How to Get the Best Credit Card When You Have a Good Credit Score
People with an excellent or even good credit score have an advantage when it comes to applying for credit cards. Credit card issuers save their best offers for users with great credit profiles. Of course, other factors such as ability to pay and employment situation are considered. But good credit significantly increases your chances of getting the best travel or rewards credit cards.
This means that you have multiple options. So with such an advantage, what type of credit card should you consider? To make sure you get the best credit card, there are a few rules you can use as a guide.
What Exactly Is a Good Credit Score?
First you need to check your credit score, obviously, in order to know whether it is good. There are many ways to do this for free. Some credit cards will offer a free score. Alternatively, sign up for services that monitor your credit score for you.
There are several credit score types but most lenders use FICO. Their credit score starts from 300 to 850.
- 800 and higher: excellent
- 740 to 799: very good
- 670 to 739: good
- 580 to 669: fair
- 579 and lower: poor
According to the creator of the FICO score formula, Fair Isaac Corporation, a score of 670 and above is considered acceptable or good by most lenders. You are more likely to get the best offers, however, if you fall under the “very good” and “excellent” categories.
The Credit Cards You Quality for If You Have Good Credit
If you have an excellent or good credit, you qualify for almost any kind of credit card you’d like. These include those with fantastic benefits and those with which you can earn amazing rewards. You can also get low interest credit cards.
Good credit can get you:
- Credit cards with 0% interest on purchases
- Balance transfer credit cards
- Cash back credit cards
- Travel credit cards
With an excellent or good credit you can also qualify for those premium cards with unique perks such as VIP travel benefits.
For instance, you can get one that affords you automatic elite status with rental car companies or hotel brands, airport lounge membership or even annual travel credits.
The annual fees for these credit cards can be a little high but the value you get in return is worth it.
If you are planning to apply for a credit card, know that you are allowed by the CFPB (Consumer Financial Protection Bureau) regulations to list the income of your entire household—not only your own. This makes it even easier to qualify for a card for those who work part-time or stay at home but have spouses with a (high) income.
Before You Apply: Questions to Ask
When deciding on a credit card offer, you should always think about what you want to gain in return.
Will you carry a balance? With some of these top reward credit cards, you can incur high APR charges and carrying debt will be too expensive. If you expect to carry a balance occasionally, find a card with zero APR on purchases for some months when you first acquire the card.
Are you interested in the rewards? Consider a card with which you earn a reward when you buy anything, if you are not interested in introductory offers on purchases or balance transfers. You can earn travel rewards, cash back or even a huge sign-up bonus.
Do you have high-interest debt to consolidate? You shouldn’t add another credit card if you have too much credit card debt already. But you can also use your new balance transfer card to consolidate and pay off debt at 0% APR.
What rewards do you want? Think of the rewards that would be the most beneficial to you. People who travel a lot will want to earn miles or points while those who love shopping may prefer cash back.
Can you pay the annual fee? You will have to pay annual fees for the best perks. But you can get amazing card options without an annual fee. Just make sure the benefits you get are worth the fee.
What to Watch Out for
Great credit cards usually come with fantastic perks. But they have their downsides and you should know what you’re getting into.
These are the common potential downsides:
Fees: premium credit cards can have really high annual fees, some as high as $500. Make sure you know exactly how much you will be required to pay.
Reward program rules: the process of redeeming the rewards you have earned can be complex. This mainly applies to airline miles. Understand the loyalty program restrictions and rules before you commit.
High-interest debt: don’t forget to consider interest rates while choosing a credit card because some of them charge really high APRs.
Maintain Your Good Credit
Credit cards are a great tool for maintaining and even building good credit. But they can also have the opposite effect. Irresponsible use of credit cards can hurt your credit score.
Don’t forget the factors that are used to calculate your score. For instance, payment history accounts for 35% of your score, making it the biggest determinant. Always make sure you pay all your bills, including your credit card bills, on time every month.
Another factor is the amount of debt you owe in relation to your credit limit, usually referred to as credit utilization ratio. Keep what you owe at 30% or below. So if you have a credit card limit of $10,000 you should not owe more than $3000.
Lastly, check your reports and see if there are mistakes that are hurting your credit. These could be accounts that don’t belong to you or a late payment that was incorrectly noted. If there are errors in your credit report, dispute them with the credit bureaus. They will fix them. To check your credit reports, go to AnnualCreditReport.com. It is free.
