Credit Cards for Fair Credit

Applying for and using credit cards

When applying for credit cards, it is important to understand what the actual cost to you will be when using the credit card. The things to take into consideration are not only the typical fees, such as an annual fee, and the APR, but additional service fees. You can find more information by reviewing a credit card’s terms and conditions. Credit cards are a very useful tool, and when used wisely, may help build your credit and increase your purchasing power.

Things to look for when you have fair credit

• Spending limits: Looking for a credit card with a smaller credit limit may be easier to qualify for, and could even limit the amount of possible misuse, such as excessive spending that could lead to burdening debt. By making small charges and paying off the balance every month, you can show your credit usage is responsible and reliable to would-be creditors down the road.
• Fees and APR: Paying attention to how much you are paying in interest and any fees will help you understand your total costs. And, knowing how much you are spending to use a credit card will help you maximize any rewards you may receive. If you had spent $500 on a cash back credit card with 1% rewards that had an average APR, and only paid the minimum payment of $15 when the bill was due, then the interest you pay for that month could be $8. In this example, the $5 cash back for spending the $500 would be wiped out and you would actually owe more because of the interest paid.
• Shopping for cards: Learn what is available for you based on your FICO Score and credit profile. Once you know what your options are, choose the best one that fits you and apply. Applying for multiple credit cards in a short period of time could hurt your credit, since each application can cause a hard inquiry on your credit report. It can also indicate a potential risk of a significant amount of new and sudden debt. And, with having multiple credit cards opened, there could be an ongoing risk of charging more than what you can repay. Applying for and using credit cards wisely can go a long way in helping you meet the credit goals you have.