At Upstart, we believe you’re more than your credit score. Your credit score is simply a number based on the information in your credit report, and doesn’t consider anything else. Having said that, it can still be a great idea to know what your credit score is and what it could mean to you.
While there is no universal definition of an “excellent” credit score, virtually all lenders would consider your 820 FICO Score to be in that category. Here’s a rundown of what this credit score means to you, different types of lenders, and how to make sure your 820 credit score stays in the top tier for years to come.
What does an 820 credit score mean?
In short, an 820 credit score puts you in the top tier of U.S. consumers in the eyes of lenders. In the widely used FICO credit scoring model, scores range from 300 to 850. The average credit score was 714 in 2021. Fewer than one-fourth of U.S. adults have credit scores of 800 or higher.
Generally speaking, it takes a rather long history of responsible credit behavior to build your score to this level. A credit score of 820 tells lenders that you are highly likely to pay back money that you borrow. According to a 2019 study by FICO, far fewer than 1% of borrowers with a FICO Score of 800 or higher become seriously delinquent on loan obligations such as credit cards or installment loans.
With all of that in mind, it’s important to keep in mind that your credit score is just one part of your overall financial well-being, and it is often not the only thing lenders look at when evaluating a loan application. At Upstart, our model looks at more than 1,000 data points when evaluating personal loan applicants, including factors like education¹, employment, and more.
Buying a home with an 820 credit score
To be perfectly clear, you don’t need a top-tier credit history to qualify for a mortgage. Even the most restrictive mortgage products have credit score requirements in the mid-700s.
A credit score of 820 will generally qualify you for a lender’s best interest rates. As a real-world example, the average 30-year fixed mortgage interest rate was just over 7% as of late October 2022. However, the average rate paid by a homebuyer whose FICO credit score was 760 or higher was 6.583%.
This might not sound like a huge difference but consider this. Let’s say that you’re buying a $500,000 home with a 20% down payment, so you’re borrowing $400,000. The typical borrower with top-tier credit would save about $59,000 over the term of a 30-year mortgage compared with someone with a good credit score of 670.
Buying a car with an 820 credit score
You could get an auto loan even if you have bad credit. But just like with mortgages, having an excellent credit score like 820 should qualify you for the best rates a lender can offer, assuming your income and debt situation is acceptable. And with auto loans, your high credit score can make even more of a difference.
On a 60-month new car loan, the average borrower with a credit score of 720 or higher gets a 5.52% APR as of October 2022. With a score in the 660-689 range, the average rate is 9.14%. With a “fair” score of 600? You’re looking at an average rate of nearly 16%.
Getting a credit card or personal loan with an 820 credit score
Most credit card issuers don’t have a formal “minimum” credit score they’ll accept, and most that do have a cutoff don’t make it public. However, an exceptional credit score of 820 should qualify you for pretty much every credit card offer. This also depends on meeting the credit card issuer’s other requirements—for example, some won’t open a new credit card if you’ve applied for too many other credit cards recently, regardless of your score.
To qualify for a personal loan, you don’t need such a high credit score, but it can certainly help you access a lender’s best rates and loan origination fees.
Tips for maintaining your excellent credit score
As we’ve mentioned several times, we believe you’re more than your credit score. But that doesn’t mean your exceptional credit score isn’t something to be proud of.
Since you’ve already reached the realm of exceptional credit, your focus should be on maintaining your credit score in order to continue to receive the best interest rates and loan terms. First and foremost, you should keep an eye on your credit score regularly and monitor your credit report. You can obtain a free copy of your credit report from each major credit bureau once a year at www.annualcreditreport.com, and there are several excellent credit monitoring services that can alert you as soon as something changes with any of your credit reports.
While some of these might sound obvious, here are the best things you can do in order to keep your score at the top end of the credit score ranges.
Keep paying your bills on time
If you have an 820 credit score, there’s a good chance that you don’t even have a single late payment on your credit report. Maintaining a flawless payment history on every credit account you have is the single most important factor in maintaining your elite credit score. Setting up automatic payments on your loan accounts can help you achieve this.
Maintain a low credit utilization
According to Kiplinger, the average person with a FICO Score of 795 or higher uses only 7% of their available revolving credit lines (credit cards, HELOCs, etc.). By keeping your amounts owed low as a percentage of your available credit, you’ll put yourself in a great position to maximize your top-tier credit score.
Let your accounts age
When building credit, time is your best friend. By simply letting your accounts age, your credit score can improve. The average credit card account of someone with a FICO Score in the 800 to 850 range has been open for nearly 12 years, so keep this in mind before you consider closing any unused credit lines.
Only apply for new credit if you need it
The average consumer with excellent credit filled out their latest application nine months ago. Credit inquiries from the previous 12 months can have a damaging effect on your credit score, and while a single credit inquiry isn’t likely to move your score by more than a few points, excessive inquiries can have a big impact.
The bottom line on your 820 credit score
We believe there is much more to being a great consumer than having a high credit score, but it’s still important to protect the excellent credit history you’ve already built. With smart personal finance behavior, it is certainly possible to maintain your credit score in the 800+ range for years, or even decades to come. Excellent credit is one of the best financial tools you can have, so it’s important to protect it.