Why 760 is the only credit score that matters—and how to work your way toward it

The best credit score possible may be a perfect 850, but experts suggest that a 760 score will get you all the same benefits.

Generally, having a good credit score pays off because it shows to lenders and credit card issuers that you are more likely to pay your loan back, and thus less risky to lend money to. At 760, consumers will likely qualify for the same top credit cards, loans and interest rates than they would with any score higher.

"The best published interest rates for auto loans are 720+ and for mortgages 760+," financial expert John Ulzheimer, formerly of FICO and Equifax, tells CNBC Select. "As such, I always tell people, shoot for 760 or better. That way, they're safe for all loan types and cards."

Jim Droske, president of the credit counseling company Illinois Credit Services, agrees. "If you're above 760, or 780, certainly you're already getting the best you can get," Droske says.

With the average FICO Score reaching 710 in 2020 (a record high), the takeaway is that if your credit score isn't yet at 760 you certainly aren't alone.

Below, we round up four tips to work your way toward this magical 760 number.

Credit scores are calculated by looking at various aspects of your credit report, and your payment history is the most important factor of them all.

In fact, whether or not you've paid past credit accounts on time counts as 35% of your FICO Score calculation. According to Experian, one of the three main credit bureaus, most people with credit scores of 760 typically pay their bills on time, with over 75% having a spotless late payment record.

If you have difficulty remembering to meet your various due dates for different bills, automate them so that the money comes directly out of your bank account on the same day each month. This way, you can be at ease knowing that all your bills are being paid on time.

Another key factor in your credit score calculation (making up 30% of your FICO Score) is how much of your available credit, or total credit limit, you actually use. This is also known as your credit utilization rate, which shows your amounts owed.

Experian found that among consumers with FICO Scores of 760, the average utilization rate is 23.7%. Financial experts generally recommend keeping your utilization rate below 30% (and some even say to aim for a single-digit utilization rate under 10%).

To calculate your credit utilization rate, divide your total balance by your total credit limit, then multiple by 100 to get the percentage. For example, if you have an $800 balance across all your credit cards and you have a $2,000 credit limit (again, across all your credit cards), your CUR is 40%: ($800 / $2,000 = 0.4 X 100 = 40%).

Your credit mix may not carry as much weight in your credit score calculation (only 10% of your FICO Score) as your payment history and your credit utilization rate do, but it's worth paying attention to as your grow older and can afford to take on more credit, such as a car loan or mortgage.

Having a variety of credit products, such as credit cards, installment loans like student loans, finance company accounts, mortgage loans, etc, show lenders that you can manage different types of debt.

In fact, 37% of individuals with a 760 FICO Score have credit portfolios that include an auto loan and 38% have a mortgage loan, says Experian.

Routinely check your credit score as you work on improving it. Doin so will help you see what actions were (and are) setting you back, as well as motivate you to continue with good financial habits.

You may want to even consider signing up for a credit monitoring service that can keep an eye on your credit for you and alert you of any changes.

CreditWise® from Capital One ranked as our best overall free service because, unlike with other free services, it offers dark web scanning and social security number tracking to prevent any potential fraud in your name. CreditWise also has a credit score simulator tool where users can actually see how certain potential actions, like paying off debt, could impact their score.

With CreditWise, consumers receive an updated VantageScore credit score from TransUnion every week and credit report updates from TransUnion and Experian in real time. If you want to see what your FICO Score is, which is the scoring model most lenders use to check applicants' creditworthiness, check out the FICO® Advanced credit monitoring service. FICO Scores are used in over 90% of lending decisions, making the FICO Advanced plans the most accurate reading for all your credit score updates.