How I Got a Perfect Credit Score in 4 Steps

Credit score
Photo by Gustavo Frazao / Shutterstock.com

The web is full of stories about how to massage your credit history and credit score to look your best to lenders. On this site and others, you’ve probably seen stories like “7 Ways to Boost Your Credit Score Fast” and “Fixing Your Credit? Do These 5 Things, Avoid These 3.”

While these stories are helpful, you don’t need them if you’re seeking a perfect credit score.

Over the decades that I’ve been doing personal finance news, I’ve done countless articles and TV stories about managing, improving and restoring credit. But here’s a confession: I’ve used few, if any, of the tips I’ve offered. Yet, my FICO credit score has reached a perfect 850.

So, how did I ignore common wisdom, yet end up with a perfect score? Here are the rules I followed.

1. No income, no borrow

Some people with credit problems today earned their bad marks at an early age. This is partially their fault and partially the fault of the lending industry.

When I was in college back in the 1970s, the credit game was simple: If you were a student and had no income, you couldn’t get a credit card or otherwise borrow, period.

This, of course, is perfectly logical. Who would lend money to someone with no means of repaying it? Conversely, who would borrow money, especially at exorbitant interest rates, that they can’t hope to repay?

Fast forward a few decades, and the standards for lending and borrowing have changed.

For many years now, banks have been throwing credit cards at any college student who can fog a mirror. And those students have been happily gobbling them up.

The result of this behavior is depressingly predictable. For banks, uncollectible accounts, big write-offs and fat losses. For students, credit damage that takes weeks to create and years to resolve.

I got my first credit card at age 21, shortly after I got my first job. In the 40 years since, I’ve rarely carried a balance and never paid a bill late.

This is not because I’m particularly responsible. It’s because I was brought up to believe credit is dangerous, so it should be used sparingly.

These days, many kids are apparently raised to believe credit is not only benign, it’s part of growing up. Like learning to drive, it’s seen as something everyone needs to experience at the earliest possible age. It’s an American birthright.

Today’s attitude didn’t happen by accident. Lenders took a page from the tobacco marketers’ handbook. They used advertising, along with everything else at their disposal, to carefully craft a message: Credit is your friend, it’s what you’re supposed to use — and the sooner, the better.

As with tobacco, the goal was to create a generation of addicts. As with tobacco, it worked splendidly.

If you want a perfect credit score, don’t use credit to pad your lifestyle or borrow money you don’t have. And if you want your kids to have a perfect credit score, let them leave home without their American Express card, but don’t let them leave home without that simple lesson.

2. Spend less than you make

As I said above, I’ve never paid a bill late. That’s not because I’ve always been wealthy, and it’s not because I’ve never lost a job, gotten divorced or otherwise experienced financial catastrophe.

The secret? Spending less than you make. Do this, and you’ll automatically create a cash cushion that will come in handy when push inevitably comes to shove. Fail to do this, and when your back is against the wall, you’ll borrow money you can’t immediately pay back and jeopardize your credit score.

Obviously, there are situations that will derail even the best-laid plans. That’s life. But the bigger the cushion you accumulate, and the sooner you do it, the better your odds of achieving and maintaining a perfect credit score.

3. Never borrow to buy things that lose value

Keeping a perfect credit score doesn’t mean not using credit. As I said, I got my first credit card at 21 and still use credit cards often. I’ve also borrowed more than $1 million over the years, primarily in the form of mortgages.

What I’ve skipped for the most part, however, is borrowing money to buy depreciating assets — like vacations, cars and clothes.

When I graduated from college, my parents gave me a used Toyota. Within weeks, I sold it and used the money for the down payment on my first home.

I then went to a credit union and borrowed money to buy a classic 1958 Triumph TR3. That was my first and only car loan. I drove that car for a couple of years, sold it for more than I paid for it, then bought a used car with cash.

Since that day, cash is how I’ve paid for cars. How could I afford new cars? Simple. I’ve never owned a new car. Today I drive a Mercedes that cost its first owner more than $100,000. The owner drove it 30,000 miles, then sold it to me for $45,000.

It’s this simple: When you borrow, you’re paying someone to temporarily use their money. If what you buy with that money goes up in value by more than what you pay to use it, you get richer. If it doesn’t, you get poorer. And if you can’t pay it back on time, you get an imperfect credit score.

4. Don’t micromanage

The internet is full of websites and expensive services that urge you to continually track your credit score. Well, here’s a secret: If you have to constantly monitor your credit and micromanage your score, you’re doing it wrong.

That’s not to say you shouldn’t keep an eye on your credit. You should, especially when it’s about to be checked by a lender, landlord, insurance company or potential employer. But if you follow simple rules, you won’t need to micromanage your score, and you won’t need credit websites and services, or stories about credit hacks.

Want perfect credit? Here’s all the advice you need: Don’t screw up. Pay your bills on time, every time, for long periods of time. Do that, and one day you’ll have a perfect score automatically.

Got a question you’d like answered?

