Being able to get a credit card for good credit feels pretty darn good. But it can’t match the bells and whistles — and lower interest rate — that come with credit cards for people with excellent credit.
Your credit score has a major impact on the interest rate you pay each month and on the credit limit you’re offered on a card. It can also make the difference between getting approved for a specific credit card or not. Lenders use your credit score as a representation of your credit risk when you apply for a line of credit.
FICO scores are the most commonly used in lending decisions and range from 300 to 850. VantageScore, its competitor, is also on the same scale.
Determine your credit score
Before you apply for credit card offers for good credit you should know what your credit score is. You can check your free credit score on NerdWallet.
You can obtain your credit report, which contains information that influences your credit score, once a year from each of the three major credit reporting agencies, Equifax, TransUnion and Experian. You can also get your three credit reports for free once a year from annualcreditreport.com.
Your credit score is based on your payment history; your balance as it relates to your credit limit, known as credit utilization ratio; the number of credit inquiries you’ve had within a certain period; the number and diversity of your credit lines; and length of credit. Knowing where your credit score falls — even between “good” and “excellent” — can influence which cards you apply for.
A good score
A good credit score falls within a range of 690 to 719. Having good credit indicates you’re financially responsible when it comes to managing your credit and can be counted on to be a dependable borrower. Typically this means your payments are made on time and you don’t carry a high debt-to-available credit ratio. Good credit credit cards generally carry lower interest rates and higher credit limits than cards available to those with fair credit (borrowers with a score of 630 to 689). Good credit credit cards usually include a rewards system of cash back or points as well.
An excellent score
An excellent credit score is in the range of 720 to 850. This means you have a long history of consistently making your payments on time and that you keep a low balance compared with your credit limit. Within this range of credit you’re the most desirable candidate for lenders. You can get the best credit cards with the best rewards or fringe benefits. You’ll receive the lowest interest rates and highest credit limits.
Once you have an excellent credit score, it becomes more difficult to move the notch upward. You have more mobility to go from a good credit score to an excellent score. Aim to balance your debt-to-available credit ratio at 30-70%; pay all your bills on time; don’t close lines of credit even after you’ve paid off the balance; and don’t open too many accounts at once.
Whether you have good or excellent credit, it’s important to keep an eye on both your credit report and credit score. You’ll want to maintain your credit score so you’ll be eligible for the most desirable credit cards.
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