You’d have the term “Credit Cards for Fair Credit” many times, and you’d have likely thought that fair credit means average credit, and let it go at that. But there’s more to the term “fair credit” than you think. Though it does mean average credit, it is important to know the concept behind the term. Here is the lowdown:
Every lender wants to know the borrower’s FICO (Fair Isaac Corporation) score. The FICO score is calculated depending on your financial records that are kept by the 3 major credit bureaus, Experian, TransUnion and EquiFax. If your Fico score is high, you can get a low-annual fee, low-interest loan. If your FICO score is low, you can even be refused a loan.
To initiate a FICO score, you must have at least one financial account that has been in existence, and active, for minimum 6 months. The credit bureaus take the financial activity into account and use it as a base for calculating your FICO score. FICO scores are very important – even your landlord may not agree to lease his house to you if you have a low FICO score.
How are FICO scores evaluated?
FICO scores range between 300-850, with 300 being the worst possible score. Most folks’ score lies between 600 and 700. A FICO score over 700 is considered as a good score and anything below 600 is considered as below-average. So, a fair credit score is between 600 and 700. Many factors are taken into account while calculating the score – payment history, total debt, credit limit, length of credit history, new credit, etc.
Credit cards for fair credit folks
A person with fair credit can be viewed differently by different lenders. Each lender has his own criteria for assessing a borrower, and this due diligence extends beyond the credit score. So, even if you have a fair credit, your credit card application may be turned down. In extreme cases, you may be able to land a low APR (Annual Percentage Rate) credit card though your score is fair. So, it depends from lender to lender, but the key takeaway is that if you have fair credit, you will be charged the regular rates and fees.
How to get a credit card for people with a fair credit score?
You must search online. Many credit card websites now allow you to filter through and compare from a variety of credit cards issued by different credit card companies and banks. These sites clearly mark cards that are meant for people with fair credit, and finding and comparing such cards is not tough because the credit card websites equip you with comparison tools.
Having found a bunch of credit cards for fair credit folks, you must compare these based on APR, fees, features like rebates, balance transfer facility, and more. The comparison will take time, but you must do it because it will help save you money over the short-medium term. Apply for a card that you are sure of getting because if you make multiple applications, your credit score will get negatively impacted. Finally, once you get your fair credit credit card, use it to improve your credit score by paying in full, and on time, and not crossing your credit limits.