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What Credit Score I Need For a Credit Card?

Now you can listen to our blog post, “What Credit Score Do I Need to Get a Credit Card?” while on the go.

Your credit scores, which range from 300 to 900 and indicate a borrower’s creditworthiness, are a crucial consideration when applying for a credit card. This amount is determined using the person’s credit history, which takes their open accounts, overall debt, and payment history into account. According to the lender, a borrower’s credit score indicates how likely it is that they will be able to make their payments on time.

what credit score is required to qualify for a credit card?

To get authorised for a credit card, there is no “magic” credit score required. In the end, it relies on the particular card issuer and the conditions for each card (premium cards will usually require a higher credit score). Most card issuers in Canada consider a credit score of 660 to be good, therefore people who have scored higher than this one should have no trouble getting approved for a credit card. However, it could be more challenging for people whose credit score is below 660 to be approved for premium options.

You should be aware that you have multiple credit scores. Equifax and Transunion, Canada’s two major credit bureaus, each use a different formula to determine a person’s credit score.

Where can I check my credit history?

You may view your credit report for free with both credit bureaus according to new legislation. While TransUnion offers a free monthly consumer disclosure report online, Equifax makes both your credit report and credit score available to you online. You may find out which credit bureau credit card issuers pull from to determine whether you are likely to be approved by researching which credit bureaus they often pull from.

How To Increase Your Credit Score In Canada?

Your credit ratings can be raised in a variety of ways. But generally speaking, your credit is impacted by five primary factors:

Payment History: This element typically contributes about 35% to the computations of your credit score. Making complete, on-time payments can therefore aid in improving your credit.
Debt-to-Credit Ratio: Another element that may have an impact on your credit scores is your debt-to-credit ratio. It deals with the difference between how much credit you have available and how much you have utilised. A $5,000 balance on a credit card with a $10,000 credit limit, for instance, represents a 50% credit utilisation rate for that account. Typically, users are recommended to spend no more than 30% of their available credit.
Credit History: Your credit ratings may also be impacted by the age of all of your accounts. Old accounts that are still in good standing can help you improve your credit.
Credit inquiries: It’s generally advised not to submit too many credit applications in a short period of time. Too many hard inquiries can damage your credit and show prospective lenders that you are having financial issues.
Public Records: Your credit report will list any bankruptcy or consumer proposal filings you’ve made under the category “public records.” Your ability to obtain a credit card may be impacted by this.

Factors That Can Affect Your Credit Card Eligibility

In addition to your credit ratings, credit card companies will consider other aspects of your application.

Occupational Status

Your income, and if it is a reliable source of income adequate to repay your debt, is one of the most crucial criteria your credit card provider will take into account. Credit card companies typically favour giving credit to people who work full-time. Students, retirees, part-timers, and self-employed workers can discover that their credit limits are smaller and that they have fewer possibilities for credit cards they can qualify for.

Ratio of Debt to Credit

The amount of revolving credit you have compared to how much of it you have used is known as your debt-to-credit ratio. Typically, credit card issuers will take your past credit usage into account. Lenders prefer to see debt-to-credit ratios of around 30%; ratios higher than this may indicate excessive usage of credit or a failure to handle debt responsibly.

As a result, even if you have good credit, your credit card application may still be rejected if you have a short credit history or a lot of previous debt.

Credit Report

Regarding the debtor’s tendency to carry a balance on their credit cards, as well as whether prior obligations have been paid in whole and on time, are both covered in detail in the credit history. In order to assess a potential customer’s long-term credit patterns and whether they are likely to repay the debt they owe, many credit card issuers will look at the applicant’s credit history.

Credit Card FAQs

If I have bad credit, can I still acquire a credit card?

It depends on the credit card you’re applying for, but you can still acquire one with bad credit. Retail credit cards typically have lax requirements and could not even demand a credit check. A secured credit card is another option, and as long as you can pay the required minimum security deposit, it practically guaranteed approval.

If I’m unemployed, can I acquire a credit card?

Not all credit card companies demand that you have a job. They will, however, typically have a minimum income threshold. They might accept you if your income is derived from investments or government subsidies. However, acceptance is never assured.

If I apply for a credit card, would my credit be checked?

When you apply for a credit card, the majority of organisations will do a credit check. Your credit may be marginally affected, although the effects are often quite transient.

Final Thoughts

Although credit scores are crucial and play a significant role in the credit card application process, they are not the only consideration. Credit cards come in a wide variety of forms to accommodate people in various financial conditions. Always do your research to determine which options are best for you, and even after receiving credit, keep your spending within your means.

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