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What credit score do you need for a credit card?

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Your credit score is how you present yourself to lenders. This determines the type of credit card you qualify for and the type of terms and conditions you get with your card.

But that doesn’t mean credit cards are only for people with good credit. Credit cards are available for all credit levels, including no credit or bad credit. But the better your credit, the more benefits you can get for a credit card.

What is a credit score?

Lenders use your credit score to gauge your risk appetite as a borrower. The higher your credit score, the better you appear in debt management, and therefore the better terms you get on your credit cards.

How is your credit score calculated?

Your credit score is calculated from your credit report by the three major credit bureaus: Experian, Equifax, and TransUnion. Your credit report is basically a summary of your bills, payment history, and credit limits.

Factors that contribute to your credit score include your payment history, credit usage, the age of your accounts and the number of outstanding accounts.

There are two popular scoring models, FICO and VantageScore, and each measures factors slightly differently. Payment history contributes the most of the two, followed by how much debt you have.

Both FICO and VantageScore divide your score into different credit levels. This is how they fall:

credit score range

FICO Vantage Score

Poor (300 to 579)

very poor (300 to 499)

Mela (580 to 669)

Poor (500 to 600)

good (670 to 739)

Mela (601 to 660)

very good (740 to 799)

good (661 to 780)

Exceptional (800 to 850)

Excellent (781 to 850)

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These scoring systems help lenders determine which credit cards you qualify for.

credit cards for good to excellent credit

If you have good or excellent credit, you can qualify for the best credit card. This means that they offer the most valuable benefits and offer you the best terms, including acceptable interest rates.

Credit cards designed for high credit scores include sought-after perks, such as introductory APR periods designed to help you avoid interest charges or better reward rates. Advanced travel credit cards can offer benefits such as primary rental car insurance, access to airport lounges, and a way to get through airport security faster.

credit cards for bad or fair credit

While credit cards designed for excellent credit are best, that doesn’t mean credit cards designed for poor or fair credit aren’t worth it. Knowing what to look for in a credit card can help you get good benefits in any credit range.

For those with poor to fair credit, there are still many good cards to choose from. There are student credit cards, secured credit cards, and credit cards designed for people with limited credit history.

Student cards are usually easier to qualify because they are designed for students who typically don’t have extensive credit histories. They help students learn responsible card habits and build credit. Some even offer prizes.

Secured credit cards help people build or rebuild credit. Unsecured credit cards – or unlike traditional credit cards – secured cards require a one-time, post-approval deposit that establishes your initial credit limit. More often than not, the security deposit is refunded after responsible use of the card, which basically translates to always paying on time with normal card use.

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Then there are credit cards designed for limited credit history, which are unsecured credit cards with low credit requirements. They don’t always have the best features, but some offer perks and rewards as you build your credit score.

how to build your credit score

The easiest way to build your credit score is to pay your credit card bills – and other loans – on time. A positive payment history contributes the most to your credit score. Another way to improve your credit rating is to limit your credit card debt.

How much of your total available credit you use at any given time affects your credit score. The credit bureaus prefer to see a credit utilization of less than 30%, which means you only want to use 30% of your total credit limit.

Paying off credit card debt and thereby reducing your credit utilization will make your credit score healthier.

Aging credit accounts will also improve your credit score. If you have a low credit score and a trusted family member with a better established credit history, you can ask to be added to their account as an authorized user to kick off bad credit.

It boils down

Credit cards are available for all credit levels, from no credit to excellent credit. But the better your credit score, the better the credit cards you qualify for. If you need to build your credit score, you can use a secured credit card or any other bad credit card to do so.

The editorial content on this page is based solely on objective, independent reviews by our writers and is not influenced by advertising or partnerships. It has not been supplied or ordered by a third party. However, we may receive compensation when you click on links to products or services offered by our partners.

Source: www.cnet.com

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