What kind of plastic can you get with fair credit?
Erica Sandberg is a prominent personal finance authority and author of "Expecting Money: The Essential Financial Plan for New and Growing Families." She writes "Opening Credits," a weekly reader Q&A column about issues for people who are new to credit, for CreditCards.com.
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Dear Opening Credits,
I have a 614 credit score
with Transunion, 610 with Equifax and 567 with Experian. I have 10 hard inquires. Would I will able to open up a new credit card? If yes, with whom? I appreciate any information you would be able to give me.
Normally when someone comes to me
asking what credit card they should pursue, I direct them to first find out
their scores. With those in hand, they can pinpoint the type of card for which
they will most likely qualify. This way they can avoid a bunch of needless
rejections. Each inquiry does wind up on the reports, and too many will
negatively affect FICO scores.
However, you jumped ahead and have them
from each of your reports, and that's great!
You may be wondering why there are differences between those scores, and the most probable reason is that the
information on each of your reports is slightly different. Although TransUnion,
Equifax and Experian all do the same thing (compile credit information), they
are separate, private companies. They charge the institutions who send them data --
called subscribers -- a fee, so some subscribers may decide to only work with one
or two of the bureaus. Credit scores, such as the FICO, are generated just from
the financial portion of the files, so if the files aren't identical, the
numbers won't be either. Another possibility is that you got them at different times. Credit
reports are snapshots in time, so the information on them changes from month to
Now, what do your scores say about you
and what kind of credit card you can get with them?
FICO scores range from 300 to 850, with
higher numbers being better, since they indicate less lending risk. At this
point, an excellent score is one that's at least in the mid-700s. Your scores
are considered "fair." That doesn't mean that qualifying for credit will be
impossible -- just that your options are more limited than they would be if your scores were fantastic. Also, the cards that
are available to you may have higher interest rates and not come with premium
programs like super-duper rewards plans. That's OK, though. You can work up to
Because of those inquiries on your
reports, it looks like you've been doing some credit shopping. While such hard
pulls are a scoring factor, they are less crucial than other activity, such as
the way you make your payments and how much you owe compared to the amount you
can borrow. But if you have no such actions because you don't have a card or
loans now, a large number of credit applications will hold greater weight when
it comes to scoring.
Of course, the only way to get a card
is by applying, but you should do so in a directed way. Take a look at these cards for people with fair credit for current offers being extended to people with scores such as
yours. There are plenty to choose from, so read them carefully and identify one
that you like. Then complete the application and wait for a response. Chances
are, you'll be approved because you're focusing on the right product.
If by chance you are not approved, take
a deep breath, sit back and wait a few months before you try again. Repeated
applications signal to lenders that you may be desperate, so letting some time
build up between applications is a good thing.
Once you are approved for a card, you
can improve your FICO scores by not applying for another until you establish a
positive history of borrowing and repaying on time and as agreed. Select a
necessary and affordable expense to charge (groceries is a good one) and then
pay on time and in full every billing cycle. In as little as a year you'll
increase your scores dramatically. At that point, you may want to add another
card to your wallet -- one that does come with special perks -- or just stick
with what you have.
See related: FICO's 5 factors: The components of a FICO credit score
Erica Sandberg is a nationally renowned personal finance authority. She’s host of several financial web shows, and a frequent guest for media outlets such as Fox, Forbes, Nightly Business Report and NPR. Erica previously was affiliated with Consumer Credit Counseling Service and was KRON-TV’s on-air credit expert. Her book, "Expecting Money: The Essential Financial Plan for New and Growing Families," was published in 2008 by Kaplan Press.
Send your question to Erica.
Published: December 4, 2013