Not only is it frustrating to get denied for a credit card, it can also negatively impact your credit for a little while. So it’s a good idea to apply for cards you have a good chance at being approved for.
No matter what your credit score is, there is a card out there for you.
What Credit Score Do You Need for A Credit Card?
Different cards require different levels of credit. If you want a card with a lot of bells and whistles then you’ll likely need a credit score in the 700s. However, anyone can get approved for a secured card, regardless of their credit score.
Once you know your score you can figure out if you have excellent, good, fair, or poor credit.
Good Credit 700-850
If you’re in this range, you have your pick of any of the best credit cards out there, and you can take advantage of promotions in which the banks will actually pay you in cash back rewards or travel rewards for opening and using a new credit card.
Reaching the excellent or superprime credit level often requires at least 10 years of on-time payments and a mix of credit accounts such as credit cards, student loans, and a mortgage.
Even if you’ve responsibly used credit for up to five years, you may still be declined for many cards simply because the banks want customers who have an even longer track record of timely payments.
Fair Credit: 600-699
If you’ve just started to use credit or are recovering from a missed payment or two, you’ll probably have a lower credit score in the 600s.
This means you’ll have trouble getting approved for many of the credit cards you see advertised, but don’t worry, there are still offers out there for you.
You likely won’t get a lot of rewards with your new card, but you can still get approved for a solid credit card that will do the job without a lot of fees. Use your card responsibly and you’ll be able to upgrade before you know it.
Pay attention to the minimum credit score range required. Choosing a card that matches your credit score is your best shot for approval. Pick one you are confident you can get approved for and work to increase your score so you can qualify for a rewards card in the future.
- Best credit cards if your FICO score is between 650 and 699.
- Best credit cards if your FICO score is between 600 and 649.
Poor Credit: under 600
If you’re in the last group you need to take special steps to get approved for a credit card.
If you’re in this situation, you should only apply for a credit card in an effort to begin rebuilding credit (NOT to spend money you don’t have!). Usually, this means applying for a secured credit card.
A secured credit card requires a security deposit before you can begin making charges. That security deposit acts as your credit limit. Although that may sound like a debit card or prepaid card, the secured credit card will report your payment history to the credit bureaus, which debit and prepaid cards do not do.
After a year or so of using a secured card, you may be able to upgrade to an unsecured account and get your deposit back.
Here’s more information on how your FICO score is determined.
How your credit score is calculated and how to improve it
The two credit scoring models, FICO and Vantage, help predict consumers’ ability to pay back their debt. These base credit scores range from 300-850 but they are calculated differently. The lower a consumer’s credit score is, the riskier it is for a creditor to lend them credit.
If you find your credit score too low for certain credit cards, here are some tips on improving your credit score and chances for approval.
Consistently making on-time payments is essential to a healthy credit profile and a good credit score. Late or missed payments are considered derogatory remarks and can drastically affect a consumer’s credit score.
For FICO your payment history accounts for 35% of your overall score, while the VantageScore states that this is “moderately influential” to your overall score. So if you’ve missed some payments recently this is definitely going to have an impact on your score.
Credit utilization just means how much of your credit limit have you used up. If you have a $2,000 credit limit and a $1,000 balance then your credit utilization is 50%. Best practices say to keep this under 30%.
Lowering your credit usage can be an easy way to manipulate your credit score. If you have the mean to pay down some of your balance, I recommend doing so. If that doesn’t get your credit utilization down enough then look into raising your credit limits on your current accounts.
With FICO your credit utilization accounts for 30% of your overall score and VantageScore says this is “extremely influential” to your overall score.
Length of credit history
How long you’ve been building credit is important to lenders because it demonstrates a pattern of responsible decision-making and trustworthiness. Lenders want to be secure in the decision to give you credit, which is why those with lower credit scores pay thousands of dollars extra in interest. It’s because of the risk the lender is taking in granting them the credit.
FICO calculates length 15% of your score and VantageScore says it’s “less influential” to your overall score. This is good news for younger folks that haven’t had time to build up an extensive credit history. But keep this in mind because keeping those older credit cards open even if you aren’t using them.
Mix of accounts
FICO weights this as only 10% of your score while Vantage says this factor is “highly influential”. A mix of accounts means that you have different types of credit. For example, a credit card is considered revolving credit while your car loan is considered installment credit.
FICO calculates this factor as 10% of your score and VantageScore considers this “less influential”. While you should aim to keep inquiries and new accounts to a minimum, they aren’t impacting your score in a major way.
There are thousands of credit cards for consumers to apply for, no matter what range your credit score falls in. The higher your credit score, the better. It means lower interest rates and more perks. However, those with lower credit scores can still qualify for cards that will help them build the credit history needed to be eligible for better cards.