Credit Cards for Fair/Average Credit

A Guide to Finding the Best Credit Card for Fair Credit

Fair credit may not be the best of credit, but there’s hope. And you’re not alone: 61% of consumers have fair credit or better with VantageScore, and 13% have fair. According to FICO, 84% have fair credit or better, and 18% have fair. With fair credit, you can build your score, earn some rewards and develop good financial habits.

We researched and analyzed over 160 credit cards designed for people in the fair credit range and evaluated them against several different criteria: rates and fees, rewards, customer service, ability to improve credit lines, and more. Below are our top picks and several tips to help you decide and improve your credit for the future. Here, we look at:

• Consumer Federation of America poll

  As you can see, there are a number of events that don’t affect your score. But what does? It’s actually late payments, bankruptcies and high balances on credit cards that impact your score, we’ve found. According to FICO, credit scores are based on the following factors, along with the percentage of importance to your score:

  Payment history: 35 percent – If you make a payment 30 days past the due date or later, it will most likely appear on your credit report. The later the payment, the worse the impact on your credit score.

  Amounts owed: 30 percent – The less available credit you are using, the higher your credit score will be.

  Length of credit history: 15 percent – This refers to the average account age of your accounts and the age of your newest account, which gets younger each time you open a new account.

  New credit: 10 percent – Each time you apply for a new credit card or loan, a hard inquiry will hit your credit.

  Credit mix: 10 percent – Having several types of loans – such as a car loan, a mortgage and a credit card – can help your credit.

  As this shows, the most important things you can do to improve your credit are making payments on time and making payments in full. To view your current credit score for free and without impacting your score, check out our app.

  Is a fair credit score good?

  Simply put: No. “Fair” is a below-average score for both FICO and VantageScore. Since credit offers are based on creditworthiness, people with fair credit get below-average offers.

  But if you have fair credit, all hope is not lost. While lenders typically prefer credit scores to fall in the good to excellent range, people with fair credit scores are still considered viable applicants for many loans. Additionally, with some work, persistence and responsible credit usage, you can improve your credit score.

  Common ways that consumers improve their credit ratings are by contacting the major credit bureaus (Experian, Equifax and TransUnion) and asking them to remove reporting errors, paying down credit card balances and paying off accounts that have been placed in collections. Another tactic is to ask for an increased credit limit on your credit cards. For people who carry credit card balances, an increased credit limit lowers the credit-to-debt ratio, a key factor in credit scoring.

  Although credit scores can be improved in a few weeks, most improvements take months and some take years. It may take some time before you qualify for the very check them for free once a year at AnnualCreditReport.com. If you’ve been rejected by a card issuer, make a point of checking your credit files to make sure there are no errors or omissions.

  3. Look at a credit-builder loan with your credit union

  If your credit files are too weak for even a basic secured card, talk to your local credit union about getting a credit-builder loan. These loans are designed for improving your credit rather than getting money for a 数字货币交易软件_数字货币手机app下载home improvement or car.

  4. Catch up on your bills

  Payment history has the biggest impact on your credit score. If you are behind on any bills, you should call the creditor and arrange to pay the past due amounts. After making your payments, you can request that the creditor rescind any reported delinquencies so they will no longer show up on your credit report. While this may be the slowest step, it is essential to improving your credit score. Finally, your more recent activity weighs more heavily, so those on-time payments are priceless.

  5. Don’t close accounts

  If you already have cards, don’t close them. Instead, pay them down and keep using them. Why? Because your payment history remains on your credit files for several years, good or bad, so you aren’t protecting your credit just by closing the account. In fact, the available credit on your cards helps your file, as does continuing to pay on time.

  6. Wait several months

  Wait several months before applying for a card again. Too many card applications too close together can mean desperation to a lender. Also, this gives your score a chance to improve.

  7. Apply for a card you are reasonably sure you will get

  In this case, don’t reach for the stars. Instead, choose a card to apply for that you are pretty sure you can get. If you are unable to qualify for an unsecured card, try a Bankrate survey.

