are evident, particularly if you plan on borrowing money, like for a house or a car, in the near future. On the other hand, there has been talk that some credit card issuers are wary of extremely high scores as this indicates that “such people did not generate profit” (Mangla, 2010, para. 18) for those who extended credit to them.

Excellent credit is good enough for most people; for some, searching for the unicorn of an 850 credit score is worth the effort, bless their hearts. 

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