Is it a bad idea for you to strive for the highest credit score?

We all know the cliché nothing is perfect and this especially holds true in credit scoring. Why? Because not only is a perfect credit score almost impossible, but trying to get one might actually harm your personal finances more than it will help!

The best score?

What is a perfect credit score anyway? Well if you’re going by FICO, it runs on a 300 to 850 scale. So if your definition of perfection is 100%, then a perfect FICO score would be an 850 FICO.

However I must warn you that the vast majority of websites do not offer FICO scores. If you check your credit score with them, more often than not they use a different type of score. The top and bottom number will probably be different but even if it does use 300-850 for the range, you can’t compare a non-FICO to a true FICO since the formula used in the calculations will be different.

For example, the second most popular type – VantageScore – runs from 501 to 990. Someone could get an 850 on that and if they didn’t understand that it was a different model being used, they would wrongly assume they have a perfect credit score.

The lesson? Make sure you know what type of score is being used! The only one you should really be concerned about is FICO. Read this post to understand why: What is a good credit score?

Is perfection even possible?

Okay so now you know what’s perfect, but is it even possible to achieve?

If you want to know how to get an 800 credit score it’s really not that hard. Sure, it won’t happen overnight, but as long as you have a few accounts and manage them properly, you can hit 800 in just a few years.

However the more you move up, the more exponentially harder it gets to go higher. This is why someone can jump from say, 670 to 700 (30 points) in perhaps 3 to 4 months under the right circumstances. But jumping from 800 to 830 (also 30 points) may literally take you decades and even then, there’s no guarantee it will even happen. The reason for this is because the scores fall along a bell curve. Something along the lines of this…

A lot in the middle, but only a few on either sides of the spectrum.

How many are on the bottom? Well what we do know is that less than 1 out of every 15 people are lower than a 500 FICO credit score. That’s a pretty small percentage of the population, considering that it encompasses almost 200 points on the scale; 300 to 499.

How many are on the top? Or in other words, how many people have a perfect credit score? Well unfortunately, FICO doesn’t publicize the exact percentage of people with a given number. However they do periodically release information regarding what percentage of the population falls within a certain bracket.

As you see, around 18% of the population is between 800 and 850. Keep in mind that percentage can change, give or take a point, depending on economic conditions. But if you research the distribution numbers from the past ten years, you will see this top bracket continuously hovers around 17-18%.

So 18% are above 800, but how many of ‘em have that perfect 850?

FICO hasn’t said much about this over the years. However as recently as 2010, Craig Watts, a senior public relations manager for FICO, stated in an interview that about one million people do indeed have the 850 score.

Then what percentage has a perfect credit score? Well as of the last census (2010) the US population is 308,745,538. We don’t know precisely what “about one million” means (800k? 1.2 mil? etc.) but whatever the case may be, it’s safe to conclude that around one-third of one percent (0.33%) have this coveted number. In other words, about 1 in 300 people.

How to get a perfect credit score?

Use credit wisely and basically be an old geezer.

In a different interview with Craig Watts (from the Consumerist, 2010) Watts stated that “Typically people who score in the mid-800s have been managing credit for at least a couple of decades.” And mind you the mid 800s, although quite difficult to achieve, is still a lot easier than getting an 850!

In short, the age of your credit record has a major impact. And unlike other factors such as quantity and diversity of accounts, you can’t control how old they are. Like an aged fine wine, you can’t speed up the clock.

Is it an unhealthy goal?

Should you strive for excellent credit? Absolutely. But an 850? Definitely not.

The truth of the matter is that once you are in the neighborhood of 780 and above, you will be treated the same as someone with an 800, 820, or even 850. All of you will face the same approval requirements and get the same interest rates.

So why strive for perfection? There’s really no logical reason to. In fact, it’s nothing more than a narcissistic endeavor. Worse yet, in doing so you might actually be doing more harm than good.

I heard from a man in the low 800’s who took out a car loan. Not because he needed it, as he could have paid cash. The only reason he did it was because he wanted another installment loan on his credit report. He chose to pay finance charges, just to try and better his 800+ score. Does that make any sense?

More frequently, I hear from people who say they will never apply for another credit card. The reason? They don’t want to decrease their average age of accounts by opening up a new card… even though they actually want a new card. If you’re getting a mortgage in 6 months that makes sense, but not just because you want to go from an 805 to an 808. Think how much money these sticklers are losing by not taking advantage of 5% cash back credit cards, all because they’re too afraid to open a new account. How ridiculous.

This kind of OCD approach to credit scoring is self-destructive, and no doubt, it’s being fueled by the more recent phenomenon of selling credit scores to the public. Don’t drive yourself crazy reaching for a credit score that’s perfect, when you can be 50 points lower and enjoy the exact same benefits.

