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Cracking the Perfect Credit Score? Don’t Bother…

perfect credit score200 MILLION AMERICANS NOW HAVE FICO SCORES

About 200 million Americans now have FICO Scores, and about 3 million have perfect scores of 850, according to this Bloomberg article – “How More Americans Are Getting a Perfect Credit Score.”

America may be approaching “peak credit score” with average scores now above where they were at the previous peak in 2006 (just prior to the mortgage meltdown).

Low interest rates, automatic payments and a strong economy are the main reasons why average credit scores are so high right now.

The other reason is that people try to game the system to achieve the elusive “850 score.”

PERFECT CREDIT SCORES SERVE NO PURPOSE

But other than granting bragging rights, perfect scores serve no purpose.

In the mortgage realm, the highest score conforming (Fannie and Freddie) borrowers can benefit from is 740.

For jumbo loans, the highest score from which a borrower can benefit is 780.

Underwriters don’t go easier on borrowers with 850 scores, and their rates are not any lower either.

We often have borrowers with excellent credit refuse to let us check their credit b/c they are worried that a credit inquiry will hurt their credit score.

But, as we remind such borrowers over and over:

(1) we have to pull credit or we cannot possibly pre-approve them;

(2) credit inquiries for borrowers with good credit minimally impact credit scores;

(3) borrowers can have multiple mortgage-related inquires within 30 days and the bureaus count it as one; and

(4) if someone’s score does drop from 810 to 808, it has no bearing on their interest rate or financing, or anything else.**

** They might have trouble getting a date, as the article also mentioned that there are dating services based on credit scores :).

Jay Voorhees
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 01524255, NMLS# 335646