How to Choose the Best Credit Card Based on Your Credit Score – January 2021
This article was last updated Dec 31, 2020. Terms and conditions may have changed. For the most accurate information, please consult the issuer website.
If you’re in the market for a new credit card, a good place to start is knowing your credit score. That’s because, in addition to factors like income, banks rely on credit scores to help determine whether or not to approve you for a credit card.
While there are credit cards available for practically every level of credit, know that the higher your credit score is, the better chance you have of being approved for any given credit card.
To help narrow down your credit card search, we explain what you need to know about your credit score and highlight some popular credit cards you may be eligible for based on your credit score.
- What is your credit score?
- Which credit cards are you eligible for based on your credit score?
- How to improve your credit score
What is your credit score?
A credit score is a three-digit number used by lenders to help predict how likely you are to repay debts. Ranging from 300 to 850, credit scores are calculated using information that’s been reported to the three major credit bureaus (Equifax, Experian and TransUnion) from previous or existing credit accounts.
There are two main credit-scoring models: FICO® Scores and VantageScore. However, FICO Scores are used in 90% of all lending decisions.
FICO uses the following ranges to determine whether your credit score is considered poor, fair, good, very good or exceptional:
- Poor: 300 to 579
- Fair: 580 to 669
- Good: 670 to 739
- Very good: 740 to 799
- Exceptional: 800 to 850
You can request a free copy of your FICO Score every 30 days through Experian. You can also access your FICO Score for free through Discover Credit Scorecard (even if you aren’t a Discover cardholder), or view your free VantageScore through My LendingTree. Or your existing bank, credit union or credit card issuer may also offer a free credit score tool.
Which credit cards are you eligible for based on your credit score?
The higher your credit score is, the better your chances are of being approved for credit cards with better terms and lower interest rates. But even if you have poor or fair credit, there are cards available that, with responsible use, can help build your credit score to a good to excellent range.
Based on our research of cards available through CompareCards, as well as top cards offered by major issuers, we selected some popular cards to recommend based on the type of credit score you currently have.
Credit cards for bad credit
If your credit score is below 600, you will only be eligible to apply for credit cards designed for individuals with limited or poor credit. This means the card may come with higher interest rates, more fees and far less perks than traditional credit cards.
Your best bet will typically be a secured credit card, which requires a refundable security deposit that will serve as your line of credit.
The Discover it® Secured card, for example, is intended for applicants with limited, bad or poor credit.
The card requires a minimum security deposit of $200 to open your account, and your credit limit will be determined by your income and ability to pay (up to $2,500). Then, starting at eight months, Discover will automatically review your account to see if you qualify to receive your security deposit back and convert to an unsecured card.
Unlike most secured credit cards, the Discover it® Secured card offers cashback rewards on every purchase. Just know, the $0 annual fee card has an ongoing purchase APR of 22.99% variable apr.
If you prefer a card that doesn’t perform a credit check, which can save your credit score from the slight damage a hard inquiry will inflict, the OpenSky® Secured Visa® Credit Card may be a better option.
The OpenSky® Secured Visa® Credit Card requires a security deposit of $200 to $3,000 (subject to approval), which will be refunded when you pay your card balance in full and close the account.
Although the card does not offer a rewards program, it does come with a fairly reasonable purchase APR of 17.39% (variable). Additionally, cardholders are subject to an annual fee of $35, which will reduce your available credit limit until paid.
While the OpenSky® Secured Visa® Credit Card does not require a credit check, applicants do need to provide some financial information, including annual income, monthly housing payments and housing payment type when filling out the application.
Credit cards for fair credit
If your credit score ranges from 580 to 669, you may be eligible for an unsecured credit card, student credit card or store credit card designed for those with fair credit. These cards are one step above credit cards for poor credit and can come with rewards programs, limited fees and no security deposits.
The Capital One QuicksilverOne Cash Rewards Credit Card, for example, is aimed at consumers with fair credit. According to Capital One, this includes those who have defaulted on a loan in the past five years or those who have limited credit history.
The Capital One QuicksilverOne Cash Rewards Credit Card offers 1.5% cash back on every purchase, every day. Additionally, the card comes with an annual fee of $39 and a regular purchase APR of 26.99% (variable).
If you are a student over the age of 18 and can prove some sort of income, you may want to consider a student credit card, such as the Journey Student Rewards from Capital One.
Journey Student Rewards from Capital One cardholders earn 1% cash back on all purchases; 0.25% cash back bonus on the cash back you earn each month you pay on time — for a total of 1.25% for that month. The $0 annual fee card also lets you access a higher credit line when you make your first five monthly payments on time. Just know, if you do not pay your balance in full each month, you will be subject to high interest charges at an APR of 26.99% (variable).
Or, you may want to look at a store credit card, which is often easier for applicants with fair credit to be approved for than a traditional credit card (since they usually come with lower credit limits and higher APRs).
The Target RedCard Credit Card, for example, gives cardholders a 5% discount on Target and Target.com purchases. Plus, get $40 off a future qualifying purchase over $40 when approved for a Target RedCard.
The Target RedCard Credit Card comes with a purchase APR of 22.90% variable and $0 annual fee.
Credit cards for good credit
If you have a good (670 to 739) or very good (740 to 799) credit score, you have a greater chance of qualifying for most prime credit cards, including those with generous rewards rates, no annual fees, 0% intro APRs and more.
