What Credit Score Do Credit Card Companies Require?

Deciding to apply for a credit card requires a proper thought process. It is not something that you rush into, and that is why you must take your time to get the right one for you.  There are very many options available in the market, all offering different benefits. Are credit cards based on credit score? If you are applying for a credit card, you may have heard that your credit score will matter. And yes, this is a very important thing you should be aware of. You, however, do not have a very good idea about what this score should be, and do not know how to go about it. But if your curious and want to learn, we will explain everything in more detail for you right now.

Credit Card Basics Spelled Out: Credit 101

Credit Cards Based On Credit Scores – Understanding Credit Score Impact

If the credit card companies give credit cards based on credit score, you should take note of the following.

Excellent Credit Rating

You have a fico score above 800, and the odds of getting an approval are high.  What it means is that your credit history dating back to almost ten years is good. You also have an excellent credit mix meaning you may have different credit cards, and installment loans. It shows that you can handle your debt portfolio well.

The credit cards you will get with an excellent credit score come with a host of bonuses and rewards. You may, for example, get special introductory offers and larger bonuses depending on your spending.  You can apply for cards like the platinum card from American Express, Sapphire reserve from Chase, among others.

Very Good Credit Score

If you have a very good credit score, it means your ratings for between 740- 799.  You enjoy almost all the benefits of those who have an excellent credit card rating.

A Good Credit Score

A good credit score means that your rating is in the range of 670- 739. Your credit history probably dates back three years, and you have no late payments.  You can apply for credit cards from most of the major lenders, and you have a better chance if your income can comfortably take care of the payments.  The lenders will also look at other factors like your monthly expenditure to determine your creditworthiness.  The lenders may also check to see how much debt you have in other credit accounts.

Proper use of the credit card may sway the lender to give you some decent rewards. Making your payments on time will also have a positive impact on your credit rating.

credit score factors

Average or Fair Credit

If your credit score is between 580- 669, you have an average credit rating. You can apply for the credit cards, but you may face some challenges getting approval. Even if you get consent, you will not enjoy the rewards that those with good credit receive.

If you fall within this range, you may have missed a few payments in the past year or two.  You may have also just started the process of rebuilding your credit.  If you have high balances when compared to your credit limit, it will also act as a red flag for any credit card issuer.

While getting a credit card may help you improve your credit score, be careful about the common credit card mistakes people make. Do not give in to the temptation of applying for too many cards; every time you make an application, there will be a hard inquiry. Credit cards based on credit score look at the number of queries; too many may ruin your chances of getting financial approval of up to two years in the future.

You will find credit card companies that have products four people within this credit score range. What you get is an opportunity to rebuild your credit score while enjoying the benefits of having a credit card. The lender may, however, not be comfortable giving you an unsecured credit card.  You can apply for the secured card that will require a deposit.  The deposit will help the company recover some of its money if you’re not able to pay your bills.  You also have the option of applying for retail store cards; the terms are not very favorable, but you stand a higher chance of getting approval.

Some of the companies you can approach include, Capital One, MasterCard, Discover it, among others.

Bad CreditРезултат слика за credit card with bad credit infographic

You fall within the bad credit range if you have a score of 580 and below.  Your chances of getting approval for a credit card with bad credit are very low. You will land within this range if you get many adverse reports on your credit history.  The Credit Bureaus will consider information such as bankruptcies, several late payments, and adverse reports from collection accounts, among others.  The impact of poor credit history are numerous, and you need to get yourself out of that range as soon as possible.

Most lenders will see you as a credit risk because all indicators point to the fact that you may not be able to pay off the debts. There are, however, certain products that credit card companies have for people in this range.  You will qualify for a secured card because the deposit is a buffer for the lender.  There is no 100% guarantee that you will get an approval, even with a deposit.

Good credit cards based on credit score may not be within your reach at this point, but you need to be careful about what you apply for.    Be watchful about some of the unsecured credit cards for people with bad credit.   The terms are usually very unfavorable.   Take time to read customer reviews before signing on.  Doing your research well will save you a lot of heartache in the future.

No Credit

Some people do not have any established credit, for instance, students.  You can qualify for certain credit cards, especially those within the fair credit range.

