Finance

Sep 14 2016

Credit Cards for People With Fair Credit


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Credit Cards for Fair Credit

Have you checked your credit report and score lately? If your FICO score isn’t exactly considered great and can still be improved, then you may not be able to have the pick of credit card listings. But there are many cards that will take on customers with fair credit scores. Certain regular credit cards and many secured credit cards and decent prepaid credit cards are open to consumers with less than stellar credit. If you are in this situation, you can use these cards to help you build a stronger credit history; simply manage your finances well and pay bills promptly. Eventually, you may be able to get good enough credit to qualify for more favorable cards.

How To Get Credit Cards With Better Terms

Having fair credit can make it tough to get a credit card in this new financial climate. Fair credit means that for the most part, you have managed to pay your debts on time, but you may have missed a payment or two, or you may have high balances on your cards, or you simply have too many open accounts. Fair credit, as defined by the FICO credit scoring model, includes individuals with credit scores that fall between 620 and 680 (give or take). The good news is that having fair credit still allows you to be able to procure a new credit card; however, the cards you will most likely qualify for will be quite a bit more expensive than the ones available for people with good and excellent credit.

In most cases, it probably makes sense for people with fair credit to improve their credit scores before attempting to gain additional credit through opening a new credit card account. This will increase the chance that you will be approved for the card with the limit you want, and will reduce the amount of money you will have to pay out in order to carry that card. People with fair credit generally don’t have to make major changes in order to increase their credit scores. A few of the more common tips to bring that credit score higher include the following:

  1. Pay down existing balances. It is important to note that paying off your existing debt is not mandatory to bringing your credit score up, though from a financial standpoint, having less debt is a good thing. Whichever path you choose, do not close your existing credit card accounts as you pay them off. Your credit score will actually decrease if you do, since your debt to income ratio will actually increase.
  2. Make payments on time, every time. A full 55% of your credit score is based on your payment habits. Each late or missed payment will hit your credit score hard and it will take months of regular, on-time payments to bring your score back up. If you find that you are having problems making your payments on time, contact the lender and discuss your options under their hardship programs. If overspending is an issue, scale back and make paying your bills your priority.
  3. Stop applying for new credit. While it makes sense to shop around when it comes to opening new credit accounts, having too many inquiries on your credit report will make a dent in your credit score. Only apply for new a credit card when you need it and compare online before you apply.

The main point is to manage the credit cards you have before applying for a new one. If you are opening a new account because your other cards are maxed out, it makes sense to reevaluate your spending habits before sinking yourself deeper into debt. On the other hand, having a new credit card account can make paying off your existing debt easier through interest free transfer periods and lower interest rates; plus, you may even be able to reap some air miles or loyalty points in the process.


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