Selecting The Right Credit Card For Your Credit Profile

Selecting The Right Credit Card For Your Credit Profile

July 7, 2020         Written By Heaven Speirs

Finding the right credit card for your credit profile can significantly narrow your options. If you have poor credit, you will most likely be denied for top-tier credit cards. An unnecessary application will create a hard inquiry on your credit report, which could temporarily hurt your credit score. It is important to select a card you could realistically qualify for to save time and avoid disappointment. Here are some tips to help you select the right credit card for your credit profile.

What Is a Credit Profile?

Your credit profile is the combination of your credit score and credit report. Your credit report is an overview of your payment history, loan and credit card applications, paid off debts, collections, and more. Your credit score is a number that represents your credit worthiness. Together, they make up your credit profile.

The term ‘credit profile’ may also be used to describe the category of credit your score falls into good credit, poor credit, no credit, etc. We will break these score ranges down in the next section. When you look for a credit card that fits your credit profile, your credit score will be the fundamental consideration.

To learn more, check out Credit Score vs. Credit Report – Which Is More Important?

Different Types of Credit Profiles (Credit Score Ranges)

Credit profiles are broken down into score ranges. The specific scores in each range will vary from one place to the next. For instance, some lenders may consider 640 to be a ‘good’ credit score, while others label it a ‘fair’ credit score. Here are some typical credit score ranges:

 

FICO credit scores range from 350 to 850. Other credit scoring models have similar ranges, but your credit profile may rank differently from one model to the next. The goal is to strive for the highest credit score achievable, not necessarily the label that comes with it. Improve your credit profile, and you will have a wider selection of credit cards to choose from.

What Happens If I Apply for a Card That Does Not Match My Credit Profile?

Picking a card that is not designed for your credit profile is like buying a size 9 shoe for your size 5 foot. Credit cards are designed and structured for specific credit score ranges. You need a card that fits your situation. Otherwise, you will be denied approval, or you will have a card that does not offer the features you need.

If you have a lower score, you are considered a high-risk borrower. Thus card issuers may offer lower credit limits and higher interest rates. The issuer will report your activity to the credit bureaus and if you have used your card properly, it could improve your score. If you establish a good reputation with a specific card issuer, they will want to retain you as a customer and could eventually offer you lower rates and higher credit limits.

Conversely, if you have a higher credit score, you are considered less risky to card issuers. You may qualify for lower interest rates, higher credit limits, and better rewards packages. If you apply for an entry-level card, you may be missing out on key benefits.

Can not hurt to try, right? Wrong! Hard inquiries on your credit can lower your credit score. A hard inquiry occurs when you apply for a line of credit. If you apply knowing you will not get approved, you are taking a ding on your credit for no reason. Furthermore, the denial could be a red flag for future lenders reviewing your credit report. If you are going to see a temporary decrease in your credit score, it should be for an opportunity with a decent chance of approval.

What Kinds of Credit Cards Can I Qualify for?

There are credit cards available for all credit ranges. It is a matter of finding a card that fits your credit profile and personal needs. Let’s take a look at what you can expect in each credit bracket:

  • Limited or No Credit: Credit cards for limited or no credit typically have low credit limits, modest interest rates, and minimal rewards (if any). These cards may be classified as student credit cards, but they are not exclusively reserved for college students. Young adults make up the bulk of this category, so the cards are labeled for the target audience. You can apply for a student credit card regardless of your enrollment status.
  • Poor Credit: Credit cards for poor credit tend to have high interest rates, little to no reward options, and low credit limits. The exception to this is in the form of secured credit cards, where the cardholder provides the money for the card limit. The card issuer is not at risk of losing money at that point, so the credit limit can be much higher. Secured cards charge interest and fees like other cards, but they offer an excellent opportunity to rebuild bad credit. Card payments are reported to the credit bureau, and the initial deposit is refundable when the card is canceled.
  • Fair Credit: Credit cards for fair credit are a step up from poor credit. They have slightly higher credit limits, lower interest rates, and modest rewards programs. These cards are for consumers who have proven that they can handle debt repayment and are ready for more responsibility.
  • Good Credit: Credit cards for good credit have robust incentives, reduced interest rates, and moderately high credit limits. These cards may or may not require an annual fee, depending on how lucrative the rewards are. Most cardholders in this category have already proven their credit worthiness with entry-level credit cards.
  • Excellent Credit: When it comes to credit cards for excellent credit, the sky is the limit. These cards offer top-tier rewards, high credit limits, and low interest rates. Because of the premium rewards offers, many of these cards come with high annual fees. Be leery of this when shopping around. You will want a card with a rewards potential that outweighs the annual fee.

