Credit Cards for People with Fair Credit

What is fair credit?

Fair credit, also referred to as average credit, generally ranges from 580 to 669 on the FICO score scale. On the VantageScore scale, 601 to 660 is considered fair.

What is good credit?

Good scores are considered slightly above average by most lenders. On the FICO score scale, anywhere from 670 to 739 is thought to be good. In the latest iteration of the VantageScore scale, scores ranging from 661 to 780 are considered good. Unlike with FICO scores, the VantageScore doesn’t have a “very good” bracket and instead jumps from good to excellent.

How can a credit card help your fair credit score?

If used responsibly, a credit card is a great way to boost your credit score. Creditors report your account details to the major credit bureaus-Equifax, Experian, and TransUnion-each month. These reports make up the basis of your credit score.

Payment history

Your payment history has the greatest weight when it comes to your credit score. Showing your ability to make payments on time lets creditors know that you’re reliable. Try to pay off your balance in full each month, if possible. This helps to avoid interest charges, which tend to be high on credit cards for people with fair credit.

Credit utilization

The amount of debt you owe also makes up a significant chunk of your credit score. Ideally, you want to use as little of your credit limit as possible. The general rule of thumb is to not use more than 30% of your credit limit. But the reality is, to have a good credit score, you’ll want to use significantly less.

Length of credit history

The longer you have credit accounts open, the better. This shows creditors that you have a handle on your finances. Don’t rush to close an account once you’ve paid it off. Keeping older accounts open shows a longer credit history, which can improve your score.

Credit mix

Having a mix of credit-ie., both installment loans and revolving loans-show that you can responsibly use credit. An installment loan, like a mortgage or auto loan, lets you borrow a set amount of money at a time. A revolving loan, like a credit card, involves a fluctuating balance.

Applying for the right card for your score

Knowing your credit score is key to figuring out which card is best for you. You increase your chances of getting approved for a card if it’s designed for your credit score range. Applying for a credit card triggers a hard inquiry on your credit report, which temporarily dips your score. Multiple rejections can hurt your credit score.

What to do if you get rejected

In the event that you get rejected for a credit card, the first thing to do is figure out why. Review the notice you receive from your bank, your credit score, and your card application. Make sure there are no inconsistencies or inaccuracies.

After reviewing this information, you can ask the credit card company to reconsider if you have a valid case. If you’re rejected again, you may need to boost your credit score before applying again-which you usually should wait four to six months to do.

What to look for in a credit card for fair credit

These are the features to consider when looking for a credit card for fair credit:

Reports to major credit reporting companies

Make sure the card you’re targeting reports to at least one-but ideally all three-of the major credit reporting bureaus: Equifax, Experian, and TransUnion. This will ensure that your habits, like making timely payments, are recorded and will show up in your credit report.

Low or no fee

With a fair or good credit score, you can find cards that offer no annual fee. A low fee card can be manageable and even beneficial if it offers rewards and tools that fit your needs.

Access to free credit score

While working to get your credit score from fair to good or good to excellent, you want to know exactly where you stand. Many major credit card companies give you access to your credit score for free on your online account dashboard.

Path to upgrading

As your credit improves, you may opt for a card with better terms-like a higher credit line or better rewards. Some credit card companies may let you upgrade hassle-free, while others may need you to request a product change. This allows you to switch from one card to another with the same creditor while keeping the same account. The good news: You won’t have to go through another hard inquiry or “hard pull,” so your credit score won’t suffer.

Rewards

Rewards shouldn’t be a priority for credit cards for fair credit, but they are attainable. Finding a card with rewards that also helps you build toward a good or excellent credit score is a bonus.

What to avoid with credit cards for fair credit

When you’re searching for a card that fits your needs, you should also keep some of these tips in mind.

Carrying a balance

If you just make the minimum monthly payment, you’ll continue to stay in debt and likely prevent your credit score from going up. Try to pay your balance in full every month to avoid the higher interest charges associated with cards for fair credit.

Paying late

If you can’t make your payment in full, you want to at least pay the minimum each month-and definitely pay on time. Late payments can result in late fees, even if it’s just a few days after the due date. Once your payment is 30 days late, your credit score can take a hit.

Settling

Don’t settle for a card that’s less than what you’re eligible for. A fair credit score still leaves you with some pretty good choices. In your search, consider 0% introductory annual percentage rate (APR) cards, rewards, perks, and paths to upgrading.

How to use a credit card if you have fair credit

• Build credit to get access to better lending products
• Keep your credit utilization ratio low
• Don’t close your old account when you upgrade to keep your credit history intact and increase your available credit