Some folks have credit scores that soar into the heavens. But many of us have scores that are a bit more down to earth. What type of credit score do we need to get the best credit cards, or any type of plastic at all?
Your score will have a major impact on your ability to borrow, and at what terms. But you can find cards for fair credit or even no credit to help you build or rebuild your credit score.
Here’s more about the credit score you need to get a credit card.
[Read: Best Credit Cards.]
What Credit Score Do You Need for a Credit Card?
There is no hard-and-fast rule about the credit score you need for a credit card. However, issuers will look closely at your credit score before extending a credit offer, and a low score could keep you from getting a credit card, or at least the one you want.
“A lower score can impact the terms of the loan offered to you, like the interest rate,” says Can Arkali, senior director of scores and predictive analytics at FICO.
The best types of cards are often offered only to those with excellent credit scores. If you want a rewards credit card, for example, you will need good or excellent credit, says the credit bureau Experian. You will also need a top credit score for a card with perks such as sign-up bonuses.
That likely means a score of at least 670 on the FICO scale and more than 660 on the VantageScore scale. FICO scores are the most widely used, but both scoring systems represent the risk you pose to lenders on a scale of 300 to 850. The higher the score, the lower the risk.
Here are the five ranges for FICO credit scores:
— Poor. Scores of 300 to 579 are well below average, and borrowers are considered risky.
— Fair. A score between 580 and 669 is below average, and you may be approved for credit but probably won’t be offered favorable terms.
— Good. A score of 670 to 739 is near or slightly above average for most consumers.
— Very good. A score of 740 to 799 is above average and shows that you are a dependable borrower.
— Exceptional. Also described as excellent, this score of 800 to 850 can give consumers access to the most competitive rates and other terms.
VantageScore is similar system, with these five credit ranges:
— Very poor. This score of 300 to 499 may cause you to be denied credit.
— Poor. A score of 500 to 600 could saddle you with high interest rates.
— Fair. Scores between 601 and 660 could cause you to struggle a bit more for credit approval.
— Good. A score of 661 to 780 puts you in a position to get credit without trouble.
— Excellent. Scores of 781 to 850 indicate financially responsible consumers who can be trusted to repay what they borrow.
What Factors Determine Your Credit Score?
A handful of factors determine your credit score.
Your FICO score is made up of five categories of data, and each one is weighted differently.
— Payment history: 35%.
— Amounts owed: 30%.
— Length of credit history: 15%,
— New credit: 15%.
— Credit mix: 10%.
The VantageScore is calculated a bit differently, with six categories of data instead of FICO’s five, regardless of whether the creditor uses the VantageScore 3.0 or the newer 4.0 scoring model. The VantageScore 3.0 is the better-known version, according to the company.
The factors that make up this score are:
— Payment history. It receives the most emphasis at 40%.
— Depth of credit. That is the age of your accounts, which is 21% of your score.
— Credit utilization. This is how much credit you use and how much you can access, and it affects 20%.
— Balances. These are total current and delinquent balances on all of your accounts, and they are 11%.
— Recent credit. This includes the number of accounts you’ve opened and hard credit inquiries, and it accounts for 5%.
— Available credit. It assesses how much you have on revolving accounts but is just 3% of your score.
[Read: Best 0% APR Credit Cards.]
Cards for Bad Credit
If you have bad credit, don’t despair: You can still qualify for at least a bare-bones credit card.
People in the poor credit category often fare best with a secured credit card that requires a cash deposit to open the account.
Such cards are backed up by your funds in a savings account, says Amy Maliga, financial educator at the nonprofit Take Charge America. The deposit for a secured credit card functions as collateral, reducing the issuer’s risk and increasing the likelihood that your application will be approved with a poor credit score.
“The credit limit on the card equals the savings account balance,” Maliga says. “And if the cardholder is unable to pay, the amount due is deducted from the savings account.”
Look for an issuer that provides a path to graduate to an unsecured card by using your secured card responsibly. If you pay reliably, you can also get your security deposit back.
Some secured cards also offer the opportunity to earn rewards. U.S. News recommends the Discover it Secured Credit Card for this reason. Cardholders earn 2% cash back on up to $1,000 in purchases per quarter at restaurants and gas stations, plus 1% back on everything else. Plus, Discover matches all the cash back users earn at the end of their first year.
Like with any secured card, you’ll be required to put down a security deposit to open the Discover it Secured. The minimum deposit is $200, which will equal your credit limit. But after seven months of on time payments, Discover automatically reviews your account for transition to an unsecured card.
The Capital One Platinum Secured Credit Card is a good alternative for cardholders who can’t afford to put down a large security deposit. It doesn’t earn rewards, but you could qualify for a $200 initial credit line with a security deposit as low as $49, depending on creditworthiness. If you don’t qualify for a low deposit, other minimum options are $99 or $200, and Capital One will also allow you to pay for your deposit in installments.
[Read: Best Secured Credit Cards.]
Cards for Fair Credit
If you can raise your credit score to fair, you might start to qualify for slightly better credit cards, including secured cards with rewards programs. However, you will still pay higher interest rates on these cards than if you had excellent credit.
Keep working to boost your credit score by paying your bills on time, every time, and eventually you may qualify for better credit cards and rates.
The Capital One QuicksilverOne Cash Rewards Credit Card is a top U.S. News pick for those with fair credit, because its cash back rate is competitive with some of the best flat-rate cash back credit cards. Cardholders can earn 1.5% on all their purchases, plus 5% back on hotels and rental cars they book through Capital One Travel. There’s an annual fee of $39 (See Rates & Fees), but if you make responsible payments, you might be eligible to upgrade to the standard Capital One Quicksilver Cash Rewards Credit Card, which doesn’t have a fee (See Rates & Fees).
If you have fair credit because you are younger and still working on building your score, a student credit card might offer you a better opportunity to access rewards and perks. You’ll need to be a current student to qualify, but the benefits are more competitive than other cards for fair credit.
U.S. News recommends the Discover it Student Cash Back, which offers 5% cash back in rotating bonus categories up to a quarterly maximum when you activate, plus 1% on everything else.
Cards for Good or Excellent Credit
With good credit, you can access card features such as special introductory rates, sign-up bonuses and other money-saving benefits. You will also be eligible for better overall rates than someone with fair credit.
If you have excellent credit, then you can take your pick of cards with favorable terms and generous limits.
The best card for you will depend largely on your spending habits and preferred rewards type. You can choose from cash back, flexible travel rewards, or points or miles with a designated hotel or airline.
If cash back is your jam, U.S. News recommends the Capital One SavorOne Cash Rewards Credit Card for its high earning rate on dining and entertainment. Cardholders get 3% cash back on dining, entertainment, select streaming services and at grocery stores (excluding superstores such asTarget and Walmart) and 1% on all other purchases (See Rates & Fees).
If points are more your speed, consider the Chase Sapphire Preferred Card. It has a $95 annual fee, but you’ll earn five points per dollar on travel purchased through Chase, three points on dining, online grocery purchases and select streaming services, two points on non-Chase travel purchases and one point on everything else. When you redeem points through the Chase Travel portal, you get a 25% boost on their value.
More from U.S. News
How to Get a Credit Card With No Credit History
What You Need to Know About ‘Free’ Credit Scores
Can You Get a Credit Card Without a Credit Check?
What Credit Score Do I Need to Get a Credit Card? originally appeared on usnews.com
Update 10/23/23: The story was previously published at an earlier date and has been updated with new information.