Getting Approved for a Credit Card

There are many factors credit card companies consider before you get an approval.  It will also depend on the types of credit card you are applying for.   That is why you need to take your time to compare credit cards for good credit. , different credit card companies have different requirements which you will need to fulfill.  Some companies will give credit cards based on credit score, others who look at a whole other range of factors.  Do note that you may face some challenges if your credit rating is below 580.

The good news is there is no actual credit score number that will determine whether or not you get a credit card.  Even those with excellent credit scores may, depending on other factors, not get approval. Credit card companies will take into consideration some of the following.

1. Credit Cards Based On Credit Scores

The lender may depend on your credit score to determine whether or not you are creditworthy. An individual who has a poor credit rating may have difficulty making the credit card payments. An individual can have more than one credit score. You also have the option of checking out some of the best credit card to get with bad credit.  Some lenders will take on the risk of giving someone with a poor payment history a credit card but will take into consideration certain factors.  Such credit cards have a higher interest to protect the lender if you are not able to make the payments.

2. Credit History

Lenders will look at your history with regard to credit to determine whether you make your payments on time or not.  Some lenders will insist on seeing your payment history dating back years.  It will allow them to get a clearer picture of your financial standing.  A credit history check will yield more information than the lender can get from a single credit score.

3.Income Level

Credit card companies will want to know your income level before they can give you an approval for a credit card.  While it will not factor into your credit score, the lenders will want to know that you have a steady source of income.  You should be ready to give additional information, such as tax returns.  Your income level will have a huge role to play on the credit limit the lender will provide you with.  It does not matter how good your payment history is, a low income may result in a low credit limit.

4. Monthly Housing Expenses

The credit card company may express an interest in your monthly housing expenses. They may also ask whether you own or rent the house, and how much you spend on running it. The lender will be trying to determine whether you are living within your income bracket.  If your expenses are higher than your income, it may negatively impact on your credit card application.

 Understanding Credit Scoring and Credit Reports

Резултат слика за credit report infographic

Understanding credit cards is the key when you are applying for a one. So here are some basics you need to know. Credit scoring looks at the number of hard inquiries over the past year. Credit reports will include any inquiries over the past two years.  If the lender finds that you have so many queries, they may not grant you an approval for a credit card.  You may also have a good credit score, but a single late payment will go to your credit report, leading to a denial for a credit card.  Missing one payment will reflect on your credit report for seven years, and credit cards based on credit scores take this very seriously.

 Understanding Credit Scores

Many people assume that you only need one credit score. The reality is that you have the option of getting several scores.  There are many scoring components and models, including FICO score Vantage score, among others.  These are the models that the three major credit bureaus; Equifax, Experian, and Transunion use in determining your credit score. You will, however, find that most of them will rate you a range of 300 to 850.  The higher the rating, the better your credit scores.

Another thing to note is that the different agencies may give you different ratings.  You need to be aware of the model they are using to calculate your credit score, and which credit card report they are using as a data source. You will also find some free resources online, which can give you a free credit score.  Such include websites for credit card issuance and those that offer credit monitoring services.  The three agencies will also give you a report once a year.

What You Need To Know When Applying For a Credit Card

Different credit card companies have their requirements, which they use to determine whether or not to give someone a credit card.  However, most of them will look at your history with debt and how you handle payments. Some of the advantages of having a good credit history include lower interest rate, higher credit limits, and rewards that come with the cards.  Retail store credit cards do not require much to get approval; even those with bad credit can apply.  Good credit cards based on credit score are usually higher-end, have higher limits, and come with some of the best offerings.  They, however, require that you have an excellent credit history to qualify.

There is no way of knowing whether the companies will deny your credit card application unless you apply.  Most companies will revert within 7-10 days.  If you do not qualify, they will tell you why.

If you’re interested in getting a new card, make sure you consider all your possibilities. With the help of our partner Fiona, you can find a list of credit cards you should definitely check out below. If you find something interesting, fill out the form and we’ll get back to you with offers from companies.


