Your credit score has a large impact on the types of credit cards you are qualified to receive as well as the rates and features you will be offered with your credit cards.
However, it’s difficult to understand how your credit score is calculated or how credit card issuers decide which credit cards you will receive.
Credit Cards come in many different levels, such as signature, platinum, gold, and standard credit cards, and each credit card level can have a range of interest rates and variations in their features.
Depending on your credit history, which is the foundation of your credit score, you may or may not qualify for the best interest rates or top-level credit cards.
It’s best to know which credit cards you are likely to receive before you apply, as applying for multiple credit cards can hurt your credit score, whether you are approved or not.
Actually, there’s no way of knowing for sure if you’ll be approved for a certain level credit card or what interest rates you will receive solely based on your credit score, as each credit card issuer follows their own approval system, and the credit score needed for a platinum card from one issuer may not be equal to the credit score needed for a platinum card from a different issuer.
In addition, there are other factors that go into your credit qualification rating besides your credit score, including your current income and employment history.
However, since your credit score does have a major impact on your credit card approval status and general credit rating, it’s important to at least know and understand your credit score, so you can assess which credit cards and interest rates you are likely to receive.
FICO, or the Fair Isaac Corporation, invented the credit score, and FICO credit scores are still considered the industry standard.
Check out our review on myFICO Credit Score Products for information on how to receive your FICO credit score as well as other credit report and credit score monitoring services.
Your FICO credit score is the standard credit score that practically all credit card issuers review in order to assess your credit qualifications.
FICO scores are calculated by assessing the information provided in your credit bureau reports at Equifax, Experian, and TransUnion. Your credit score can be different at each credit bureau, so you have 3 FICO scores altogether.
FICO scores use a lot of different credit data when calculating your credit score, but this credit data can be grouped into 5 basic categories.
Payment History – 35% of your credit score is based on your payment history for credit cards, loans, and other specific types of accounts as well as your overall history of delinquent and/or paid accounts.
Current Loan Balances – 30% of your credit score is based on the current amount of money you are in debt. This takes into consideration the proportion of your credit lines that are in use as compared to your total available credit.
Length of Credit History – 15% of your credit score is based on how long you’ve had open credit lines and how long your credit lines have been active, including any recent activity.
New Credit – 10% of your credit score is based on the number of your recently opened accounts, recent credit inquiries, and the amount of time since you’ve re-established a positive credit history if you’ve had past credit problems.
Types of Credit – 10% of your credit score is based on the number of various types of credit accounts you have open and their activity history.
Check out the myFICO.com Credit Education Center for more details on how your FICO score is calculated.
Your FICO score can range from about 300 to 850, although the actual range varies slightly depending on which credit bureau is used to calculate the score.
Credit scores of 760 or higher are extremely good.
Credit scores of 700 to 759 are generally considered excellent or very good credit.
Credit scores from 660 to 699 are generally considered good credit.
Credit scores from 620 to 659 are generally considered average credit.
Credit scores from 580 to 619 are generally considered less than average credit.
Credit scores from 500 to 579 are generally considered bad credit or poor credit.
Credit scores below 500 are very bad.
Credit card issuers assess your credit score when issuing you a credit card, and they may either decline your application or provide you with a lower-level credit card if your credit score is too low.
This is one of the Credit Card Tricks that traps many applicants, because they apply for a high-level credit card that is advertised with great features and a low interest rate, but they receive a low-level credit card with none of the great features and a higher interest rate.
So once you know your credit score, how do you know which credit cards will qualify you for approval?
Although there is no clear way to know for sure which credit cards will approve you, based on your credit score and the acceptable credit qualifications given by the credit card issuers for each type of credit card, you can estimate which credit cards will approve you before you apply.
Many credit card issuers advertise certain credit cards for applicants with excellent credit and other credit cards for applicants with poor credit. Based on your credit score range, you will want to apply for credit cards that are targeted for your credit qualifications.
For instance, if you have a credit score of 550, then you’ll want to apply for poor credit cards, but if you have a score of 750, then you can apply for top-level credit cards and be approved with the lowest interest rates.
This is not an exact science, but once you know your credit score, you can judge which credit cards you will likely receive based on your credit score range.
This can save you a lot of frustration and time spent applying for credit cards you don’t have a chance of receiving, plus it can help prevent your credit score from decreasing even more, as each new credit application temporarily reduces your credit score.
You may not be able to ever fully understand what specifically qualifies you for certain credit cards and interest rates, but you can definitely help prevent declined applications by applying for credit cards that you know your credit score qualifies you to receive.
Find out how to get your myFICO Credit Scores and make sure you know which credit cards your credit score qualifies you to receive.
Thanks and enjoy maximizing your credit score.