When you are on the hunt for a new credit card, finding the best card for your credit profile can be one of your most important considerations. If you have poor credit, it is pointless to apply for a card aimed at those with excellent credit. You will probably be denied, and your credit score could take a hit. In the same vein, if you have good credit, do not apply for a credit card intended for those with poor credit, as you will be given a high interest rate, and could miss out on the features associated with credit cards designed for those with excellent credit.
Finding the Right Card
There are five designations of your credit level:
- Excellent Credit: These cards are for people with a credit score of 750 and up.
- Good Credit: Credit cards in this section serve people with a credit score between 700 and 749.
- Fair Credit: These cards are for those with a credit score between 640 and 699.
- Bad Credit: These credit cards can help those with a credit score below 640.
- Limited or No Credit. These cards can help those with a limited credit history increase their scores.
Why is Finding the Right Card Important?
Choosing a credit card that is not designed for your credit profile is a bit like jamming your foot into a size 5 shoe when you need a 9. Just like shoes, credit cards are designed to fit the card holder. They are structured for specific credit score ranges.
If you have a good or excellent credit score, you are considered a low risk borrower by lenders, so card issuers may offer you rewards and benefits to entice you to choose their card over a competitor’s card.
On the other hand, if you have a fair or poor score, you are considered a high risk, the card issuer will offer you a card with a lower credit limit and higher interest rate. The good news is that, if you use your card responsibly and make payments on time, your creditor will report this activity to the three credit bureaus, which can improve your score. If you maintain a positive credit history with a card company, they will want to keep you as a customer, so they might offer you a higher credit limit and a lower interest rate once you prove yourself.
How Do I Improve My Credit?
There are a number of articles on BillSaver that will help you improve your credit:
- Which Credit Cards Help Authorized Users Build Credit?
- Using Credit Cards to Build Credit
- How Long Does It Take For A Credit Card to Build Your Credit?
To increase your credit score, you will need to closely follow the terms of all of your loans, including mortgages, car and student loans, credit cards and other debts, to prove that you are a responsible borrower.
If you are not happy with your current credit profile, there are steps you can take to improve it. If you put together and execute a plan and make payments on-time, you will soon see an improvement in your score, which will have a positive impact on many parts of your life.