If you’re currently being scammed by identity theft (or have good reason to think you will be) these are the fraud alert types that you can self-initiate with the credit bureaus:

1st Type: Initial 90 day fraud alert

You can set one of these up whenever you want. The requirements/qualifications to do so are very lax: “Anyone that suspects they are a victim of identity theft.”

So if that’s the case, you can add one of these to your credit reports even if you haven’t become a victim yet.

Once in place, any creditor that pulls your report will see the alert. So if you (or someone else) attempts to open a new account, increase a line of credit, or obtain a secondary card on an existing credit card during that 90 day window… expect the creditor to take extra steps to verify identity before the request or application is processed.

Here’s how to file a fraud alert with the credit bureaus…

Equifax:

• Online: https://www.alerts.equifax.com/AutoFraud_Online/jsp/fraudAlert.jsp
• Phone: 1-800-525-6285
• Mail: Equifax Information Services LLC, P.O. Box 105069, Atlanta, GA 30348-5069

Experian:

• Online: https://www.experian.com/fraud/center.html
• Phone: 1-888-EXPERIAN (1-888-397-3742)
• Mail: Experian’s website does not list a specific address for fraud alerts

TransUnion:

• Online: http://www.transunion.com/personal-credit/credit-disputes/fraud-alerts.page
• Phone: 1-800-680-7289
• Mail: TransUnion LLC, P.O. Box 6790, Fullerton, CA 92834

Obviously, it probably makes the most sense to file a credit bureau fraud alert online or by phone, since it will take time to mail and process a written request.

It’s only necessary to file with one of the three bureaus, as they’ll notify the other two (typically within 48 hours). But if you insist on filing separate fraud alerts with all 3 credit reporting agencies, go ahead because it certainly won’t hurt to do so.

It’s important to point out that with a 90 day alert, there is no legal requirement for a creditor to do anything differently. In fact, they could ignore it altogether. However any creditor with half a brain will take them seriously and employ extra steps to verify your identity, because issuing credit to imposters obviously won’t make them any money.

2nd Type: Extended Fraud Alerts (7 years)

Often times the 90 day fraud alert will work, because if a criminal is trying to apply for credit cards using your Social Security, after they fail (hopefully) they will move on and never attempt to use your info again. That’s what happened to me when I was a victim and I’ll tell you more about that in a minute.

An extended fraud alert is similar to the 90 day version, except it lasts for 7 years. Additionally, it will be mandatory for creditors to contact you at the phone numbers provided (or meet with you in-person) before they can approve you for credit requests.

However unlike the 90 day version, in order to file for an extended alert you will need to provide an identity theft report to prove you have been victimized. Please note that a bare-bones police report might not qualify. Here is how the FTC website describes an identity theft report:

For further details, click on the above link.

Once you have an extended alert, you’re entitled to the following:

• 2 free credit reports within 12 months from each of the 3 credit bureaus; Equifax, Experian, and TransUnion
• 5 year removal from marketing lists for pre-screened credit offers. You can ask them to add you back onto those lists at any time, but by default the removal will last for 5 years.

3rd Type: Active Duty Alert (12 months)

As the name implies, if you are on active duty you can request one of these alerts (even if you’re not a victim). The point of these is so no funny business happens with your credit while you are away. Of course, that means this option is only available to active military personnel.

This type of alert will last for 12 months. It will also remove you from pre-screened offers but for a longer period of time; 2 years. To file these, check out the links above to the 3 credit agencies.

In addition to filing alerts yourself, your creditor can initiate a fraud alert:

Creditor Initiated Fraud Alert

A bank, credit card company, or other lender can add a fraud alert to your report if there is merit to do so. It’s similar to the initial 90-day alert except it’s added by a creditor.

For example, here is a post from a forum member who found a fraudulent credit inquiry on his report. He called up Capital One to notify them about it, who in turn, placed a creditor-initiated alert on his credit report.

My personal experience using them

Several years ago I was the victim of identity theft – someone attempted to apply for credit cards using my info. I knew EXACTLY where the thief was getting my info, too.

Just a few days before, I applied for a job and made the foolish mistake of providing them my Social Security number. Why? Well I knew it was a dumb move, but I was desperate for a job and their application insisted on it.

Normally you should put “available upon request” but in this circumstance, the shady hole-in-the-wall company pressured me to provide it anyway, as they eluded I would not be given the job if I didn’t (even though I was at this point just one of many people applying).

Lo and behold, a few days later Chase contacts me because they received a credit card application online. It contained specific pieces of information that were not provided to ANYONE yet since they just changed… which meant the only source that would have that info was the job application.

