A perfect credit score is not a necessity but a choice. Excellent credit habits reflect well when an individual asks a lending institution or a bank for a loan.
It would lead to lower interest rates and higher loans. However, having a perfect credit score isn’t necessarily something you would get extra benefits for. For example, if your credit score is just below the perfect credit score rating, that would get you the same benefits as the borrower who has a perfect credit score.
But if this is a choice you have made keeping all of that in mind, then you will need to be very disciplined and patient.
Let’s dive into what a perfect score looks like before you can start doing things that help you achieve it.
What Is A Perfect Credit Score
A perfect credit score differs for different credit rating agencies. The following is the perfect credit score of various credit rating agencies:
The credit score for Credit Rating Information Services of India Limited ranges from CRISIL AAA to CRISIL D. Here, CRISIL AAA is the highest score while CRISIL D means the score holder will default soon.
The credit score range of ICRA Ltd. is ICRA AAA to ICRA D, with ICRA AAA being the highest and the latter being the lowest.
The highest credit rating that one can receive from CARE is CARE AAA and the lowest is CARE D.
The credit scale for India Ratings & Research ranges from IND AAA (highest) to IND D (lowest).
Experian credit scores range from 300 to 850 with 300 being the lowest score.
The CIBIL score is the most popular credit score in India and ranges from 300 to 900 with 300 being the lowest.
How To Get A Perfect Credit Score
More Credit Instruments but lower debt
One common behaviour found amongst users with a perfect credit score was that they held much more credit cards than the average credit user. However, their utilisation of those credit cards was much lower than that of the average credit user. For example, if you hold 6 credit cards with only Rs. 20,000 as your credit usage, you stand a better chance at a perfect score than someone who holds 2 credit cards and has Rs. 30,000 credit usage.
Re-evaluate your credit mix
Your credit mix affects your credit history a lot. Having a good mix of secured and unsecured sources of credit is considered a good credit mix.
Increase your credit limit and lower your spending
This might seem contradictory but it’s not. The lower your credit utilisation is the better your credit score will be. Most people with perfect credit scores have a lower credit usage percentage and a higher credit limit as compared to the average credit user. You can either hold multiple credit cards, as mentioned above or request to increase the credit limit on your current cards.
Keep old credit accounts open
Closing down old credit accounts is one of the biggest mistakes you can make if what you wish for is a perfect credit score. The longer your credit history is the better your credit score will be. Closing an account deletes your credit history linked to that account. Thus, try your best to not close old credit accounts.
Apply for credit only on a need basis
Since some loans or credit cards initiate hard inquiries from the lender or the bank, you should also apply for credit only when you really need it. Or at least wait a good amount of time between your applications. Since a hard enquiry is only calculated in your credit score within the period of twelve months prior to filing for a report, you can also wait a little while before checking your score again if you have had a lender make a hard enquiry.
Clear credit bills in shorter intervals
Another habit that individuals that have a perfect credit score have is clearing their debt in shorter intervals. This means that they don’t wait for the credit cycle and keep clearing their dues in a few days or a week. This early payment also ensures their credit never dips.