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Choosing A Credit Card Based On Your Credit Score

Choosing A Credit Card Based On Your Credit Score

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This article was last updated Nov 02, 2015, but some terms and conditions may have changed or are no longer available. For the most accurate and up to date information please consult the terms and conditions found on the issuer website.

In a perfect world, we would all compare every credit card available and pick the one with the best terms and benefits for our needs. But unfortunately, we can’t all do that as each card is marketed to those with a minimum level of creditworthiness as indicated by the applicants’ credit score.  In other words, if you have bad credit, you certainly won’t get approved for any of the most prestigious credit card offers.

So let’s look at the different levels of credit scores, and see how applicants should choose their next card based on their credit score.

Bad Credit or No Credit (Below 580)

There are many reasons why applicants can suffer from bad credit, including bankruptcy, divorce and unpaid medical bills. In these situations, the only way to be approved for a credit card is to apply for a secured card. Secured cards operate much like standard credit cards, except applicants must submit a refundable security deposit when they open an account. This deposit then acts as their credit limit, but in all other ways, a secured card operates like any other card. Account holders will receive monthly statements, must make regular payments, and will incur interest charges if they choose to carry a balance. But the best feature about secured credit cards is that they help to improve your credit when you make consistent payments on-time. If you make responsible payments for at least a year, your credit is likely to improve to where you can transition from a secured card to an unsecured card, such as a cash back credit card.

Fair Credit (Between 580-670)

According to FICO, a fair credit rating is approximately 580-669. At this level, you can qualify for the most basic credit cards. These cards may not offer a rewards program or have many premium benefits, and will also likely have an on-going interest rate above 20%.  In addition, this is the credit level many students hold. Since most students maintain this credit score due to a limited credit history and not because of a poor credit history, there are student credit cards available that offer a bit more in perks and rewards than you would find with standard consumer cards for fair credit. Applicants should look for cards that offer decent interest rates, low fees, and have a record of good customer service. A few credit cards for fair credit worth comparing is the Capital One® Platinum Credit Card, any student credit card for those that are in college, or any of the Credit One card offers. For more tips, check out How to Choose the Right Credit Card for Building Credit.

Good Credit (Between 670-740)

According to FICO, and an average – good credit rating is 670-739 and good – excellent credit rating is about 740-800. I would say it’s a safe bet that if your score lies in the high 600’s and 700’s, you have good credit. At this range, you will be able to qualify for most credit card offers, except for the most premium credit products. But since many credit cards offer a range for the standard interest rate, you may not receive the most favorable terms available. Cardholders who carry a balance should look for cards that don’t offer rewards, but do feature the most competitive interest rates they can get. If you are a credit card user that doesn’t incur interest charges, you will still be able to qualify for some good rewards credit cards, including ones that offer airline miles, hotel points, and bonus points. Examples of these cards include the Chase Freedom®, the Capital One® VentureOne® Rewards Credit Card, and the Citi® Double Cash Card – 18 month BT offer.

Excellent Credit (740 and up) 

Cardholders with excellent credit get to choose from any card on the market. So if the cardholder is avoiding interest charges by paying each statement balance in full, then it would make sense to apply for a card with the most valuable rewards and added benefits. But if the cardholder regularly carriers a balance and incurs interest charges, having an excellent credit score will enable him or her to choose a card with the lowest possible interest rate. In addition, applicants with excellent credit can also qualify for all of the promotional financing offers that feature 0% APR on new purchases and balance transfers for as long as 21 months. Some of the top cards worth considering are the Citi® Diamond Preferred® Card – 21 Month Balance Transfer Offer or The Amex EveryDay® Credit Card from American Express.

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