Credit scores express the creditworthiness of an individual. They are the expression of how someone can pay loans when given one by a bank or credit union. Various credit scores qualify you for various credit cards. But how much can I borrow with a 700 credit score? I will dwell on this later on in the day.
As we shall see, it is not a must that you have credit scores to get a credit card. There are credit cards that do not need any credit scores whatsoever. They are called secured credit cards. Unsecured credit cards are the ones that require you to have a credit history. You can either get a bad credit score or a good credit score credit card.
Credit scores are from credit card and loan usage. If you use your credit card well, you will have good credit scores and vice versa. Every financial institution reports credit card usage and loan repayment to credit bureaus. Some people have been wondering how financial institutions come up with credit scores. You apply for a loan or credit card only to find out that your scores do not meet the threshold and wonder who told them. Now you know.
What are credit bureaus?
Credit bureaus are the institutions that have the mandate to keep credit card usage records received from various institutions. The bureaus receive information about your loan repayment patterns, what kind of loan, the amount borrowed, and when you are supposed to finish repaying the loan, among other pieces of information.
We have three credit bureaus in the US. They include the following.
Credit bureaus come up with credit reports to show details about your loans and repayments. They also come up with credit scores that you can purchase when you need them. For the credit report, you can get one for free from each credit bureau once per year.
How do credit bureaus calculate credit scores?
As I have mentioned above, credit bureaus calculate credit scores based on various pieces of information. But how are credit scores calculated?
There are five main pieces of information that credit bureaus use to calculate credit scores. They include your payment history, the amount owed, credit mix, length of your credit history, and new credit.
The payment history contributes 35% of the overall credit scores. It shows how you have been paying your loans over time. If you have been paying loans and lines of credit as per the agreements, you are likely to have good credit scores. Poor payment patterns and loan defaulting will give you poor credit scores.
For the amount owed, 30% of your overall credit scores will come from here. If you have so much to pay, then it means that you will have low credit scores. You should utilize low credit up to 30% of your credit limit. That way, you will be able to score well.
Additionally, the length of your credit history contributes 15% of your credit history. The percentage is quite significant since people who just started using their credit cards in the recent past usually have minimal credit scores. The more you use your credit, the more you grow your credit scores.
The new credit portion contributes up to 10% of your credit scores. If you apply for various types of credits quickly, your credit scores will lower. That means you should be careful about applying for new credit cards or loans.
Lastly, the last piece that credit bureaus use to calculate your credit scores is the credit mix. If you take various kinds of loans such as credit cards, auto loans, student loans, mortgage loans, and so on, your credit scores shoot up with time.
How do I know my credit scores?
Knowing your credit scores is essential to understand which credit cards you can apply for. You can get your credit scores from either of the three credit bureaus (TransUnion, Experian, and Equifax) by creating an account with either of them. The three credit bureaus require you to purchase your credit scores.
However, you can get credit scores for free from Credit Karma or from your financial institutions that gave you a credit card.
How do I improve my credit scores?
If you have bad credit scores, it does not mean that you cannot attain good scores. There are various ways you can grow your credit scores.
The main one is clearing all your debts with various financial companies. But how long after paying off credit cards debt does the credit score improve? You will not see credit improvement as soon as you pay your loan. However, you should see improvement in your credit scores one to two months after clearing your debts. Your name will remain negatively listed for up to seven years.
Another way you can improve your credit scores is by applying for a secured credit card that requires you to deposit an amount of money in your credit card account. The amount of money you deposit acts as security for the credit card and helps the bank or credit union account get their money easily if you cannot pay the loan.
The money acts as security for the line of credit you get. The more you deposit, the bigger your line of credit. In a span of around six months, you can quickly improve your credit scores.
Thirdly, you can improve your credit scores when you mix various credits. If you apply for various loans such as credit cards, mortgage loans, auto loans, and so on, you show that you are responsible for your loans. However, you should pay the loans as per the agreements.
Can I get a credit card if I have bad credit?
If you have bad credit, you can still get a credit card. Various credit cards are suitable for bad credit scores. You can ask your bank or credit union if they have a credit card for bad credit. Again, various online banks have credit cards that are suitable for bad credit.
The only problem with bad credit cards is that they attract high-interest rates for the amount borrowed. However, they are suitable to grow your credit scores. Even secured credit cards are suitable for bad credit scores.
What are the different credit score ranges?
The following are various score ranges as per the FICO score guidelines. The scores range from 300-850, where 300 represent the poorest score and 850 represents the highest. Have a look at the following FICO score table.
How much can I borrow with a 700 credit score?
From the FICO score table above, you can see that the credit scores of 700 ratings are good. That means you can get credit scores with a reasonable credit limit.
Well, with a credit score of 700, you can get credit limits of up to $4,200 or slightly higher. A credit score of 750 can qualify you for a mortgage loan of up to $200,000 or more.
Which credit cards are for 700 credit scores?
Various credit cards are suitable for people with 700 credit scores. They include the following.
1) Blue Cash Everyday® Card from American Express
The card requires credit scores of between 670-850. It comes with a 3% Cash-back at US supermarkets when you make up to $6,000 per year in purchases, then 1% afterward. You also get 2% Cash-back when you fuel at US gas stations and certain US department stores. The Blue Cash Everyday® Card from American Express has a 1% Cash-back on other purchases.
2) Southwest Rapid Rewards® Plus Credit Card
The card requires credit scores of between 670-850. With the card, you can earn 2 points per $1 spent on Southwest purchases. You also earn 1X1 point for every $1 spent on all other purchases.
3) Delta SkyMiles® Gold American Express Card
The card also requires 670-850 credit scores. It gives you an intro bonus of 70,000 when you sign up. You can also earn 2X Miles on Delta purchases at various restaurants worldwide. These include takeout and delivery and at US supermarkets. Furthermore, you can earn 1X Mile on all other eligible purchases.
4) Capital One Walmart Rewards Mastercard
Capital One Walmart Rewards® Mastercard requires fair to good credit scores. The card earns you a 5% cash-back on Walmart.com purchases, and that includes pickup and delivery. You can also earn 2% cash-back- on various purchases in Walmart retail stores, restaurants, and travel purchases.
In addition, you get 2% cash-back in Walmart retail stores and at Walmart and Murphy USA filling stations. The card also gives you a 1% cash-back on all other purchases every place Mastercard® is accepted.
5) Marriott Bonvoy Bold® Credit Card
The card requires 670-850 credit scores. The card gives you an intro bonus of 60,000 points and has an annual fee of $0. You can also get rewards from the card.
Credit scores show the creditworthiness of an individual. Financial companies such as credit unions and banks report your credit card usage and loan repayment to credit bureaus. You can obtain a credit card with bad credit scores. Credit scores range from 300-850, with 300 being the worst and 850 being excellent. You can get a credit card with any credit score.