Gen Z Can’t Have a Perfect Credit Score (Yet) — Here’s What They Should Aim For
Written by
Adam Palasciano
Edited by
Nicholas Morine
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Having a “perfect” credit score is something to be proud of, it might even give you some financial bragging rights. Maintaining a healthy credit score can provide you with access to lines of credit with favorable interest rates, such as a mortgage, auto loan, personal loan, and more.
Meanwhile, a low credit score will make it more difficult to qualify for lines of credit at all — and can seriously hinder your ability to achieve life’s milestones, like buying your first home.
If you’re a financially savvy Gen Zer, you might be reaching for the ultimate 850 credit score. But, there are many factors that go into calculating your score and it can be tricky to achieve that score at a young age.
How Your Credit Score Is Calculated
CNBC reported that your FICO score, which is the main credit score used by the majority of lenders, can range from 300 to 850 and is calculated based on several weighted categories:
- Payment history (35%): Determined by whether you’ve paid your credit card bills on time and in full.
- Amounts owed (30%): The amount of credit that you’re using and how high of balance you carry.
- Length of credit history (15%): How long you’ve had credit cards, have been paying back loans, etc.
- Credit mix (10%): The blend of credit accounts you’re maintaining, from installment loans to retail credit cards and bank credit cards.
- New credit (10%): The length of time it’s been since you’ve applied for new lines of credit.
While it’s important to have a high credit score, perfect credit is only for the 1% — literally. A May 2024 report from credit bureau Experian indicated that as of the third quarter of 2023, only 1.54% of U.S. consumers had a FICO Score of 850. Further, only 20.37% of Americans currently have an exceptional FICO score between 800-849.
However, an 850 credit score isn’t necessary to reap the benefits of having a high score. Even a credit score in the mid-700s and above will give you access to some of the most favorable mortgage interest rates. At present, the average FICO score in the U.S. is 717.
Why Gen Z Can’t Have an 850 Credit Score (Yet)
If you’re a Gen Zer who pays every bill on time, keeps your credit utilization low, carries no credit card debt, and only opens accounts when necessary, you might think you’d have a perfect score by now.
However, there’s one crucial factor used to determine your credit score that you can’t control: length of credit history, which only increases with time and age. Of the 1.54% of U.S. consumers that have reached an 850 FICO score, the majority of them are between the age of 60 and 78.
If you’re looking to improve your score further, the best way to do so is to consistently pay all your bills on time and never miss a payment. This is the single largest factor taken into consideration when calculating your FICO score, and can help you reach a perfect score over time.
For now, aim for a FICO score of 760 or above, which will unlock some of the most favorable rates for borrowing, being approved for loans and better credit cards, and more.
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