Your credit score feels like an imaginary number for most of your life. But when it comes to major turning points in your life — moving into a new place, starting a new job or replacing your car — your credit score starts to matter a lot. Getting a credit card can help you build up your score.
The Science Behind Credit Scores
A credit rating can range from 300 to 850. Scores above 700 are seen as a good credit scores. In general, a “bad” credit score falls at 630 or below, as calculated by FICO or VantageScore.
Your credit score can affect your ability to apply for a mortgage, take out student loans or get approved to rent an apartment. A poor credit score might cause some lenders to reject your offer, or raise the available interest rate because they view you as a risk.
A bad credit score doesn’t inherently mean you’re untrustworthy. It simply reflects your recent financial history. For example, your credit score can drop if you miss a car payment, or have a series of overdue credit card payments during a period of financial instability.
What Hurts My Credit?
Banks use credit scores to decide which consumers will be the most reliable in paying their balances. It takes time to build up good credit: a graduate fresh out of college without any loans or credit cards might take a while to increase their score. Whenever you don’t pay a minimum statement balance or make a late payment, your credit rating can drop in response.
Your credit utilization ratio refers to how much of an available line of credit you spend each month. It affects your credit score because charging too much to your credit (especially if you’re maxing them out) sends a sign to banks that you owe a lot of money, which makes you a credit risk. As a result, this makes them less likely to lend to you.
The most effective way to build your credit is to establish your history as a user who makes payments on time and limits credit card utilization to 30%. When financial institutions see that, they see you as a reliable individual they can trust with more credit. Users shouldn’t open and close too many credit cards in a short time: the application process creates a “hard pull” on your credit and will bring down your credit score.
Instead of filling out the full online application, look for personalized offers on Fiona, an online search, comparison and recommendation engine that only verifies your personal information with a “soft pull”. Fiona allows you to filter available offers based on your credit score, so you only see the most relevant credit card offers from top providers.
For a better credit card search experience, get matched with offers on Fiona.
Choosing a Credit Card Based on My Score
The bad news: a “bad” credit score might take you out of contention for 0% APR and some of the biggest credit card rewards.
The good news: credit scores can change for the better with some effort to nurture them. With a secured credit card, users pay an initial security deposit that you get back when you close the account or upgrade to an unsecured amount. Secure credit cards provide a way for the credit card companies to verify that you’re reliable and that they can extend credit to you. Many secured cards don’t report to the three credit card bureaus that determine your credit score.
Look for secured card accounts that let you graduate to unsecured accounts later on, which will allow you to boost the overall age of accounts and improve your credit score. Fiona can search by credit score, annual fee and average percentage rate (APR) to match you with the best credit card offers from top providers. Compare available offers side by side and take the stress out of selecting a credit card.