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Getting Smarter on Credit Cards for Fair Credit
Updated: October 1, 2018
Fair credit may not be the best of credit, but there’s hope. With the average VantageScore at 675, that’s right in the middle of what the scoring model deems fair or what is sometimes called average. 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:
Not sure what to expect? We’ll share how to build credit and how to maximize your fair credit card.
Best credit cards for fair credit
|Best For:||Average Credit Card||Annual Fee|
|No Annual Fee||Capital One® Platinum Credit Card||$0|
|Flat-Rate Rewards||Capital One® QuicksilverOne® Cash Rewards Credit Card||$39|
|1% Cash Back||Credit One® Platinum Visa® with Cash Back Rewards||$0|
|Protection from Fraud||Indigo® Platinum Mastercard®||$0 - $99|
|Credit Bureau Reporting||Credit One Bank® Platinum Visa® for Rebuilding Credit||$0 - $99|
|Easy Pre-Qualification||Milestone® Gold Mastercard®||$35 - $99|
|Growing Credit Line||Credit One Bank® Unsecured Platinum Visa®||$0 - $99|
|Establishing Credit||Fingerhut Credit Account issued by WebBank||$0|
|Fraud Protection||Milestone® Mastercard®||$35 - $99|
|Secured Cash Back Card||Discover it® Secured||$0|
Credit cards analyzed: 161
Criteria used: Credit needed, tools to track credit score, ability to improve credit line, rewards rate, rewards categories, sign-up bonuses, redemption options, promotional 0% APR periods, annual fee, other rates and fees, extra features and benefits, customer service, ease of application
What is fair/average credit?
The two major credit scores in the United States are provided by FICO and VantageScore. FICO is the creator of the first, and still most-widely used score. Both scores range from 300 to 850. Each defines “fair” credit slightly differently.
FICO score ranges
What impacts your credit score?
You may be surprised to learn that your marital status and age don't impact your credit score, and you're not alone if you thought that. VantageScore and the Consumer Federation of America found in a poll they commissioned in June that about two-fifths of consumers wrongly believe that marital status and age affect their scores, and the misunderstanding is even higher with other events.
Consumers wrongly believe these events affect credit score...
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. In the FICO score, it is a below-average score. 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 time, but paying on time, every time, and keeping credit balances low will slowly, steadily improve your credit.
By increasing your credit score, you will have access to better financial opportunities, such as lower interest rates and better credit card offers. To see what credit card offers are available to you, check out our CardMatch tool or review or list of fair credit cards and cards for those with no credit history.
What can I do with a fair credit score?
Individuals with fair credit can still qualify for mortgages, car loans and some credit cards with a sufficient income. For example, many mortgages require a minimum credit score of 620. But keep in mind that with a fair credit score, you will more than likely pay a higher interest rate than if you had good or excellent credit.
If you have fair credit and want to apply for a credit card, here are a few things to consider:
- Use CreditCards.com’s CardMatch tool to get prequalified for an offer that suits you. This will also help you avoid applying for cards that may reject you – which will have a negative impact on your score.
- Instead of focusing on cards with travel rewards, cash back bonuses and other perks, go for a card designed for individuals with fair or poor credit.
- If you are unable to qualify for an unsecured card, try a secured card to help build your credit.
Once you have your card in hand, be sure to practice responsible card management. Pay your bill on time and in full each month and do not charge more than you need to.
What do I do if I'm rejected for a credit card?
If your hopes of landing a credit card of your dreams have been dashed, we can help. By taking the right steps, you can recover and get the card you want and need.
Get the explanation from the issuer
Issuers are required to explain to you why you were rejected. You might find out online, by phone or by mail – no matter which way, read the issuer's feedback, then rectify the situation.
Check your credit score and credit reports
In general, it's a good idea to check your credit reports several times a year. You can 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.
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 home improvement or car.
Keep paying on time
Pay all of your bills on time, even your library charges, and pay down any debt you have. Your more recent activity weighs more heavily, so those on-time payments are priceless.
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.
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.
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. There are secured cards, cards that allow you to try to pre-qualify and even cards that are offered to consumers with a thin credit file, so do your research.
Typical line of credit/interest rate for fair credit
If you have fair credit, you will typically pay higher interest rates on loans than if you had good to excellent credit. The amount of interest, though, depends on the type of loan and the amount you are borrowing. For example:
- Mortgage rates are usually 0.5 to 0.75 percentage points higher for a 30-year fixed-rate loan.
- Auto loans are typically 4 to 7 percentage points higher.
- Credit card interest rates are often 5 to 7 percentage points higher.
- Unsecured personal loans can be about 7 percentage points higher.
How fast can credit improve?
The length of time it takes to improve your credit depends on the details of your financial situation. Along your credit behavior, your starting score is a major factor.
For example, if you have no credit history, it will take a minimum of six months to establish a credit score. Credit score formulas require an active credit account to be present for at least six months before a score is generated.
If you are repairing damaged credit, however, it can take much longer to up your score. A person who only qualifies for a secured card, for example, can generally improve to fair credit within 12 to 18 months – with responsible card usage, of course.
While some people need to repair minor infractions, others have major issues to recover from. According to VantageScore, here are the approximate lengths of time it takes to repair credit based on your actions:
|Action||Avg. Recovery Time||Credit Score Impact|
|Applying for Credit||3 months||Minor|
|Closing an Account||3 months||Minor|
|Maxing Out a Credit Card||3 months||Moderate|
|Missing Payment / Default||18 months||Significant|
Tips for improving your credit score
If you want to improve your score quickly, here are a few steps you can follow:
Report errors on your credit reports
Regularly check your credit files for mistakes, such as payments marked late that you paid on time or negative information that's too old to report. Notify the credit bureaus of any errors you find, no matter how small, because even a little one can be a sign that you're a victim of fraud. Credit bureaus are required to respond to credit disputes within 30 business days.
Don't apply for multiple products
Resist the urge to apply for several credit cards at once. Each application, whether you get the card or not, dings your credit a little, about 5-15 points each. Instead, choose a card that you are reasonably sure you qualify for and apply.
Pay on time
This is the single most important credit-building habit you can have. With every on-time payment, you are building your credit that much more quickly.
Pay down on your debt
The second most important part of credit building is maintaining low balances, or a low utilization ratio. You want your ratio, which is how much you owe by how much you have available, to be as close to 0% as possible. Already knee-deep in card debt? Pay down cards with the highest utilization first. That will lower your overall ratio more quickly.
Because credit card issuers usually report to the bureaus each month, it shouldn't take long for your score to reflect a lower balance.
Do not exceed your credit limit
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.
Pay off past-due 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 that will no longer show up on your credit report. While this may be the slowest step, it is essential to improving your credit score.
How to properly use a fair 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. By keeping your card balance low, you keep your utilization ratio low, which is your balance by your available credit.
- 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 percent 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.
Robin Ratcliff is the managing editor for reviews on CreditCards.com. Before CreditCards.com, she worked as a analyst and editor, and still brings that same analytical rigor to her card recommendations today. You can reach Robin at email@example.com. Tracy Brackman is a credit card news editor at CreditCards.com, writing breaking news stories on card updates and new card launches. You can reach Tracy at firstname.lastname@example.org.
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