Earning cash back or travel rewards can be a dream come true, but it’s a dream that’s out of reach for many. The reality is, rewards and travel credit cards are only available to consumers with good or excellent credit. The rest of the world is forced to miss out, relying on boring credit cards with few perks or benefits.
If your credit score has you sitting on the sidelines, you may be wondering what it would take to get you in the game. What kind of credit score do you need to get your own rewards credit card? And how can you get started working toward that goal?
We’ll go over those questions and more in this guide. If you have bad credit but wish you were earning cash back or travel rewards, keep reading to learn more.
What Kind of Credit Do You Need to Earn Points and Miles?
First things first. You should check your credit score to see where you’re at. It’s possible your credit isn’t quite as bad as you think, but either way, getting a free look at your credit score can help you determine how much work you’ll need to do.
Since most credit card issuers look at your FICO score, we’ll rely on myFICO.com for details on how good your credit needs to be to get a rewards credit card. According to the myFICO website, consumers with “very good” or “excellent” FICO scores, or scores of 740 or higher, are most likely to get approved for loans and other financial products with the best rates and terms.
Consumers with scores that are considered “good,” or in the 670 to 739 range, are usually considered “acceptable” but may or may not be approved.
5 Ways to Boost Your Score Fast
To have the best chance at getting approved for any rewards credit card you want, you should strive to get your credit score as high as possible while keeping these ranges in mind. Fortunately, there are plenty of ways to accomplish this goal in less time than you think. Here’s where you should focus your time and your energy.
Make On-Time Payments
Late payments can lead to costly late fees, but they can also wreak havoc on your credit score. Make sure you’re paying all your bills earlier than normal as you work to improve your credit in the short-term and over the long haul. If you need to take dramatic steps to avoid paying bills late, set up your bills on automatic payments, mark your calendar with payment due dates, or set alarms on your phone.
According to myFICO.com, your payment history makes up 35% of your FICO score — that makes it more important than any other factor they consider.
Dispute Errors on Your Credit Report
Errors on your credit report can also pose a huge problem and cause your score to drop, but you may not know they’re there unless you look.
Take the time to look at a free copy of all three of your credit reports from Experian, Equifax, and TransUnion using the website AnnualCreditReport.com. If you find false negative information or any reporting errors, follow the Federal Trade Commission’s (FTC) guide to disputing errors and have them removed.
Pay Down Debt
The second most important factor that makes up your FICO score is the amount of debt you owe in relation to your credit limits, also known as your credit utilization. The higher your utilization, the riskier you seem to credit reporting agencies and creditors. Therefore, you’ll be a lot better off if you can pay down debt and reduce your utilization percentage.
Most experts suggest keeping your credit utilization below 30% of your available credit limits, with utilization higher than that having the potential to hurt your score.
Pay down debt and you may see your credit score rising in a hurry. Just remember to stop using credit cards for purchases while you focus on debt repayment.
Don’t Open or Close Cards
A few other factors that help determine your FICO score include the average length of your credit history and any new credit you apply for. However, both of these factors are ones you can influence with smart credit management.
Since the average length of your credit history can be shortened any time you open a new card or close an old one, for example, it’s best to simply stick with the cards you have while you’re trying to boost your score. This is why many experts suggest keeping old cards open — even if you don’t use them. The fact you’ve had them a while is likely lengthening your credit history, and that’s a good thing.
Opening new cards should also be avoided unless it’s absolutely necessary. New credit also makes up 10% of your FICO score, and any new loans or credit cards you apply for will result in a hard inquiry on your credit report.
Get a Secured Credit Card First
Here’s an exception where it can make sense to get a new credit card while you improve your credit score. If your credit is so bad that you can’t seem to boost it through other methods, picking up a secured credit card may be your best bet.
Unlike unsecured credit cards that extend a line of credit without collateral, secured credit cards require you to put down a cash deposit to get approved. This deposit is then used to secure your line of credit, letting you use your card for purchases and pay them off as normal.
- Credit Recommended:
- Bad/Limited/No Credit
- Regular APR
- See Issuer Website
- Annual Fee
- See Issuer Website
- Credit Line
- See Issuer Website
on First PREMIER® Bank secure website.
- Credit Recommended
- Bad/Limited/No Credit
- If approved, fund your Security Deposit to open your account. Once open, you will have the opportunity to build your credit limit up to $5,000.
- Opportunity to build your credit card limit over time by adding funds to your Security Deposit.
- Reports to consumer reporting agencies help you monitor your financial progress to begin your credit building journey (build credit by keeping your balance low and paying all your bills on time every month)
- You don't need perfect credit for a First PREMIER® Bank Secured Credit Card
- Make your payments on time each month, and keep your balance low relative to the credit limit, for positive marks on your credit report.
- If approved, make your first six monthly minimum payments on time and we may send you an offer to apply for an unsecured credit card. Some restrictions apply.‡
- ‡If you apply for the second account, which is unsecured, you will be approved if you can demonstrate the ability to pay your bills, meet our minimum income requirements, do not reside in New York or Wisconsin and are not covered under the Military Lending Act.
FICO scores are used to represent the creditworthiness of a person and may be one indicator to the credit type you are eligible for. However, credit score alone does not guarantee or imply approval for any First PREMIER® Bank product.
Secured credit cards report your credit movements to the three credit reporting agencies, however. This lets you build credit where you may not be able to otherwise, potentially improving your score along the way.
Also remember that, with a secured credit card, you’ll eventually get your cash deposit back when you close your account in good standing or upgrade to an unsecured credit card.
Editorial Disclaimer: Information in these articles is brought to you by CreditSoup. Banks, issuers, and credit card companies mentioned in the articles do not endorse or guarantee, and are not responsible for, the contents of the articles. The information is accurate to the best of our knowledge when posted; however, all credit card information is presented without warranty. Please check the issuer’s website for the most current information.