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This credit expert has a perfect credit score—here's exactly how he does it

What does it take to get the perfect 850 FICO score? We looked at one credit report to see what components make up that number on the FICO 8 model.

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Photo courtesy of Jim Droske
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Jim Droske, 55, still uses the first credit card he ever opened: A Chase Sapphire card that he applied for in 1984 on campus at The University of Illinois at Chicago in exchange for a free box of Fannie Mae chocolates.

Today, he has six credit cards and a perfect 850 credit score.

Droske, who is president of Illinois Credit Services, a credit counseling company, has long been obsessed with tracking his credit score, and it's paid off.

"The more you pay attention to it, the better your credit tends to be," Droske tells CNBC Select.

We took a look at one of Droske's credit reports that calculated he had an 850 score using the FICO 8 model (the most commonly used version) to see what components make up that perfect number.

Keep in mind that while each credit bureau has different information on your credit report, you can expect a breakdown of information like:

  • Your personal identifying information (name, address, Social Security number, date of birth)
  • Number and types of credit accounts 
  • Credit limits
  • Balances
  • Payment history
  • Length of credit history
  • Hard inquiries
  • Soft inquiries
  • Bankruptcy
  • Collections accounts

Here's what we found when we took a look at Droske's credit report:

He has a mix of credit

Droske has six credit cards, two installment loans (which are both car loans) and one real estate loan (a mortgage). That variety of credit is important.

When it comes to lenders making a decision on what loans or interest rates to offer you, this helps. "They want to see how you're managing different types of debts," Droske says. 

His total credit limit is high

Droske's total available credit limit across his six credit cards was $82,700, according to the credit report he provided. Given Americans have an average credit card limit of $22,751, he has much more available credit to his name yet he's smart about how he uses it. "You have to use it, but not abuse it," Droske says.

His balance is very low

Though Droske points out that his balance naturally fluctuates month-to-month, on this credit report it was a total of $638. This is very low when compared to Americans' average credit card balance of $6,194.

Typically, Droske says he will charge any utilities that allow payments with a credit card, such as his gas, electric, phone, garbage and alarm system bills. "Plus any spending for food, home items, groceries...pretty much anything that can be charged that doesn't require cash," he says. "But I don't try to charge any big-ticket stuff like car, mortgage or tuition payments. Bigger stuff like that is often either not allowed to be charged or there is a premium to use a credit card so I don't bother with those."

But no matter what Droske charges on his credit cards each month, the key is that he doesn't spend more than he normally would just because he has the flexibility of paying with credit.

"That is the problem for many people, they charge more because it's easy and they can," Droske says. "My spending habits didn't change — just the way I pay for things."

Photo courtesy of Jim Droske

He has a 1% debt utilization

Because Droske's credit limit is high and his balance low, his credit utilization rate, or the percentage of the total credit limit he's using, rounds up to 1% on his credit report. "That's actually a hard number to hit unless you have high credit limits," Droske says. Experts recommend keeping your utilization rate below 30%.

He has long standing credit history

The average age of Droske's accounts is 10 years and 11 months on the report that CNBC Select reviewed. His oldest account is 34 years and 10 months old. 

Length of credit history is a key factor FICO considers when determining your credit score, so it helps that Droske started using credit at a young age

Droske learned early on about the impact of people's credit on their purchases during his first job in finance at a car dealership's lending department.

"I would see two people buying the same car on the same day, and one person gets 5% [finance rate] and the other person gets 19% based on credit," Droske says. "That very quickly taught me the impact of credit, and then I was really curious about what made that number move."

He has two hard inquiries

A hard inquiry, or "hard pull," means that a lender or credit card issuer has pulled your credit report from one of the main three credit bureaus, Experian, Equifax or TransUnion. Hard inquiries may cause your credit score to fluctuate slightly, compared to a soft inquiry, which doesn't pull your credit and has no effect on your score.

Of the two hard inquiries listed on Droske's credit report, one is older than 12 months so it no longer calculates into his credit score. The second inquiry was three months prior to the report but didn't affect his score at all. "Every inquiry does not automatically deduct points off of your credit report," Droske says.

He has no missed payments

Perhaps the most important factor in your credit score is on-time payments. In fact, both FICO and VantageScore list payment history as the top factor in calculating your credit score, since paying your bills on time demonstrates that you pose a lower credit risk to lenders. 

According to FICO, about 98% of "FICO High Achievers" have zero missed payments. And for the small 2% who do, the missed payment happened, on average, approximately four years ago.

So while missing a credit card payment can be easy to do, staying on top of your payments is the only way you will one day reach 850.

Of course, you don't need to score an 850 to qualify for even the best rewards cards. With good or excellent credit, you could qualify for the American Express® Gold Card, which gives members 4X points per dollar on eligible purchases at restaurants, 4X points at U.S. supermarkets (on up to $25,000 per calendar year in purchases, then 1X) and 3X points on flights booked directly with airlines or on Amextravel.com.

Editor's note: Scoring models have different algorithms, and credit scores can vary from day to day. This specific breakdown was based on Jim Droske's credit report pulled on Dec. 18, 2018, which used the FICO 8 model. Jim Droske recently pulled a Wells Fargo credit rating using the FICO 9 on March 4, and it shows a perfect 850. But a credit report he pulled on March 11 using the FICO 8 model shows 842. A perfect credit score on one report doesn't mean the same for every scoring model — but it will probably be close.

Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.