How Your Credit Score Shapes Your Credit Card Options

What Credit Score Ranges Mean

Credit scores are three-digit numbers that lenders use to help predict how likely you are to repay borrowed money. While credit scores can range from 300 to 850, different credit scoring companies may use different ranges, and lenders may use various scoring models or data sources. This means you likely have more than one credit score, and they may differ depending on the scoring model used.

In general, a higher credit score makes it easier to qualify for credit and can help you get lower interest rates. Credit card companies typically offer their best rates to customers with the highest credit scores, so understanding where your score stands can give you a sense of the options you may have.

• Scores typically fall between 300 and 850, but ranges can vary by scoring company.
• Lenders use different scoring models and data, so your scores may differ.
• Higher scores generally mean easier approval and better terms.

Sources: Consumer Financial Protection Bureau

How Issuers Use Scores for Approval

When you apply for a credit card, the issuer may check your credit score to help decide whether to approve your application and what terms to offer. If an issuer uses a credit score in its decision and takes an adverse action—such as denying your application or offering a higher interest rate—it must provide you with the credit score and related information.

Issuers consider multiple factors when evaluating your application, including your payment history, credit utilization, length of credit history, credit mix, and new credit. These factors contribute to your credit score, and issuers use the score as one indicator of your creditworthiness.

• Issuers may use credit scores to set interest rates and credit limits.
• If an issuer takes adverse action based on your credit score, you must be informed.
• Your payment history and credit utilization are key factors affecting your score.

Sources: Consumer Financial Protection Bureau

Minimum Scores for Common Card Types

Issuers do not publish universal minimum credit scores for card types, and approval depends on their individual criteria. This means there is no single score that guarantees approval for a specific card. However, your credit score is a major influence on the types of cards you may qualify for and the terms you receive.

Generally, higher scores may help you qualify for a wider range of cards, including premium rewards or travel cards with better terms. Lower scores might still qualify for cards, but they may come with higher interest rates, lower limits, or require a security deposit. To get a sense of what you may qualify for without a hard inquiry, consider using pre-qualification tools offered by many issuers.

• Secured cards: often available to those with lower scores, but may require a security deposit.
• Standard unsecured cards: may be an option with average scores, but terms vary.
• Rewards and travel cards: typically benefit from higher scores, but eligibility varies by issuer.
• Business cards: issuer criteria vary; some may be available to small business owners with moderate scores.
• Pre-qualification offers can give you an indication of approval without a hard inquiry.

Sources: Consumer Financial Protection Bureau

How Applying Affects Your Score

When you apply for a credit card, the issuer may perform a hard inquiry, which involves checking your credit report. Hard inquiries can negatively impact your credit scores, typically by a few points. The impact is usually temporary, but multiple hard inquiries in a short period can add up.

According to the Consumer Financial Protection Bureau, consumers' credit card application rates drop sharply as their credit scores reach a minimum and then trend upward after hitting bottom. This suggests that consumers may be mindful of their scores when applying, possibly to avoid the negative impact of hard inquiries while their scores are already low.

• Hard inquiries can lower your credit scores, but the effect is usually temporary.
• Applying for multiple cards in a short time may compound the impact.
• Application behavior often changes as credit scores fluctuate.

Sources: Consumer Financial Protection Bureau

Steps to Improve Your Score

Improving your credit score takes time, but you can take steps to gradually build a stronger credit profile. The most important action is paying your bills on time, as payment history has the greatest impact on your credit score. Setting up automatic payments or reminders can help you avoid missed due dates.

Another key factor is credit utilization, which is the amount of credit you are using compared to your total available credit limits. Consumers are generally advised to keep utilization below 30% of their available credit limits to avoid lowering their credit scores. You can do this by paying down balances or requesting higher credit limits.

Building a positive credit history over time, maintaining a mix of credit types, and limiting new credit applications can also support a healthier credit score. Avoid applying for multiple cards at once, as each hard inquiry may have a small negative effect.

• Pay all bills on time—this has the greatest impact on your score.
• Keep credit utilization below 30% of your available credit limits.
• Limit new credit applications to reduce hard inquiries.
• Build a longer credit history and maintain a healthy credit mix.

Sources: Consumer Financial Protection Bureau