Credit inquiries can damage your credit score so it is important to understand your score and your options before you ever submit an application.
Credit cards are one of the best ways to help establish your credit, build your credit, and, in some cases, rebuild your credit. However, if you are someone who has a limited credit history or has some problems on your report that drag down your score, you may have trouble getting a credit card.
That’s not to say that it’s impossible. There are credit card options for all types of credit scores. There is not a clear answer to whether there are minimum scores or not. Sometimes, there are minimums for particular cards that come with high limits, low interest, or a lot of benefits. Sometimes, a lower score could leave your options much more limited and may lead to you needing to get a secured card.
Credit scores can be confusing and you don’t want to apply for too many new lines of credit all at once just to face a slew of denials and a huge hit to your score. In this article, we’re going to explain the different credit options for you based on your score range and explain how you can avoid hard inquiries when you’re shopping around for the best credit card option for you.
How Low Can My Score Be To Get A Credit Card?
The lowest score that you can have and still be eligible for some credit cards is actually zero. The more complex answer is that it all depends on your credit history and the credit card issuer. If you are just getting started on your credit journey, you’re not going to have a score just yet. Even if that’s the case, there are still options for you. If you’re enrolled at least part-time in a college degree program, you will very likely be able to get a student credit card. Student credit cards tend to have lower limits but may also have features like cashback for good academic performance, low interest, and reduced fees.
If you have no credit score or a very poor credit score, it’s going to be harder for you to find a credit card that works for you. Where your score truly comes into play is with the terms and conditions of the cards you’re eligible for. Scores in the 300-580 range are considered to be pretty bad credit. Your score may be that low because of debt, accounts in collections, a foreclosure or repossession, or missed or late payments. These things can happen to anyone and you shouldn’t let it discourage you from looking for a credit card at all.
If you’re someone with a score in this low range, though, there are only certain kinds of cards that you’re going to be able to get. One of the most common occurrences is that you will only be eligible for a secured credit card. A secured credit card requires you to make a deposit that is (usually) equal to your credit limit. These are different from prepaid cards though because they do report to all the major credit bureaus and will help improve your score as long as you’re smart with them.
You will probably have to settle for a card with a lower credit limit. Credit cards designed for those with bad credit also come with higher interest rates and will not come with any rewards or benefits that you may see in a more premium card. Even though that’s not ideal, it’s still a great way to get started. Most credit cards that are designed for those with bad credit report monthly to all three major credit bureaus to help you get your score up faster by giving you a positive payment history as long as you stay current. Also, settling for a card like this is something that is only temporary. Eventually, your score will improve or the creditor will see that you’re able to make your payments and you can either qualify for or upgrade to an unsecured card with better terms.
One thing to keep in mind is that your credit score plays a role but there are other things that creditors will look at before issuing you a card of your own. They’re also interested in your monthly or annual income as well as looking at your history of on-time payments. In order to qualify for a credit card with good terms, you need to be able to demonstrate to banks that you’re not a risk. The best way to do this is by working on your credit score, but having a steady income and good payment history can help boost your odds.
What If My Credit Is Just Fair?
Fair credit is the term used to describe your financial health if your score falls in the range of 580-670. If you fall into this range, you are very likely to be able to get a credit card without much hassle. Even though that is the case, creditors still consider people who fall in this score range as “subprime borrowers.” This means that you may not be eligible for very competitive rates such as low interest, rewards, perks, or other benefits that come with more premium cards.
If your score is in this range, you will most likely be able to get an unsecured credit card without much issue. Some of the most popular cards right now for people who fall into this category include the Capital One® Platinum Credit Card, the Capital One® QuicksilverOne® Cash Rewards Credit Card, and the Indigo® Platinum Mastercard®, but there are hundreds of options.
The caveat with any of these credit cards that are suited for your category is that you are probably going to face high annual fees. Many of the most popular credit cards targeted to fair credit customers can have annual fees as high as $99. This is usually based on your perceived creditworthiness from the creditor.
