Trying to open a credit card account when you have a bad credit score can be frustrating. The good news is that several credit card options can help you improve your credit and build a positive credit history. Keep reading to learn how to get credit cards with a 690 credit score.
What Are the Credit Score Ranges?
Credit scores are split into five categories based on the score range, as shown below. When most credit card companies review applications, they want to see a good credit score. Good scores fall between 670 to 739 points.
FICO credit scores are one of the most common credit scoring models used. The average FICO credit score in America rose from 710 to 714 in 2021. If your score is lower, keep in mind that there are ways to manipulate and boost your credit score over time.
- 800 to 850: Excellent
- 740 to 799: Very good
- 670 to 739: Good
- 580 to 669: Fair
- 300 to 579: Poor
Credit Card Options for Poor to Fair Credit
When you have a poor or fair credit score, it seems like your financial options are limited. But there are three ways you can get a credit card without excellent credit. You can apply for a secured or retail credit card or become an authorized user. These options can help you secure a credit limit to borrow money quickly and easily.
To ensure your credit card can help you grow your credit score, ask if the lender reports your payment history to one of the three credit bureaus. Most lenders report to at least one of the three major credit bureaus: Equifax, Experian, and TransUnion. If your creditor does not report payments, then you cannot improve your current credit score.
Apply for a Secured Credit Card
A secured credit card works just like a traditional credit card, except borrowers must provide a security deposit. You will receive a monthly billing statement, and the lender will expect you to make monthly payments on time.
When you apply for an unsecured credit card, your credit limit will depend on your creditworthiness. But when you apply for a secured credit card, your credit limit is equal to the security deposit. For example, if the credit card company requires a $500 deposit, you can spend up to that amount. The deposit requirement amount varies per lender. If you only have a few hundred dollars to spare on a secured card, compare lenders to find one that has the lowest minimum deposit requirement.
Some credit card issuers will charge an annual fee for secured cards, but not all. Ensure you ask the lender about fees before applying. You can receive your security deposit back once you close the account or upgrade to an unsecured credit account. Many credit card borrowers close their accounts after improving a fair or average credit score. But keeping a credit account open can help you build a long payment history.
Some financial companies offer credit card rewards that allow you to earn points or cash back for eligible purchases. While building a strong credit score, you can also get cash rewards to spend in stores or online.
Apply for a Retail Credit Card
A retail credit card is typically easier to obtain than a regular credit card. Why? Retail cards are known for having low loan amounts, high-interest rates, and strict spending restrictions. Borrowers can only use their retail credit card at that specific retail chain. If you obtain a Target credit card, then you can only spend your credit limit at store locations or on the website.
Retail credit cards offer various benefits for eligible borrowers. You can get a credit limit to spend, rewards, and discounts! Retail credit cards typically have a rewards program for borrowers. You can get discounts, free shipping, special offers, and more by shopping with a retail card. If you manage your credit card wisely, you can grow your credit and eventually qualify for a platinum credit card.
Become an Authorized User
An authorized user is an additional cardholder on an established borrower’s credit card account. If you are an authorized user, you receive your own credit card to use for transactions. However, the bill is solely sent to the primary cardholder.
To add an authorized user to a credit account, the account owner must have a good or excellent credit score. However, anyone can become an authorized user. Some credit card companies charge borrowers to add an authorized user, but this is uncommon.
Are you having trouble qualifying for your own credit card due to an insufficient or poor credit history? You can still build a credit score without a credit card! Becoming an authorized user allows you to share the credit history of the primary cardholder despite making no transactions. But before sharing your credit history, ensure the primary cardholder continuously pays on time and keeps their debt balance low. Your average credit score can fall if the account owner misses payments or maxes out their credit limit.
How To Improve Credit Scores Over Time
Improving your credit score can help you get credit cards with a higher credit limit and better benefits. However, a higher credit score can also improve other areas of your life. Landlords, insurance companies, and prospective employers can all request to view your credit report. Working to get an excellent credit score can significantly benefit your life.
These are some ways to improve your credit score over time:
Improve Your Payment History
Your payment history greatly affects your credit because it counts for 35% of your score calculation. If you make a late payment, your score can decrease, and you will have to pay a late fee. In addition, the late payment will remain on your credit reports for up to seven years.
Lenders shy away from working with people they deem a financial risk, such as chronic late payers. But if you constantly make on-time payments every month, your credit score will steadily increase over time!
Monitor Your Credit Report
When trying to build credit, it’s a good idea to keep an eye on your credit reports. Unfortunately, it’s not that rare to have an error appear on one of your credit reports. Common errors include incorrect payment information, account statuses, dates, etc. The good news is that it’s relatively simple to fix a mistake.
You can submit a claim online, mail a letter, or call to dispute an error with one of the three major credit bureaus. You will need to provide identifying information and a detailed description of the error. Once you submit a claim, the credit bureau will conduct an investigation and report the results to you once they are done. If the credit reporting agency confirms the error, they will update or remove the disputed information.
Pay Down Your Debt
Having too much credit card debt can prevent you from obtaining an excellent credit score. While it’s tempting to use all of your available credit, a high credit utilization ratio can decrease your credit score. Credit utilization is how much revolving credit you are using in comparison to your total credit limit. You can negatively affect your credit score if your utilization ratio is higher than 30%.
Paying down debt and minimizing other purchases can help borrowers get excellent credit scores. Keep in mind that it’s not bad to pay off a credit card early! Paying your account every time you make a small purchase can help you avoid interest fees while still collecting cash rewards.
Limit Your Credit Inquiries
Your credit score decreases by as much as five points every time you submit a loan or credit card application. But making more than six inquiries a year can cause severe damage. Your credit inquiries account for 10% of your score calculation. If you want to get a good credit score, limit the number of applications you submit.
Avoid Closing Credit Accounts
Once your credit score starts to get better, you may decide to close your no-frills credit card and upgrade to a platinum credit card for better rewards. But it may be in your best interest to keep all of your financial accounts open. The age of your credit accounts makes up 15% of your credit score.
Closing an account lowers your total credit limit and increases your credit utilization ratio. A high credit utilization can be detrimental to your credit score. However, you can cancel a credit card without hurting your credit score when your debt amount is lower than 30%.
The Bottom Line
If you want to get your first credit card, you may think it’s impossible to get a credit card with a low credit score. But that’s simply untrue! There are plenty of financial options available if you need quick emergency cash.
Credit cards are convenient because they allow you to borrow money, repay, and then borrow again. You can build a stronger credit score by making continuous on-time monthly payments! Just ensure you maintain a low credit card balance to avoid excess debt. Payday loans for bad credit are an alternative option for people that need fast cash. But no matter which financial option you choose, ensure you ask about the repayment terms and compare your options carefully.
References:
What Is the Average Credit Score in the U.S.?
How do I dispute an error on my credit report?
