What Credit Score Do You Need for a Credit Card?

Jaron Pak
A person holding a credit card for the camera.
Reading Time: 4 minutes

There is no single credit score threshold required to get a credit card. That doesn’t mean that a credit score has no bearing on the subject. However, requirements tend to vary from card to card.

Typically, the range of your credit will dictate what kind of cards you can try to get. Even then, the terms may change depending on the state of your credit. A lower score may mean higher interest rates, lower limits, and annual fees. A higher score can open up the doors to better terms as well as a slew of different rewards and benefits.

Here are several of the most important credit-related factors that tend to impact credit cards.

Factors Affecting Credit Decisions

One of the biggest reasons there isn’t a single baseline credit score to apply for a credit card is because your credit score is just one of several items that lenders consider. Other qualifying factors include:

  • Your total income, as this can reveal what kind of resources you’ll be working with to repay your revolving line of credit.
  • Your housing expenses, as this represents a significant predictable expense against your income.
  • Your credit history is seen through your credit reports provided by the three major credit bureaus.

In addition, while your credit score is important, a credit card company may use one of several different credit scores to judge you. The FICO credit score is most commonly used, but there are others as well, such as the VantageScore model.

Why Does Your Credit Score Matter?

While there are other factors, your credit score is still a very important part of your finances. It represents a numerical estimation of your financial health that is contingent on several different factors.

This can help lenders quickly assess if you’re a trustworthy individual who can handle the complicated responsibility of borrowing and paying back the money regularly.

How Are Credit Scores Calculated?

Several different factors affect your credit score — either for better or for worse. These include:

  • Your payment history: Your ability or inability to make payments adds up to 35% of your total credit score.
  • Your total debt: The amount of non-revolving debt that you owe shows if you’re able to pay off loans promptly.
  • Your credit utilization ratio: The percentage of your available credit that you’ve already used is a critical factor, and it shouldn’t get above 30% if possible.
  • Your credit age and mix: The greater the variety and the older the average age of your credit, the better.
  • Derogatory marks: Anything from a delinquent account to a tax lien, repossession, foreclosure, or bankruptcy can dog your credit report for years at a time.

It’s important to address all of these factors, as they collectively impact your score negatively or positively.

What Credit Cards Can You Get?

The kind of credit card you can apply for depends on your credit score and a few other factors. Here are a few examples of different kinds of credit cards that you can apply for based on your credit score, regardless of if you have bad, fair, good, or even no credit.

Keep in mind that, while there are options for all of these tiers, good credit is the only way that you can truly cash in on the greatest benefits of owning a credit card.

If You Have No Credit

At some point, everyone has to start their credit journey. When you do so, you don’t have to wait for years to get a credit card. Remember, you currently have no credit, not bad credit. While you have to prove yourself, you aren’t righting past financial wrongs. You’re simply starting to establish your finances.

Fortunately, there are several different kinds of cards that can help you get your credit history rolling. Secured credit cards and student credit cards provide predictable, regulated, and controllable options that help individuals begin to prove their ability to manage credit.

If You Have Bad Credit

Bad credit or “Very Poor” credit, according to the FICO model, is a score below 580. A score this low is not good. As the name would suggest, it’s downright bad. A credit score this low can have many negative effects, such as making loan and housing approval difficult. It can also disqualify you from most credit card options.

If this is the case, it’s wise to begin repairing your credit so that you can improve your finances. In the meantime, while you have extremely limited options, you might still be approved for a secure credit card that comes with low borrowing limits and intense restrictions. You can also get a credit card with a cosigner who has better credit.

If You Have Fair Credit

“Fair” credit is a score between 580 and 669. While better than bad credit, this is still an average score that is not considered good yet. It’s wise to continue improving your credit score to get above 670, which is officially considered a good score.

In the meantime, with a fair credit score, your credit card choices begin to open up a bit. Rather than being restricted to secure credit cards, you can begin to qualify for certain unsecured cards. Many of these will come with limitations such as a lower borrowing limit. However, if you can prove your ability to make payments on time, some of these restrictions will likely be removed in the future.

You can also apply for many retail credit cards. These are cards that are connected to a retail brand, such as Target or JCPenney. Retail cards often come with lower limits, and are thus easier to obtain.

If You Have Good or Excellent Credit

Finally, if you have “Good,” “Very Good,” or “Exceptional” credit on the FICO model (basically anything above a score of 670) you can enjoy a large array of credit card options.

As a rule, the higher your good credit score, the more you’ll be able to qualify for perks and benefits. From bonus points to rewards miles to cash back, a high credit score can help you begin to cash in on the benefits of having good credit.

Good credit opens up the doors to a large variety of financial benefits, with credit cards being one of the leading advantages. If you have a good credit score already, you can begin to apply for these card options. If not, make plans to improve your credit score so that you can qualify for better cards in the future.


Image Source: https://depositphotos.com/

 

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