It is entirely possible for a fair credit card to become a good credit or excellent credit card over time. As your credit profile improves, you can increase your credit limit and lower your APR. Your credit card rewards may also improve. For instance, if you are earning 1.25% cash back for all purchases, you may get 1.5% cash back with a positive payment history. If you feel that your current credit card is not sufficient for your credit profile, consider applying for a card in a higher tier.

How to Improve Your Credit Profile and Boost Your Credit Score

Want a better credit card? You may need to improve your credit profile. This will give you a better chance of getting approved for a low cost/high reward credit card. Here are some credit boosting tips to get you started:

  • Use a secured credit card to rebuild bad credit. You provide the deposit for the credit limit, so your chance of approval is practically guaranteed. You can use a secured card to build your credit for several months, and then you can transition to an entry-level credit card.
  • Pay off your card balance in full each month. This is the best way to keep your credit score on the rise and establish smart credit card habits. If you cannot pay the balance in full, apply as much extra money as you can toward the principal. This will lower your interest costs over time.
  • Use your card for everyday purchases instead of cash or debit. Spend the money on your credit card, then pay it off with the money you were going to use in the first place. This will fortify your credit portfolio and show the credit card issuer you can be trusted with repayment.
  • Make your credit card payments on time. A history of late payments will show on your credit report. Lenders will see this as a sign of poor money management, thus limiting your credit card options.
  • Increase your current card benefits before applying for a new one. If you have six months of positive payment history, request a limit increase and lower interest rate. Try to make the most of the card you currently have until it no longer fulfills your needs.
  • Do not cancel your card when you get a new credit card unless it has high fees. If you have a credit card with no annual fee, leave it open. This will show as a long credit history in your credit profile, even if you no longer use the card. Enjoy the perks of the new card and the boost in your score from the extended credit history. It’s the best of both worlds!

Explore the credit cards that fit your credit profile, and then upgrade as your credit score increases. Over time, you’ll have a rich credit portfolio and a wallet full of rewards.

The information contained within this article was accurate as of July 7, 2020. For up-to-date information on any of the terms, cards or offers mentioned above, visit the issuer's website. Many of the offers on this article are from our affiliate partners, and LowCards.com may be compensated if you take action with any of our affiliate partners.

Review LowCards.com Editor’s Top Cards!

2020 Top Credit Cards by Category
Featured Fair Credit Card
Reflex Mastercard® Credit Card
EDITOR RATING
Featured Fair Credit Card
Reflex Mastercard® Credit Card

Applying for this card will securely direct you to the issuer's website.

Top Features: All credit types welcome to apply!

Featured Low Interest Card
ABOC Platinum Rewards Mastercard®
EDITOR RATING
Featured Low Interest Card
ABOC Platinum Rewards Mastercard®

Applying for this card will securely direct you to the issuer's website.

Top Features: No annual fee; $150 statement credit after spending $1,200 in first 90 days; 0% on Purchases for 12 months

Featured Bad Credit Card
First Digital NextGen Mastercard® Credit Card
EDITOR RATING
Featured Bad Credit Card
First Digital NextGen Mastercard® Credit Card

Applying for this card will securely direct you to the issuer's website.

Top Features: Reports to all three credit bureaus, perfect credit not required for approval

Petal® Visa® Credit Card
EDITOR RATING
Petal® Visa® Credit Card

Applying for this card will securely direct you to the issuer's website.

Top Features: No fees whatsoever. No late fee, international fee, annual fee, or any-other-kind-of-fee, fee


heaven

About Heaven Speirs

Heaven Speirs is a contributing writer for LowCards.com. She remains up-to-date with the latest developments in the credit card industry and the financial sector as a whole. Heaven has over 10 years of experience in online journalism, the bulk of which has been focused on personal finance. Heaven attended Oklahoma State University, where she discovered her talent for research and content creation. In her spare time, Heaven enjoys painting, playing poker, and spending time with her husband and three dogs.