Perfect 850 credit score an elusive ‘unicorn’?

Posted Aug. 26, 2010 at 7:32 a.m.

A major league pitcher dreams of throwing a perfect game. High schoolers eyeing the Ivy League study furiously in hopes of earning 2400 on the SAT. Meanwhile, Chris Peplinski is pursuing his own brand of flawlessness: an 850 credit score.

The 37-year-old stay-at-home dad from Rogers, Ark., has already nabbed 813 on the FICO scale, the credit scoring system most lenders use in sizing up potential borrowers.

That ranks him above more than 82 percent of Americans and comes with a big payoff: It entitles him to ultralow rates on loans, saving him tens of thousands of bucks over a lifetime.

Nevertheless, Peplinski won’t be satisfied until he hits the maximum: 850. Why? “Your credit score tells a lot about you,“ Peplinski explains. “A high score means you’re responsible and in control of your life. You’re trustworthy.“

To reach his goal, Peplinski voraciously reads up on every element that goes into a FICO score, checks his number every three months, and tweaks his behavior to eke out every possible additional point.

Two years ago, he took out a car loan even though he and his wife, Chrissy, had the cash to buy their wheels outright. He figured that adding to his mix of credit might boost his score.

In spite of Chris’s best efforts, landing an 850 may be a quixotic goal — only about 0.5 percent of Americans manage it, FICO reports.

“The 850 score is kind of like a unicorn,“ says John Ulzheimer, a credit scoring expert with who used to work for FICO. “Everybody talks about it, but nobody’s seen it.“

The reality is that you don’t need to catch the unicorn to catch the best rates. But adopting some of the habits of Peplinski and other members of the 800 club can help you improve your own score.

And that can translate into real money: On a $300,000 30-year fixed-rate mortgage, the most credit-worthy borrowers will pay $14,200 less than those one tier below, $25,600 less than those two tiers below.

FICO, the Minneapolis company that produces the scoring model, divulges the five factors that determine your magic number — your payment history, the amount you owe on credit lines and loans, the length of your credit history, how much new credit you’ve applied for, and the types of accounts you’ve had — plus what percentage of your score each factor represents.

But as for exactly how many points you’ll gain or lose for, say, taking on a mortgage, being late on a bill, or charging credit cards up to the max? That’s proprietary information: “It’s a black box,“ says FICO spokesman Craig Watts.

Mystery feeds obsession. Much the way fans of TV’s Lost met up online to postulate theories on the show’s ending, some credit score aficionados passionately debate their hypotheses on message boards like the FICO Forums at Others use themselves as guinea pigs to discover which moves will nudge a score up or down.

While most people could tell you their number only from the last time they got a loan — if at all — true FICO fiends know their score as well as they know their spouse.

Of the score strivers MONEY interviewed, most check their score obsessively, at least every few months — at a cost of $50 or more a year. They also fixate on their credit reports, upon which the scores are based.

Leland Lim, a 41-year-old doctor from the Bay Area, is vigilant about scanning these for errors that might drag down his number. “It took me three years to get a derogatory entry on one of them corrected,“ says Lim, who now earns an 806.

As for what makes an 800-plus score, these self-made experts basically say the same thing FICO does: Payment history is the single most important factor.

“I have this fetish about paying bills as soon as they come in the house,“ says Dick Husemann, 66, a retired Air Force officer from Wilmington, N.C. He and his wife, Brenda, 69, attribute their high scores — matching 818s — to the fact that they’ve never missed a credit payment.

The Husemanns also never charge more than 10% of their credit limit. They’re not alone in that; most score enthusiasts aim to keep a low “utilization ratio,“ or the amount they owe compared with the amount of credit available to them. FICO verifies that a low ratio can help your score.

Chris Peplinski used his knowledge of this principle to help his wife boost her number. When they met seven years ago, Chrissy’s credit cards were maxed out and her score was a low 466. (Today he jokes: “I tell people when they’re dating someone new, ask about your date’s credit score!“)

Chris helped her get on a repayment plan. A sales manager for General Mills, Chrissy now has tons of available credit she’s not using and a score of 786. Chris occasionally applies for additional credit cards to goose the couple’s credit lines further, even though he knows the FICO model will ding his score in the short term for opening a new account.

That kind of gamesmanship is all part of the quest for 850. With lenders now routinely closing inactive accounts, Lim rotates all his credit cards into circulation so that he’ll continue to have a lot of available credit to figure into his utilization ratio.

But because his charges also affect that ratio, a few months before applying for a loan, he stops using the cards or pays them off before the statement is generated. That way, he says, “my score jumps a bit“ — just in time for the lender to see.

The 800 club members are also conscious of their mix of credit.

Lim became interested in the scoring process two years ago while refinancing a home-equity loan into a home-equity line of credit. Having heard that revolving debt could affect a score more than an installment loan, he studied up.

His research revealed that HELOCs are not considered revolving debt in the FICO model. (The scoring firm confirms.) And remember that car loan Peplinski took out even though he didn’t have to? He did it because FICO favors those with a variety of credit types, such as mortgage, credit cards, and auto loans.

“I probably paid $100 in interest,“ he says. “But it was worth it because we raised our credit scores by 15 points.“

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  1. Wake Up Suzie Aug. 26, 2010 at 9:24 a.m.

    Good idea to pay bills immediately after you get them in the mail, BUT….Only the most financially ignorant would take out a loan for something they have the cash to pay for merely to boost their “I-love-to-make-banks-a-lot-of-money” score. People don’t need to pay interest to credit card companies to be deemed trustworthy. This interviewee is an idiot being manipulated by the credit industry and doesn’t know it.

