What Credit Card Can I Get With a 650 Credit Score?

A credit score represents a numerical summary of an individual’s creditworthiness, serving as a key indicator for lenders when evaluating applications for financial products like credit cards and loans. This article provides guidance for individuals with a 650 credit score, exploring available credit card options and strategies for credit improvement.

Understanding a 650 Credit Score

A 650 credit score falls into the “Fair” credit category across common scoring models such as FICO and VantageScore. While specific ranges can vary slightly between models, a FICO score between 580 and 669 is considered fair, and a VantageScore between 601 and 660 is also in this range. This classification suggests that while obtaining credit is possible, options may be more limited or come with less favorable terms compared to higher scores.

Lenders perceive a “Fair” score as indicating some degree of risk, which can lead to higher interest rates or lower credit limits on approved accounts. Credit scores are calculated based on several factors. Payment history carries the most weight, typically accounting for 35% of a FICO score. The amounts owed, or credit utilization, makes up about 30% of the score. Other factors include the length of credit history (15%), new credit applications (10%), and the mix of credit types (10%).

Credit Card Options

Several types of credit cards are available for individuals with a 650 credit score. Secured credit cards are a common option, requiring an upfront security deposit that sets the credit limit. This deposit minimizes risk for lenders and provides an opportunity for consumers to build or rebuild their credit history through responsible use.

Some traditional unsecured credit cards are designed for those with fair credit, though they may come with certain conditions. These cards often feature lower credit limits and potentially higher Annual Percentage Rates (APRs). Annual fees may also be present, ranging from $39 to $99 or more, to offset the increased risk for lenders.

Store credit cards, offered by individual retailers, can also be accessible with a fair credit score. While they might offer immediate discounts on purchases, their usability is limited to that specific retailer. These cards often carry very high interest rates, sometimes exceeding 25%, and tend to have lower credit limits compared to general-purpose cards. Their restricted acceptance and high APRs make them a less flexible option.

Lender Considerations

Lenders evaluate several other aspects beyond a 650 credit score to assess an applicant’s financial profile. An applicant’s income is a significant consideration, as it directly reflects their ability to manage and repay new debt. Lenders want assurance that the borrower has sufficient funds beyond living expenses to cover credit card payments.

The debt-to-income (DTI) ratio is another metric, calculated as the percentage of an applicant’s gross monthly income that goes towards debt payments. A lower DTI indicates more disposable income available for new obligations, making an applicant appear less risky. Employment stability also plays a role, with consistent employment history often viewed favorably as it suggests a reliable income stream. Lenders may inquire about the length of time at a current job to gauge this stability.

Recent credit inquiries are monitored, as numerous applications in a short period can signal financial distress. Each hard inquiry can cause a small, temporary dip in a credit score. Lenders also review the applicant’s overall credit history to understand their financial behavior.

Improving Your Credit Score

Improving a 650 credit score involves consistent financial habits that address the factors influencing credit calculations. Making on-time payments is the most important step, as payment history accounts for a substantial portion of credit scores. Even a single missed payment can negatively impact a score, and late payments can remain on a credit report for up to seven years. Setting up automatic payments can help ensure bills are paid by their due dates.

Keeping credit utilization low is another impactful strategy. Credit utilization is the percentage of available revolving credit being used, and it makes up about 30% of a FICO score. Lenders generally prefer this ratio to be below 30%, with lower percentages often correlating with higher scores. Regularly paying down balances throughout the month, rather than waiting for the statement due date, can help maintain a low utilization rate.

Reviewing credit reports regularly for errors is also important. Consumers are entitled to free copies of their credit reports from each of the three major credit bureaus (Equifax, Experian, and TransUnion) annually. Checking for inaccuracies, such as incorrect account statuses, wrong payment dates, or accounts that do not belong to the individual, and disputing them can help maintain an accurate credit profile.

Limiting new credit applications is advisable, as each “hard inquiry” can cause a temporary, small decrease in a credit score. While the impact is usually minor and temporary, multiple inquiries in a short timeframe can signal increased risk to lenders.

Maintaining a diverse credit mix, which includes both revolving accounts like credit cards and installment loans like mortgages or auto loans, can demonstrate responsible management of various debt types. Avoiding closing old accounts, especially those with a positive payment history, is beneficial because it preserves the length of credit history and can positively influence the average age of all accounts.