In Search of the Perfect Credit Score

Shelley Cantrelle swore off credit after troublesome debt in her twenties resulted in bankruptcy. Cantrelle, 49, happily pursued a cash-only lifestyle for more than 20 years. Then, two years ago, curiosity got the better of her. On a whim, she checked her credit score -- and was horrified to discover that it was zero.

"I didn't even know that was possible," says Cantrelle. "It was like I had died and nobody told me." Armed with advice from CreditBoards.com, an online credit forum, Cantrelle began to resurrect her score. First she put $5,000 into a one-year certificate of deposit at her bank and used the CD as collateral for a secured loan. Then she had the payments deducted automatically from her checking account each month.

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Also at the recommendation of CreditBoards, Cantrelle slowly began applying for credit cards to build a credit history. She pays $12 a month to a credit-monitoring service and checks her credit score every day -- sometimes twice a day. Her FICO score -- compiled by the company Fair Isaac and the score most commonly used by lenders -- is now in the mid 700s, but her goal is to top 800 (out of a possible 850). "I'm a little obsessed," admits Cantrelle, who lives in Birmingham, Ala., "but it became a challenge."

Plenty of other people share her obsession. The forums at CreditBoards.com and CardRatings.com are crawling with credit-score junkies who reply to each other's questions and post tips on boosting their scores. One trick of the trade, for example, is to have different types of accounts that reflect a mix of credit. That includes revolving debt, such as credit cards, and installment debt, such as a car or mortgage loan. Credit-card issuers are authorized to raise your credit limit every few months. So another tactic -- used regularly by Cantrelle -- is to ask your card issuer when you're eligible for an increase and then request one.

Rebecca Walker says she has always had a keen interest in finance and credit. Finding mistakes in her husband's credit reports has made her more diligent about managing her own score.

The 29-year-old Broomfield, Colo., woman pays $27 a month to get daily scores from two monitoring services. She checks her balances online and often pays them off before they post to her statement. The card issuer sees that she has used her card, but the statement doesn't report a balance, so the ratio of debt to her credit limit is zero for that account. That gives a big boost to her credit score, which is now 780 -- well on the way to her goal of at least 800.

Three simple rules. We're not saying you should emulate Rebecca Walker. Unless you've got credit problems or mistakes in your report, or you're about to apply for a big loan, you don't need to micromanage your credit score. Only 13% of credit users score above 800 on the FICO scale, and once your score is in the mid 700s, you won't have trouble qualifying for the best interest rates (the median FICO score is 723). "There's just no need to go in search of the holy grail of credit scores," says Steven Katz, of TrueCredit.com, which is operated by the credit bureau TransUnion.

But you do need to know and understand your score. A recent study by Visa USA found that 42% of consumers have never checked their score. That's "like driving with your eyes closed," says Jason Alderman, director of financial education at Visa USA.