  2. Get a life Aug. 26, 2010 at 10:54 a.m.

    The guy sounds like a total tool

  3. John Smith Aug. 26, 2010 at 11:24 a.m.

    Get a life comes to mind

  4. creditworthy Aug. 26, 2010 at 12:10 pm

    When I got a car loan last year I was pleased to learn I had FICO score in the high 790s – only about 10 points lower than the Bay Area doctor in the story. And, I didn’t do any kind of obsessive credit rating acrobatics to get there. I just pay my bills.

  5. Paula Aug. 26, 2010 at 4:56 pm

    My credit is wacked from my ex. I don’t think I’ll live long enough to recover.

  6. Cindy Aug. 26, 2010 at 5:12 pm

    Don’t be so fast to trash someone who takes out an auto loan when they can pay cash. I did that two years ago; received a 1.9% interest rate. I took the amount of the loan from one of my accounts. I put it in a checking account that pays a little over 4% with certain very simple requirements that cost me nothing. When the car is paid for in another year (3-year loan), I will still have money in that account. I don’t believe that would have been the outcome had I paid cash unless you know something I don’t. I don’t have a mortgage and pay all credit cards in full each month, so no doubt this did help my credit score. I don’t check mine but anyone who has says its excellent.

  7. Ivy Aug. 26, 2010 at 7:05 pm

    It’s nice to hear something like this but… heck, tell this to millions who just wanted to stay afloat in this bad economy.

  8. Wake Up Suzie Aug. 26, 2010 at 9:01 pm

    Cindy…what you fail to realize is that 1.9% interest rate is not indicitive of the total amount you paid to finance the car. Had you asked for a cash price on the car it would have been less than the principal amount you financed. That just wipes out your sophisticated financial strategy of placing the cash in a higher yielding account.

  9. jeff Aug. 26, 2010 at 10:09 pm

    I see both sides to the story about the cash or finance option with the car and why he did the finance to boost his score however nothing is more satisfactory than owning something outright . Why burden yourself with a payment just to boost a score that is already excellent and if something ever happens where you cant pay for the car then your out of the car and the money . Im aware he is a doctor and may never end up in alot of peoples situation thats going on right now but you never know what life can bring . On top of that sometimes if you have a good credit score and too many financial obligations (debt to income ratio) that can hurt you when you truly do need a loan . BOTTOM LINE IF YOU CAN PAY CASH THEN DO SO!!!!!!!

  10. Sergio Aug. 26, 2010 at 11:41 pm

    First off, never take a loan on a car if you can pay cash. Its not about the banks. Its about the insurance. Most of the time when there is a lien, you are forced to pick the most coverage, that means $$$$$ bills for car insurance. On the other hand if you own the car, you have more freedom on car insurance plan and will have a lower bill 100% of the time.

    Example Wife’s Car (loan) 135 month insurance. Mine 40 bucks.

  11. Dr. Cash Aug. 29, 2010 at 3:13 pm

    Notice that nowhere in the article is “net worth” discussed. This is a real measure of financial success, unlike some stupid “I like paying debt” score.

  12. Retired USN CAPT & LCDR Sep. 4, 2010 at 10:15 a.m.

    The 2 of us EACH have one 800+ score & two 780+ credit scores, ‘earned’ in part by paying off our 3 active major credit card bills in full, each and every month.

    Each card (only one, by the way, charges an annual $50 fee) has generous ‘rebate’ programs via which we ’save’ over $1,000 a year! We use those rebates to be ‘credited back’, thus reducing what we owe each month. We used to save ‘pts’ or ‘miles’, but found it far too cumbersome & wasteful when ‘miles expired’, for example.

    While this means the month-to-month “Credit Utilization Rate” for those accts varies, & can exceed 15% or higher at times, we believe the consistent payment history ‘counts for more’ towards our good scores.

    Also, one of the easiest ways we improved our OVERALL “Credit Utilization Ratio” (the TOTAL amount owed on ALL accounts combined … divided by the TOTAL of ALL ‘available credit limits’) … was to simply call our ‘Discover’ & ‘MasterCard’ companies, asking for an ‘increase’ in our available credit limit for each account.

    ‘Discover’ declined to do so … but the ‘MasterCard’ rep took only a minute or so before coming back & saying: “Sure! How much of an increase would you like?” We asked for the “max we’re eligible for” & got the limit MORE THAN DOUBLED! Our ‘utilization ratio’ for that acct thus dropped fm 33% to less than 15% … all with just a single phone call!

    Perhaps it was due to the fact that the “MC” was associated with the same company that we have our checking account with – we don’t know, we’re ‘just customers’.

    But we do ALL our insurance business with that same company as well … so perhaps our 75+ yrs of ‘combined membership’ with that company was another positive – again, we can’t tell for sure. What we DO know is for at least the “MC” acct, our ‘numbers’ improved dramatically, just by asking via a phone call!

    One more ‘lesson learned’:
    Another bank sent us a ltr noting the ‘lack of activity’ on the credit card acct & implied that the acct would be closed it not used. We keep the card ‘in reserve’ should a purse or wallet be lost or stolen. We satisfied the company (we hope) by simply using the card for a few small charges for 2 months in a row. We paid the bills off in full each month & have now put the card back ‘in reserve’. Activity recorded … & history with that company extended … plus there’s now a 0% monthly ‘credit untiliztion ratio’ on that account.

    The credit rating agencies hold MOST of the cards, folks … but not ALL of them! It DOES, however, take concerted & constant actions by US to ensure we ‘play the best hand’ possible.
    “Soon to be drawing Social Security!”