Impact of Debt Consolidation on the Credit Score

If you hope to get good credit cards based on credit score, you will need to apply specific strategies. One such approach is debt consolidation. It allows you to lower monthly payments, thus making it possible for you to stick to the repayment schedule. It can be tough to manage the high interest on your credit cards if you have multiple accounts. But if you bring them together, you have a better opportunity of managing them. Let us explore how debt consolidation can affect your credit scores and how you can do it effectively.

  • Balance transfer credit cards will offer you introductory periods, where you do not have to pay any interest on a balance on the cards within a specified period. By making savings, you will be able to pay off your debt quicker.
  • You can apply for personal loans, but make sure you only go for those with low-interest rates.  You get the benefit of getting to pay off the higher interest credit card balances faster.
  • Taking a loan from your retirement account will help you pay off any debts you have consolidated. Be careful about penalties and taxes that apply to retirement accounts so that you do not end up paying more than you expected.
  •  Home equity loans or lines of credit will use your home as collateral.  The interest rates are lower, but you need to know that the lender can auction off your home if you do not meet the repayment terms.

But beware…

Debt consolidation is an excellent way of paying off your debt in a more comfortable manner.  You, however, need to be watchful of the following:-

  • When you apply for new credit applications, the lender will make a hard inquiry.  The more the inquiries, the more significant the impact on your credit scores.
  • Opening a new credit account may temporarily lower your credit score.  The lender will view you as a high-risk borrower because they are not sure about your ability to pay the debt.
  •  The more you make your payments promptly, the better the impact on your credit score.  It, therefore, means that the older credit accounts will have a positive effect, but a new account will lower your count temporarily.
  •  Credit utilization ratio measures how you are using the available credit.  Opening a debt consolidation account will increase your available credit, thus having a positive impact on your credit score.
  •  Make sure you keep up with your payments because this is one of the most significant factors when it comes to determining your credit rating.

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What Can Hurt Your Credit Score

We have looked at some of the things that can hurt your credit score. With a low rating, you will face a challenge, if you are applying for credit cards based on credit score.  You need to be careful about the following;-

    • Missing out on payments;   your payment history accounts for up to 35% of your FICO score. it will also stay on your credit report for up to seven years
    • Credit utilization takes up to 30% of your fico score.  you must, therefore, be watchful that you do not max out your credit cards
    • Hard inquiries when applying for a credit card will impact on your credit score. The inquiries will stay on your credit report for two years, but will only  have an impact on your score for one year
    • Do not apply for too multiple credit cards within a short time.  It may give the impression that you are desperate for credit, and the hard inquiries will show up on your credit report.
    • Declaring bankruptcy can cost you up to 240 points on your FICO score. It also stays on your credit report for up to 10 years.
    • A foreclosure report will be on your credit report for up to seven years and can cost you up to 160 points
    • Deed-in-lieu or turning your property over to the mortgage lender can cost you up to 125 points if the lender sells the property to recover his money.
    • A short sale has the same impact on your credit score as a foreclosure.
    • Negotiating to settle a debt at less than what you had initially agreed with the creditor, can cost you up to 125 points
    • We have talked about debt consolidation above.  The hard inquiry will temporarily lower your credit score, but if you keep up with the payments, you will significantly improve your credit rating.
    • Refinancing a loan can impact due to a hard inquiry,  or a report that it is the same loan, but with slight changes
    • You may need to close a credit card account, but note that you will reduce your credit utilization ratio.  it will also impact on the age of the credit history by shortening it
    • You may be an authorized user on someone else’s credit card account, meaning that you inherit their payment history.  If the initial user had discipline about making payments, it would boost your score. The reverse is that if the person was delinquent, it harms your credit score
    • Having the right credit mix is crucial for a good score.  It accounts for up to 10% of your FICO score
    • You may think that not having a credit card will be good for your credit rating. the truth is, you need to have at least one account to qualify for a FICO score
    • Pay attention to the reports you get from the bureaus, because they could contain errors.  Report any irregularities so that the credit Bureaus can correct them as soon as possible.

Final Thoughts

Applying for credit cards based on credit score can be challenging if you have a poor credit rating.  However, there are measures you can take to improve your credit score. You must keep up with your payments so that you do not damage your credit history.

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