Chase advised me to call in and file a 90 day credit bureau fraud alert. I filed one with Experian or Equifax (don’t remember which) and within a couple days, all 3 bureaus had the alert on file. Some of my current credit cards even contacted me over the next week or two, to make sure my accounts were normal.

I was lucky in that a 90 day was all it took to get the scammers to leave me alone. But if the criminal is persistent, they might hold onto your personal info long term, so be sure and monitor your reports regularly.

Sponsored offer:

So far this year I’ve seen more than one person asking about a credit score of 699 and whether it was good or not.

699… it sounds more like the price of something at Target rather than a credit score, right? Why such a peculiar number?

FICO vs. FAKO?

What type of credit score are you getting? For the people I have heard from having that number, they were using an Experian PLUS Score… not a FICO.

So it seems that for some odd reason, the PLUS Score seems to spit back that 699 number more frequently. It could be just a coincidence, but then again, maybe it’s not.

If you are referencing a 699 PLUS Score, then keep in mind that the scale of that type runs on a 330 to 830 range (which is different than FICO). To compare on that scale, check out my Experian PLUS Score post.

699 FICO Score?

If you are indeed talking about a true FICO, then how does a 699 measure up? Well let’s take a look…

It’s not 100% clear what the average credit score in America currently is, but the median is estimated to be around 723. That’s what it was the last time FICO publicly reported it.

So if you have a 699 credit score you are well below the median (remember, that means exactly half are higher and half are lower). If you want the true average score, then it will be it will be lower than the median. Why? Because it’s being skewed by people with really bad credit. That means the best way to gauge your score is in relation to the median.

Obviously a 650 and 699 are quite different, but that’s as specific as FICO gets in the information they release to the public. Either way, the above graph should give you a good idea of where you fit in on a relative basis.

What it can – and cannot – do for you

Is 699 a good credit score? Nope, but at least you are close to having one.

Most of the popular cash back credit cards you see advertised on TV will require a FICO score of at least 710-720 to be approved, some are even higher. It’s not impossible to be approved with a score of 699 but it’s highly unlikely.

For mortgage rates, a 699 score won’t get you the best deal. You will still probably be able to get approved as long as the home price is reasonable relative to your income, but don’t count on getting the lowest rates.

Acccording to MyFICO, here were the score ranges it gave me for the different tiers of mortgage rates:

As you see, a 699 credit score will probably only qualify you for 3rd from the top.

How to improve it?

No matter how you look at it, the honest truth is that a 699 credit score is bad. If you can’t even get approved for most reward cards or loans, I don’t know how anyone can classify it as being “good.”

So what’s the next step you should take to improving your credit? Here are some posts I would recommend that should help your journey…

• How to get a free FICO score
• How to get an 800 credit score
• What is a good credit score?

Choosing to apply for a Sheetz gas card isn’t a bad choice, but it’s not the best either…

With fuel prices as high as they are, it’s no shocker that gas station credit card applications are so popular. The bad news is that many of them are changing for the worse:

• Reduced (or eliminated) rewards – With the price per gallon being so high, many gas station chains are realizing it’s too expensive to pay out good rewards. As a result many have greatly reduced them (like the BP gas card did in 2012) or outright cancelled them altogether (like the Citgo and ConocoPhillips MasterCards which were killed off in 2012).
• No longer available as Visa/MasterCard – These major credit cards are more expensive to run versus a card that can only be used at the gas station. So it comes as no surprise that many of them are no longer Visa or MasterCard.

Now for the good news… so far the Sheetz credit card hasn’t fallen victim like its peers. Sheetz still has a rewards program and their gas card is still a Visa.

The Sheetz Visa card in a nutshell

Issuer: First National Bank of Omaha (FNBO)
Annual Fee: None. However surprisingly, they charge $10 if you need an additional/replacement card.
Interest Rate: 15.99%, 17.99% or 19.99% depending on creditworthiness. These aren’t low rates but for a rewards card, they’re not unexpected.
Points Program: 1 point per dollar normally, 3 points per dollar at Sheetz gas stations/convenience stores.
Promotion: 8 points per dollar at Sheetz stores for the first 90 days.

The good?

When you redeem the points, if you choose gift cards you will usually get a good deal on ones that cost 5,000 points or more.

Examples: 5,000 points is enough for a $50 gift card from T.G.I. Fridays, Tony Roma’s, Bass Pro Shops, Best Buy, and JC Penney.

If you choose options like that, it means your Sheetz credit card rewards are the equivalent of a 3% rebate at their gas stations and 1% elsewhere.

The bad?

It looks like you’re almost always are going to get a bad value if you’re cashing out less than 5,000 credit card points at a time.

