Everyone will at some point in their life get locked in a loan, whether it’s a student loan, home loan, or even a credit card payment.
If you had an overdue student loan, years of high credit card balances, collections accounts, or even foreclosures, you probably have below-average or bad credit.
When looking to get approved for a credit card, you will need to understand and qualify for all of the card company’s minimum criteria:
- Established credit with payments made on time for two or more years
- A stable income
- A credit score that meets the bank’s threshold for approval
The less debt you are in and the longer you have been making payments on your accounts, the more likely you are to be approved for cards with low rates and high rewards.
750 or Higher
When you have a credit score of 750 or higher, you fall under the “prime” or “subprime” category. Reaching this level of excellent credit often requires at least 10 years of on-time payments and a mix of credit accounts such as:
- Credit cards
- Student loans
Once your credit is at this level, you can look at banks that offer to pay you cash or travel rewards for opening and using your new credit card.
600 or Average
If you have just started to use credit or are trying to recover from a missed payment or two, you will probably have a lower credit score in the 600s.
You will have trouble getting approved for many of the credit cards you see advertised, but there are still some offers out there for you. Applying for multiple cards and getting denied will hurt your credit score even more. Capital One will be your best bet when looking for a new credit card. The no fee Capital One Platinum Credit Card offers you access to a higher credit after the first 5 monthly payments are made on time. It is designed to help you build your credit back up after some slip ups or as a great first new credit card.
If you’re in this group and you have had bad credit because you missed a few payments, collection accounts, or a foreclosure, you will need to take additional steps in fixing your credit.
A secured credit card requires a deposit before you can begin to use the card. It sounds like a debit card, but your deposit acts as the credit limit. The secured credit card reports your payment history to credit bureaus. After a year or so, you may be able to upgrade to an unsecured account and get your deposit back.
We recommend a secured card to help your credit get back on track. Make the first steps to fixing your credit so you are able to live a less limited financial life.