5 Facts you didn’t know About Credit Scores and Credit Cards
Owning a credit card can be quite tempting as it offers great rewards like 0% APR (introductory rates), bonus points, and free airfare etc. But the only challenge is to successfully qualify for these offers. The underwriting secrets of these plastic cards are a closely guarded secret – much like the top formulae of soft drinks and several food joints. Companies offering credit cards seldom reveal the secret criteria they follow to choose from a pool of applicants.
Although these criteria are closely guarded and not revealed to anybody, we have a list of some standards that we would like to present to you. The information below includes some details about the credit scores of those applicants whose applications were approved. It states 5 facts about credit cards and credit scores that will definitely surprise you.
1. The non-requirement of the 700 club
The average credit scores for some of the top credit cards usually ranges in the low 700s. However, the lowest approved credit scores dip to a good 600s, and with this, obviously, factors like past payment history and incomes etc come into the picture. Yet some of the top credit card selling companies like Citi, Discover, and Barclaycard do approve cards to applicants whose scores are in the 600s.
2. Rewards are directly proportional to the score
All reward cards are not created equally. Typically the best rewards cards offer 2% points, cash, or miles on all purchases. The average credit score for such cards is obviously higher than the other credit cards.
3. The top 0% offers require a top credit score
The best 0% APR introductory offer that is available today is valid for 18 months. These offers apply to both balance transfers as well as purchases. These offers require a high credit score although they help people to get out of their credit card debt. For example, the longest 0% offers from Citi and Discover have average credit scores ranging in the lower to mid-700s. For those with an average score of mid-600s, a 0% offer valid for only six months is generally approved.
4. Lower scores are required for student cards
As we all would expect; student credit cards require comparatively lower credit scores and the average credit scores of the approved applicants of student cards is below 700. In fact, the lowest scores in some cases have fallen down to the lower-600s, as also below 600 in certain cases.
5. It’s not only about approval
Getting an approval of a card is just the beginning. There are several factors and criteria like credit scores etc that affect the interest rate and the credit limit of the card. Having high credit scores result in gaining higher limits and lower interest rates. Hence it is important to remember that these criteria keep changing as the interest rate environment changes and as the card issuing companies fine tune their standards.