Examples: 2,500 points for $20 gift card from Subway, Pizza Hut, Starbucks. 3,000 points for $25 gift card from Best Buy, Cracker Barrel, Dunkin’ Donuts.

Cash rebates are also a rotten deal most of the time. For 6,000 points you only get $50 cash back. In order to get $0.01/point you need to redeem 50,000 ($500) worth in one fell swoop. Unless you are a mega-spender it will probably be difficult to accumulate that many points on your Sheetz card.

However the biggest drawback is simply that the rewards value is only so-so. It’s not bad, but not the best either. For example, compare the Sheetz credit card’s 3% and 1% rewards to the AmEx Blue Cash Preferred which gives you 3% at all gas stations and 1% elsewhere.

Final Verdict?

Among the gas station-branded cards, the Sheetz Visa card is actually one of the better offers out there. Unfortunately it’s still not very competitive when compared to the best gas cards.

Written or last updated March 2012

Let’s face it… there’s a lot of dumb things you can do with a credit card and a cash advance definitely ranks near the top of the list.

Sure, they may not be as bad as paying the equivalent of up to a 391% APR (or higher!) on a payday loan, but cash advances are still a rotten deal…

Reason #1. The interest rate is always higher

Credit card cash advance interest rates will almost always be higher than what you would pay on purchases or balance transfers.

You will occasionally find an exception to this. For example the Citi Simplicity card features the same APR for everything, whether it’s a purchase or advance. But double check that card’s application because obviously there’s no guarantee they won’t change that in the future.

Reason #2. Interest begins now

First of all just to clarify… as is the case with any credit card transaction, interest begins immediately. However with purchases you have a grace period so if you pay your bill in full, you don’t ever see it (but if you don’t, on the following bill the interest charges will appear going back to the date of the purchases).

However with cash advances on credit cards, there is never a grace period. That means it doesn’t matter whether you pay the money back in full when the bill comes… you still will be charged interest the moment the cash is advanced to you.

Reason #3. Your account might be flagged as high risk

If everything was peaches and cream, obviously you wouldn’t be taking an advance. When someone uses one of these, it’s usually for a somewhat dire situation, such as cash to pay a mortgage. Or worse yet (much worse!) is that some people use these funds for speculative or foolish purposes, like gambling.

Whatever the case may be, the instant you start doing cash advances on your card, don’t be surprised if the bank starts monitoring your account more closely. If the activity makes you appear you might be at wits’ end, they might decrease your credit limit or take some other adverse action.

I rarely hear of Citi, Bank of America, Wells Fargo, or Chase doing this, but I know with American Express they will occasionally flag a customer’s account to verify your income/employment. When that occurs they ask you to fill out a 4506-T form covering the past 2 years. With that, you give AmEx permission to pull your tax info directly from the IRS.

But I still want to proceed anyway!

If you know the disadvantages and still want to proceed, you have every right to do so. I just want you to make an informed decision.

So if you insist on proceeding, here’s are some tips which will come in handy:

1. Compare the rates and fees across all your cards

If you have multiple credit cards, then compare the cash advance fees and rates on all of them. There’s a good chance all of them will charge you an APR north of 20%. Some [most] also charge an additional fee:

Sometimes this fee is the most expensive part. Why? Because if you pay back the money within a few weeks your interest charges might not be a lot (percentage wise). However the upfront 5% cash advance fee is a lot to pay for only a short-term loan.

There are some no cash advance fee credit card offers on the market, too.

2. Pay attention to your debt to credit ratio

Remember that part about your account being flagged as high-risk? Well, that’s more likely to happen if you are getting close to maxing out your credit limit.

Ideally, it’s best to keep your debt to credit ratio below 25-30% on any given account. But of course if you’re using a credit card cash advance, that might not always be possible (because I’m guessing there’s a good chance you already have a balance).

So even if it’s not possible to keep your debt to credit that low on the account, you certainly don’t want it to be something high like 70 or 80%… so please keep that in mind.

3. Sometimes a balance transfer is cheaper

There are a couple different scenarios where you may actually be able to use a balance transfer in lieu of a cash advance:

• Promotional Checks: Most credit card companies seem to send these out on a monthly basis. Some banks allow you to write the check to whoever you want (even yourself) and it will still count as a balance transfer. That may be cheaper since there could be a 0% period and/or lower APR than a cash advance would carry. Just make sure to read the fine print because sometimes they trick you and still count those checks as a cash advance!
• 0% Balance Transfers: If possible, this ideally is the way to go. When you open up a new credit card for a balance transfer, some issuers will give you the “balance transfer” in the form of a direct deposit to your checking account. You can then use the funds as you see fit, as long as you follow the credit card company’s rules in doing so.