Ethan Dornhelm, vice president for scores and analytics at FICO, said the company sees “no evidence of score gaming.” Recent increases in credit card delinquencies is on the banks, he said, since more low-scoring consumers are obtaining credit as lenders “aggressively compete for new card volume.”
We know our credit score sets interest rates on what we borrow, sure. But many may not realize that it also affects what card offers you get, what deposit utilities require, what your insurance rate will be, whether you get that rental apartment, or what your installment plan is for a mobile phone. In our society, it’s a three-digit number that can open or shut doors. Not surprisingly, many hyper-competitive consumers obsess over it. And when Americans obsess over something, they start looking for an edge.
“We’ve all been raised using a grading and evaluation system from school through work,” says John Ulzheimer, a credit expert who has worked at FICO and Equifax Inc. “You want to do as good as possible, and as good as possible in the credit scoring world is 850.” The only number that may be more important is your cholesterol count, he says.
The quest for the perfect credit score is “part of our western competitive edge,” says Sarah Davies, senior vice president of analytics and research at VantageScore Solutions, which has a scoring model that competes with FICO. “Here’s a way not to keep up with the Joneses, but to get ahead.”
Your credit score has become such a popular character-meter that there are dating services based on them. A 2015 academic study found that “quality in credit scores, measured at the time of relationship formation, are highly predictive of subsequent separations.” The research suggested “credit scores reveal an individual’s relationship skill and level of commitment.” As if you needed another reason to boost your score.
Members of the 850 Club can be broken into two groups. There are the super-knowledgeable tacticians trying to crack scoring algorithms, and the naturally prudent. Some are prepping for a loan. Others are just credit-score hobbyists. Paul Chua, 40, who works at San Carlos, Calif.-based Helix, a startup focused on personal genomics, is one of the tacticians.
It’s almost like a video game, he says, “where people are trying to get a good score.”
Chua learned about credit the hard way. He ruined his score by running up debt in college. He read up on how to fix it, went on internet forums, and eventually got his credit into good shape—then he landed a job at consumer credit firm Credit Karma. Even with all that effort, though, the big reason for his success was simple: He didn’t miss a payment for seven years. He also used at most 5 percent of his credit limit, since scores can be hurt by high “utilization rates.”
Chua had an 850 score for about two months, he says, but it dropped to the 800s because he applied for a few rewards cards. Trying to get multiple cards in a fairly short period is interpreted as a sign of potential financial trouble, but if you’re looking for a big-ticket item like a mortgage, scoring algorithms will assume you’re only trying to buy one house when several lenders check you out.
So let’s say you’re a good consumer, you’ve never paid late, never did anything credit rating agencies might consider naughty. Why do you only have an 810? Getting to the big leagues, let alone the magic 850, usually requires a little more effort. In some cases, it might even help to have screwed up your credit at some point.