Video Sunday Reader Question: What is the Minimum Credit Score Needed To Get Approved for the Best Credit Cards?
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TPG reader Ben asks:
"What is the minimum credit score needed to get approved for all these reward cards? What is the lowest credit score you have heard of getting approval for a premium product like the Chase Sapphire Preferred® Card?"
There is no one magic score that will automatically get you approved for any credit card. Credit card companies will take into account a lot of different factors in addition to your 3-digit score when determining an approval:
1) The ratio of your amount of debt to available credit
2) Your relationship with that bank (do you already have a bunch of open credit with them)?
3) Any past judgments/collections/bankruptcies
Granted, these things are all factors that go into your score, but since the credit crisis especially, credit card companies aren't just trusting a number to predict someone's full creditworthiness. So even if you have an 800 FICO score (850 is the highest), you still may get denied for having too many recent credit cards. At the same time, someone with a 690 may apply and get approved if they don't have many cards and their low score is a result of lack of history. It all really depends.
However, my honest unofficial thought based on tons of reader emails I've received over the years is: you really don't need a super-high credit score to get rewards cards - even the "premium" cards like Chase Sapphire Preferred® Card and Amex Platinum. I have had readers with past credit blemishes and upper 600 credit scores get approved for premium cards - often after convincing a reconsideration line representative that they are indeed creditworthy and just made a couple bad mistakes in the past. In general 700 is probably sufficient for most cards, though 730+ should put you in the "very likely to get approved" category.
That being said, if you are in debt and can't manage your finances appropriately I do not recommend applying for any new credit cards - even if the rewards seem worth it. Focus on paying down your credit because the APR you pay on any balances can easily negate the value of any points/miles you receive. Credit scores are used for a lot more than just credit card approvals - they will be a major factor in determining how much interest you pay on a mortgage and even be considered in your insurance premiums. Not only that, but many employers run credit checks so achieving and maintaining a strong credit score should be your ultimate goal and luckily you can do that and get rewards cards at the same time if you pay all of your bills and carry a low amount of revolving credit.
If you have a lack of credit history, getting new cards and paying them off on time and in full will actually help increase your credit score. If you don't feel that your score is high enough for a premium card, start with a basic card like the Chase Freedom which doesn't have an annual fee and you'll be creating a good relationship with one of the biggest card issuers. Once you build your credit score and relationship with the credit card company and you can get approved for the Chase Sapphire Preferred® Card and Amex Premier Rewards Gold cards, the points in the "lite" points programs can be transferred into the more valuable Ultimate Rewards and Membership Rewards points - which can then be transferred to airline and hotel partners.
To sum it up, the only source that will tell you if your score is good enough to get a credit card are the credit card companies themselves. With the economy improving they have definitely loosened up a little bit and are getting very aggressive at recruiting new customers who will be lifelong profitable customers.
Feel free to share your experience getting cards- especially if you have a lower credit score or one with past blemishes. Clearly everyone's situation is unique, but sharing experiences can help those on the sidelines determine whether it makes sense to apply or not.