  • 17% added to their debt. Additionally, 8% carried a balance, thinking it would help their score.
    Could hurt your: credit utilization ratio (and wallet)
  • 12% paid a bill late, and 6% didn’t pay a bill at all.
    Could hurt your: payment history
  • 3% cancelled a credit card, thinking it would help their score.
    Could hurt your: credit history

  When you boil down the noise about what factors are and aren’t considered by FICO, we’ve found late payments, keeping your card balances full and bankruptcies have the biggest impact on your score.

  How your credit score is calculated

  According to FICO, credit scores are based on the following worse the impact on your credit score.
  Amounts owed (30%) – This is known as your “credit utilization ratio, which is the amount owed by your available credit. If you owe $100 and your available credit is $1,000, then your ratio is 10%. The closer to zero the better.
  Length of credit history (15%) – This refers to the length of each credit account since they were established (specifically considering your oldest and newest), the average age of your accounts and how long it’s been since each account was active.
  New credit (10%) – Each time you apply for a new credit card or loan, a hard inquiry will temporarily ding your credit.
  Credit mix (10%) – Having several types of loans – such as a car loan, a mortgage and a credit card – can help your credit.
  As this shows, the most important things you can do to improve your credit are making payments on time and in full. To view your factors affecting your credit, and VantageScore has identified which ones are more important than others. What makes one factor more important than another and what can you do about it? It has to do with how lenders see the behavior. Here are behaviors, how lenders view them and how much impact they have on your credit:

  Behavior	How lenders view this	Impact on your score
  Pay bills on time	Wisely handling debt	Improvement
  Not use all available credit	Sufficient access to credit, unlikely to need additional funds	Improvement
  Hold accounts for long periods	Experienced credit user	Improvement
  Use different types of loan products	Experience with different types of repayment requirements	Improvement
  Inquire about or take out new loans	Are you just expanding access or taking on too much?	Slight drop
  Max out credit cards or make first late payment	Potential signal of increasing risk	Drop
  Pay multiple loans late; miss 3 or more payments	All credit at risk	Larger drop
  Stop paying loan; foreclosure	Default	Major drop
  Bankruptcy	Default	Maximum drop over extended time period

  How consumers with fair credit should use a credit card

  When applying for a fair or average credit card, it is important to keep the goal of improving your credit in mind. Here are a few tips on how to properly use a fair credit card:

  • Use your card to build credit. The most important aspect of using a card that requires fair or average credit is that you can build your credit with it, which will grant you access to better lending products.
  • Keep your utilization ratio low. People with fair credit tend to have cards with low credit limits. To keep your balances low and avoid increasing your credit utilization ratio, making small, multiple payments throughout the month.
  • Look for a card without an annual fee. By taking out a card with no annual fee, you minimize the costs incurred with card membership.
  • Practice with rewards. Cards for fair or average cards will sometimes have rewards, such as 1% back on all purchases. This is a good way to practice for getting a rewards card down the road. Make sure you don’t carry a balance, because interest charges will negate your rewards.
  • Don’t close your old card. Once your credit score has risen to the point that you can apply for a better card, don’t close or stop using your card for fair credit. By continuing to use it, as least for small charges, you keep the account active, continuing to build credit with it, and you increase your available credit.

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  Robin Ratcliff is the former managing editor for reviews on hfyhpf120.com. Before hfyhpf120.com, she worked as an analyst and editor, and still brings that same analytical rigor to her card recommendations today. Tracy Brackman is a former credit card news editor at hfyhpf120.com, writing breaking news stories on card updates and new card launches. You can reach hfyhpf120.com editors at editors@hfyhpf120.com.

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  About the

  

  Garrett Yarbrough

  hfyhpf120.com expert Garrett Yarbrough strives to make navigating credit cards and credit building smooth sailing for his readers. He specializes in cash back and credit scores, delivering valuable next steps toward personal financial growth. Most recently, Garrett's credit card and credit monitoring analysis were regularly featured on NextAdvisor.com. You can send your questions to gyarbrough@redventures.com.

  About the Editor

  

  Laura Mohammad

  hfyhpf120.com Senior Editor Laura Mohammad writes, edits and coaches extensively on all things credit cards and works to bring you the most up-to-date analysis and advice. In Laura's 20+ years as a financial and personal finance journalist, her work has appeared in such publications and websites as The New York Times, The Associated Press, Streetity.com and American City Business Journals. You can reach Laura at laura.mohammad@hfyhpf120.com.