Credit Cards For Fair Credit: Your Key To A Better Credit Score
Credit cards are one of the main determinants of your credit score. This is because it is one of the most ubiquitous ways for people to avail of their credit options. While mismanaged credit cards for fair credit can turn your good or fair credit score to bad, a properly managed credit card plan can save you from spiraling down credit score hell. First, of course, we need to be able to define what a fair credit score is for you to get a good idea on where you stand and to find if this guide is for you.
Credit scores are a composite score derived from different factors which affect your credit. The most prominent factors here are credit management and credit utilization. Income is not given a huge emphasis, since you may have a large income and still live above your means. Credit scores determine your creditworthiness and is a crucial factor in most transactions you enter with different financial institutions today.
It is also a measure of risk, making it suited as a supplementary scoring system in the insurance sector. In addition, it is also checked on by employers as a factor in hiring employees, particularly at the lower rungs of the corporate ladder.
Credit scores range from 300 to 850. A score above 720 is considered to be a good credit score, while those below 650 is considered as bad credit score. Thus, the range from 651-719 is considered as a normal or average credit score. In this case, most lending institutions will simply require you to provide additional documents before they give you a loan, and will charge higher interests and fees than those at the top category.
You also get higher credit limits than those who are in the below 650 range, or the subprime sector, but will still have a cap, unlike those above 720, who may get an unlimited credit limit.
Being in the fair zone means that you can more easily improve your credit score. You can do this by simple reorganization of debt. In this instance, having additional credit cards while lowering the credit limits of each will allow you to have a more extensive credit record while lowering your credit utilization rate. This makes more lenders trust you and will in turn give you some leverage when asking for favorable deals. You just need to prevent your eggs being put in a single basket.
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