You can ask me a question simply by hitting “reply” to our email newsletter. The questions I’m likeliest to answer are those that will interest other readers. In other words, don’t ask for super-specific advice that applies only to you. And if I don’t get to your question, don’t hate me. I do my best, but I get a lot more questions than I have time to answer.

About me

I founded Money Talks News in 1991. I’m a CPA, and have also earned licenses in stocks, commodities, options principal, mutual funds, life insurance, securities supervisor and real estate. You can read more of my work on my author page.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Read Next
10 Common Ways Seniors Get Scammed
10 Common Ways Seniors Get Scammed

Here’s what to watch for to make sure you don’t fall prey to some of the biggest rip-offs targeting seniors.

This Cellphone Carrier Has the Worst Network Quality, Customers Say
This Cellphone Carrier Has the Worst Network Quality, Customers Say

One major wireless provider stands out for the least reliable call, messaging and data services.

10 Products That Upgrade Your Home for Less Than $45
10 Products That Upgrade Your Home for Less Than $45

Make a fresh start with these affordable Amazon buys.

8 Things I Always Buy at Costco
8 Things I Always Buy at Costco

From bacon to birthday cakes, here are my favorite deals at the popular warehouse store.

Can My Wife Use My Social Security Benefits While Letting Hers Grow?
Can My Wife Use My Social Security Benefits While Letting Hers Grow?

Your self-discipline in not uttering three little words helps determine whether you can use a key claiming strategy.

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Most Popular
11 Senior Discounts for Anyone Age 55 or Older
11 Senior Discounts for Anyone Age 55 or Older

There is no need to wait until you’re 65 to take advantage of so-called “senior” discounts.

20 Things That Are Actually Worth Stockpiling
20 Things That Are Actually Worth Stockpiling

You don’t need a year’s supply of toilet paper to survive an outbreak, but consider stocking up on these items.

9 Things You’ll Never See at Costco Again
9 Things You’ll Never See at Costco Again

The warehouse store offers an enormous selection, but these products aren’t coming back.

Can a Twice-Divorced Woman Claim Social Security Survivors Benefits?
Can a Twice-Divorced Woman Claim Social Security Survivors Benefits?

Understanding survivors benefits rules is the key to getting the most from your benefit.

These Are the 10 Worst Cars for Depreciation
These Are the 10 Worst Cars for Depreciation

Two types of vehicles are especially likely to see steep plunges in value.

Do This With Your Mask Before Thanksgiving Dinner
Do This With Your Mask Before Thanksgiving Dinner

Before you sit down at the year’s biggest feast, make sure to properly care for your mask.

Never Buy These 10 Things With Your Credit Card
Never Buy These 10 Things With Your Credit Card

Credit cards offer many conveniences and protections, but sometimes it’s simply smarter to keep the plastic tucked away.

13 Amazon Purchases That We Are Loving Right Now
13 Amazon Purchases That We Are Loving Right Now

These practical products make everyday life a little easier.

10 Things I Always Buy at Trader Joe’s
10 Things I Always Buy at Trader Joe’s

From snacks to sweets to side dishes, stock your cart with these time-tested favorites on your next TJ’s run.

19 High-Paying Jobs You Can Get With a 2-Year Degree
19 High-Paying Jobs You Can Get With a 2-Year Degree

There are easy high-paying majors available in the U.S. — and no bachelor’s degree is required. We’re here to help you find easy degrees that pay well.

8 Surprising Household Items You Can Sell for Fast Cash
8 Surprising Household Items You Can Sell for Fast Cash

Sometimes, the humblest household items are worth the most money.

Cut These 11 Expenses Now If You Hope to Retire Early
Cut These 11 Expenses Now If You Hope to Retire Early

Like the idea of financial independence? Part of the FIRE equation is cutting costs.

5 Ways Social Security Will Change in 2021
5 Ways Social Security Will Change in 2021

These adjustments will affect both workers and retirees in the new year.

These Are the 4 Best Medicare Advantage Plans for 2020
These Are the 4 Best Medicare Advantage Plans for 2020

Medicare Advantage customers themselves rate these plans highest.

Stop Buying These 19 Things Online
Stop Buying These 19 Things Online

The internet has changed how we shop. But for some things, you’re still better off buying the old-fashioned way.

15 Products You Need — Even If You Didn’t Know It
15 Products You Need — Even If You Didn’t Know It

Discover some must-have products on Amazon that you didn’t even know you were missing.

3 Ways to Get Microsoft Office for Free
3 Ways to Get Microsoft Office for Free

With a little ingenuity, you can cut Office costs to zero.

7 Tips for Building an Emergency Food Supply
7 Tips for Building an Emergency Food Supply

A pandemic or natural disaster could leave you reliant on your existing emergency food supply. Is your pantry well-prepared for emergencies? Knowing what to stock up on for emergencies can be a difficult task and we’re here to help.

11 Things Retirees Should Always Buy at Costco
11 Things Retirees Should Always Buy at Costco

This leader in bulk shopping is a great place to find discounts in the fixed-income years.

View More Articles

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Add a Comment

Our Policy: We welcome relevant and respectful comments in order to foster healthy and informative discussions. All other comments may be removed. Comments with links are automatically held for moderation.