By Julie Anderson | American Express Credit Intel Freelance Contributor
5 Min Read | June 14, 2021 in Credit Score
You were not born with a credit score – and you don’t need one to get a credit card. Of course, it does help to have a credit score. In fact, generally speaking, the better your credit score, the more credit card options will be available to you – usually with better interest rates, too.
Let’s explore the credit scores needed for different credit card options, starting with no credit score at all.
Even with no established credit – and, therefore, no credit score – you can still get a credit card. Three first-time credit card options are:
Being an additional card member can help you build credit. As an authorized user on another person’s card, you get a card with your name on it and the ability to charge purchases. But as an additional card member, you’re not responsible for making the payments. That rests with the main card member. This option helps your credit score increase over time, provided that the main card member makes on-time payments.
A secured card uses your deposit as a credit limit. With a secured credit card, the card issuer offsets its risks by requiring you to pay a deposit, usually between $200 and $3,000. The deposit amount then becomes your credit limit. The annual fees, if any, on these cards are usually lower than average, but the APRs are usually higher than credit cards for people with established credit. As you use the card for purchases, you’re obligated to pay at least the minimum payment each month. If you miss a payment, the card issuer dips into the deposit to pay the amount you owe. If you consistently make on-time payments and keep your balances low, in time you can earn a credit score that qualifies you for a regular, unsecured credit card.
The student option. Another category of credit cards is designed specifically for, and limited to, college students. Student credit cards generally have good perks but come with lower credit limits and high APRs on unpaid balances – from 13% to as high as 24%. And because many credit card companies no longer accept co-signers, to qualify for a student credit card you must have a sufficient income. The income can be from a job, scholarship, or grant.
If your past payment history includes missed or late payments, bankruptcies, or foreclosures, you may have a low credit score. A credit score between the minimum score of 300 and 579 is considered “very poor,” and a credit score between 580 and 669 is considered “fair.”1 If your credit score falls into those ranges, your credit card options are limited but still available – in other words, you may not yet qualify for credit cards with the most valuable benefits and lucrative rewards. You may, however, be eligible for a no annual fee credit card with limited rewards, in addition to the secured card and authorized user approach described above.
With a low credit score, you may also qualify for a retail credit card designed for large purchases, such as furniture, bedding, or appliances. Retail stores tend to have more relaxed credit score requirements but high APRs to compensate for the risk. You might be able to avoid interest charges by paying the balance in full within a promotional period, though if the balance isn’t fully paid by the deadline you’ll usually owe the full amount of deferred interest.
Being an additional card member can help repair a low credit score because your payment record is reported as that of the main card member. Thus, aligning with a main credit card member who has good to excellent credit habits can help improve your credit score.
As your credit score improves, the types of credit cards available to you increase. The better your credit score, the more favorable the card terms. A credit score between 670 and 799 is considered “good” to “very good,” and 46% of people fall into one of these two categories.2
With good or very good credit, you could find a card with no annual fee and a 0% introductory APR. You’ll want to check how long the introductory period lasts and what the APR will be after the introductory period ends. If you plan to pay the balance in full each month, the APR may be less important than the perks. Examples of perks offered at this level are 2% to 5% cash back on purchases, travel credits, or early access to event tickets.
If you’re uncertain whether you could be approved for a particular credit card, look for pre-qualified credit card offers on the lender’s site. For a pre-qualification, the lender does only a “soft check” on your credit, which does not affect your credit score the way a “hard” credit check does.
With exceptional credit – a rating of 800 or above – you’re considered the lowest risk and have virtually your choice of cards with relatively low APRs. Your choice may boil down to which perks are most important to you. Some card companies offer elite-level cards to those with an excellent level of credit. These cards can carry annual fees up to $550. The perks, however, are substantial and can include travel insurance and complimentary visits to airport lounges. Credit limits vary depending mainly on your income.
There’s really no credit score at which you can’t get a credit card. Even with no credit, you could qualify for a secured credit card, student credit card, or as an additional card member. The better your credit score, the more options you have for obtaining a credit card with a low APR and annual fee, as well as perks such as cash back or points toward travel. Elite-level cards can carry a higher annual fee but deliver many benefits, especially to travelers.