Why you don't need perfect credit

The highest-possible FICO score is 850, but even people with the best credit don't usually exceed 825. Those last 25 points wouldn't save you money on a loan anyway. A credit score is your credit history at one point in time, reduced to a single number. One of the most popular credit-scoring models, the FICO score, can range from 300 (very bad) to 850 (solid gold). But don't expect to see many 850s walking around. "It's very rare to be there," says Maxine Sweet, the vice president of public education with Experian, one of the three major credit bureaus. "I've never seen it." Though it's theoretically possible to score 850, most high scores top off around 825, Sweet says. "You can't get much higher," she says. "There is no reason to go from 775 to 850 because you're still going to get the same rate,"

How to boost your score...

1) Use a small fraction of your available credit. Credit scoring will examine how much of your available credit you're using and penalize you if the percentage is too high. The limit that creditors want to see is anywhere from 25% to 35%, depending on the formula (and whom you ask).

So keep it at 25% to be on the safe side. If you're shooting for that superpremium score, just remember: the lower, the better.

...one late payment can lower your credit score severely. "It can cause your score to dip as much as 100 points,"

...Consumers are entitled to at least one free report from each of the three major credit bureaus annually. Many consumer experts recommend pulling a different bureau report every four months as a way of keeping an eye out for mistakes and identity fraud....