The Capital One SavorOne Cash Rewards Credit Card, for example, is intended for consumers with good credit — which Capital One describes as those who have not declared bankruptcy or defaulted on a loan in five years, have had a credit card or loan and have not been more than 30 days late on any payment in the last year.
The Capital One SavorOne Cash Rewards Credit Card offers 3% cash back on dining; 3% cash back on entertainment; 2% cash back at grocery stores; 1% cash back on all other purchases. Cardholders also earn a one-time $200 cash bonus after you spend $500 on purchases within the first 3 months from account opening.
Additionally, the $0 annual fee card comes with an APR of 0% intro on purchases for 15 months, then an ongoing APR of 15.49% - 25.49% (variable).
The Chase Freedom Flex℠ card, which is designed for those with good to excellent credit, also comes with a $0 annual fee and offers cashback on every purchase.
Earn 5% cash back on eligible purchases in rotating categories, 5% on travel purchased through Chase, 3% on dining and drugstores, and 1% on all other purchases. Earn a $200 Bonus after you spend $500 on purchases in your first 3 months from account opening.
The Chase Freedom Flex℠ card also offers a 0% Intro APR on Purchases for 15 months. After that, a regular APR of 14.99% - 23.74% variable applies to any unpaid portion of your balance.
Credit cards for excellent credit
A credit score of 800 or higher can help you qualify for some of the best credit cards available. These cards often offer valuable sign-up bonuses, premium benefits and extensive travel and shopping protections. Just know, the more luxurious the benefits the card offers, the higher the annual fee tends to be.
Take the Chase Sapphire Reserve®, for example, which requires excellent credit to qualify.
In addition to an elevated rewards rate on travel and restaurant purchases, the Chase Sapphire Reserve® card offers a sign-up bonus that’s worth $750 when redeemed for travel through Chase Ultimate Rewards® and when redeemed for statement credits to cover grocery, dining and home improvement store purchases (through April 30, 2021).
The card also comes with a long list of premium benefits, including a $300 annual travel credit, free Priority Pass Select membership, trip cancellation and interruption insurance, lost luggage reimbursement, purchase protection, extended warranty protection and much more.
Keep in mind, the Chase Sapphire Reserve® charges a hefty annual fee of $550.
If that annual fee is too steep, the Capital One Venture Rewards Credit Card also requires applicants with excellent/good credit, which Capital One describes as someone who has never declared bankruptcy or defaulted on a loan, hasn’t been more than 60 days late on any credit card, medical bill or loan in the past year and has had a credit card for more than three years with a credit limit above $5,000.
Like the Chase Sapphire Reserve®, the Capital One Venture Rewards Credit Card offers a generous rewards rate on everyday purchases — but with a much lower annual fee of $95.
Cardholders earn 2 miles per dollar on every purchase, every day. Plus, enjoy a one-time bonus of 60,000 miles once you spend $3,000 on purchases within 3 months from account opening, equal to $600 in travel.
The card also offers a variety of travel and purchase protections, including auto rental collision damage waiver, travel accident insurance, 24-hour travel assistance services, extended warranty and more.
How to improve your credit score
If your credit score needs some work, there are steps you can take to get those numbers up, which will increase your chances of being approved for a new credit card.
Check your credit report for errors
In addition to monitoring your credit score on a regular basis, you should check your credit report several times a year to identify potential fraud, identity theft or legitimate errors, which can all decrease your credit score. You can access a free copy of your credit report from each of the three major credit bureaus from AnnualCreditReport.com once every 12 months (Note: In response to the COVID-19 pandemic, you can now access your online credit reports for free on a weekly basis through April 2021). You can also sign up to receive free access to your credit report through Experian or CreditWise from Capital One.
How to Check Your Credit Score When You’ve Never Done It Before
Pay your bills on time
Since payment history is the most important factor impacting your credit score (making up 35% of the total score), it’s essential to pay your bills on time each month. Just know, while a late payment stays on your credit report for up to seven years, its negative impact will lessen over time as you add more positive payment history to your credit reports.
Maintain a low credit utilization ratio
Your credit utilization ratio, which is the amount of credit you use compared to your total credit limit per account as well as across all your credit accounts, makes up 30% of your credit score.
To calculate your credit utilization ratio for a single credit card, divide the balance you are carrying on the card by its credit limit. If you have several credit cards, add all your balances together and divide that amount by all your credit limits added together. For optimal credit-scoring results, financial experts recommend that you keep your credit utilization ratio well below 30%.
Note, installment loans, such as for a car or mortgage, do not factor into your credit utilization ratio.
Minimize the number of new accounts you open
Each time you apply for a new credit card, loan or mortgage, a hard inquiry appears on your credit report when the lender checks your credit file. This temporarily lowers your credit score by a few points with each hard inquiry.
If lenders see too many hard inquiries on your credit report in a short period of time, it may signal to them that you are a high-risk consumer, and they may deny your application. For those reasons, it’s best to only apply for new credit as needed.
Just know, if you are rate-shopping for a mortgage, auto loan or student loan within a 45-day window, those inquiries will be grouped into one hard inquiry after you apply for the loan. Also, soft inquiries, which occur when you check your credit score or when a creditor preapproves or prequalifies you for an offer, do not impact your credit score.
Keep a diverse mix of accounts
The mix of credit cards, retail accounts, installment loans, finance company accounts and mortgage loans you have makes up 10% of your credit score. Although you aren’t required to have each of these types of loans, responsibly maintaining a diverse range of accounts shows lenders you are capable of managing a variety of financial obligations.