What Is The Ideal Credit Score For Getting A Credit Card?
In America, the majority of people have credit scores that fall into the categories of poor or just fair. The benchmark for what counts as good credit varies depending on where you look for the information, but it is generally considered to be above 670 at the very lowest. Most scores that are considered to be “good” are over 700; to be considered excellent, your score should be over 800. Because of the huge discrepancy in what is considered to be “good credit” and the credit score of the average American, it is hard to say if there is an ideal credit score at all.
To make sure that you have the best possible approval odds for an unsecured card, your score should absolutely be above 600 and most likely closer to 650. If your score is less than that but you have a positive payment history and limited accounts in collections, you will still probably be able to get an unsecured credit card.
If your score is closer to 600 or comes in under 600, you’re probably only going to be able to get a secured credit card even if all of the other factors such as payment history, delinquencies, and inquiries look good.
Credit card companies don’t really have a preference for what score they would like you to have. The main thing that a creditor cares about is the risk. What if they give you all this money and then you are unable or unwilling to pay it back? This is the question they ask themselves any time someone with a lower credit score submits an application. They mitigate that risk by requiring a deposit, having high interest, or charging higher fees. They also will not offer as many rewards at these lower levels.
In order to get the best deal from a creditor, you must have good credit. If you have good credit, you are not going to have any problem getting approved for a credit card. Banks also like to compete for these customers because they’re the least risky and the most profitable for the card issuer. Someone with good credit is smart with their money, makes their payments on time, and is going to be very attractive to a creditor. Because of that, cards suited for people with good credit have lower fees, lower interest, and more benefits associated with the card. This could be things like cashback, miles, and other perks.
So, while there is no set ideal credit score or even a set minimum credit score, banks still show a clear preference. You will almost always be able to find a credit card that you’re eligible for, regardless of your score. Finding a card that is the best possible deal out there is going to be a lot harder for anyone who doesn’t have good or excellent credit, though.
What If I’m Scared To Be Denied?
If you’re learning about credit cards or shopping around for one, it probably comes as no surprise that hard inquiries on your credit, denied applications, and attempting to open a lot of lines of credit all at once are things that will all negatively impact your score.
The first thing you should know is that a hard inquiry on your credit takes as long as two years to drop off. Fortunately for you, though, they have a very low impact on your score and will likely only bring you down a couple of points. This is something that you can bounce back from in just a few months. The same is true of credit card denials; they bring your score down, but not by much, and you won’t have to wait very long for it to even back out.
However, it still isn’t fun to sift through cards and submit applications just to see yourself denied over and over again. It can be very discouraging. There are a few things that you can do to help keep this from happening to you, though.
First, you should make sure that you are researching as much as possible about the cards that you’re considering. Be realistic about what you think you’d qualify for and start there. Read the terms and conditions for the card. Some credit card issuers will even dictate what score range they expect applicants to fall into. One website that puts it right on the bottom of every card description is Mastercard. Many others do the same.
Second, you can make use of online tools like those offered by Credit Karma, Nerd Wallet, and the like. Many websites have tools that allow you to fill out a little bit of information and they will give you a list of credit cards and inform you of your approval odds for each one. This can be a great way to get a feel for what cards it would be worth applying to if you’re just not sure how your credit score is going to measure up.
The final thing that you should make sure that you take advantage of is prequalification. Many credit card applications are able to collect some basic information about you and let you know if you prequalify, which means that they see your information and decide that you are most likely qualified for a specific card. These tools can be incorrect but that doesn’t happen very often. Prequalifying for credit cards does not include a hard inquiry on your credit and can help you make a more informed decision before deciding to apply.
There are credit cards out there for people in all different types of financial situations and with all different credit scores. The better your score is, the better the cards that you’ll qualify for will be. You shouldn’t let a low credit score make you feel like you can’t get a credit card but, you should be prepared that you may not be able to get exactly what you want just yet.
Settling for the best credit card that you qualify for at your current score is going to help you push your score up to where you want to be, as long as you use it accordingly.