How to earn points and miles with fair to poor credit

Apr 26, 2020

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Travel rewards cards can be incredibly lucrative, and although the best sign-up bonuses often require high credit scores and unblemished borrowing histories, you can still get into the game even if your credit record isn’t sparkling. Today, we’re going to look at how your credit score is calculated and discuss strategies for would-be award travelers with less-than-perfect credit.

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In This Post

(Photo by Orli Friedman / The Points Guy)
(Photo by Orli Friedman / The Points Guy)

Credit score basics

Credit scores affect everything from interest rates on auto loans and your monthly mortgage payment to insurance rates and employee background checks when looking for a new job. The Fair Isaac Corporation (FICO) produces the most well-known personal credit rating, and lenders commonly use this number as the first metric to analyze your risk as a borrower.

The FICO score has a range of 300 (bad) to 850 (excellent). Generally speaking, having a higher score makes you a more attractive candidate for a loan. The average credit score is somewhere between 660 and 690. “Good” credit includes scores of 680 or above, and “poor” credit includes scores of about 620 and below. Top-tier or “excellent” credit starts around 740-750 and gives you a good chance of being approved for credit cards and other loans.

Your credit score is comprised of a number of different factors, as shown in the chart below:

Paying your bills on time is just one of many factors that determines your FICO score.
Paying your bills on time is just one of many factors that determine your FICO score.

The most important factors are late or missed payments and your credit utilization (the ratio of how much credit you’re using to how much credit is available to you). Negative remarks like a late payment or accounts in collections stay on your credit report for seven years. That’s a long time to pay for a mistake and to have an obstacle to earning points and miles. Fortunately, negative remarks affect your score less and less as they age.

People often mistakenly believe that if you carry a lot of credit cards, you’ll automatically have a low score. However, each new account improves your credit utilization (so long as you’re not carrying significant balances), so having multiple lines of credit can actually have a net positive effect. There are other factors, and I’m not suggesting that you open a bunch of credit cards in order to improve your score. However, having multiple cards isn’t necessarily a bad thing.

A new type of FICO score

In 2019, FICO unveiled a new kind of numerical system called UltraFICO. This is great for those who have a limited credit history or have had a financial hiccup in the past as it allows lenders to look at other information from your checking and savings accounts to understand your approach to managing money. For instance, the new score takes into account how long those accounts have been open and whether you have recurring monthly deposits to your savings account. As long as you display good behavior with your bank accounts, you should be able to climb into good or excellent credit score territory.

UltraFICO is an opt-in opportunity, and you have to be willing to give lenders access to information about your checking and savings accounts. However, if your credit score has been toward the bottom of the ladder — the upper 500s and lower 600s — the new approach to gauging your creditworthiness can make all the difference to your financial life. If interested, go here to put your name on the list to learn more about and use UltraFICO.

Protecting your credit

Travel rewards cards offer great opportunities to collect points and miles, and if you’re new to award travel, this beginner’s guide to getting started with credit cards can help. However, your credit isn’t something you want to take lightly, so you should only pursue rewards cards if you’re well organized and have sound financial habits. Banks are smart; they offer these bonuses because they want to make money, and any interest or fees you pay can easily wipe out the value of your rewards. But if you hit your minimum spending requirements, pay off your balance on time each month without accruing interest and avoid other fees, you’ll come out ahead.

If you have less than “good” credit, it’s likely you’ve already missed payments, maxed out your limits or have judgments on your credit report. Making on-time payments from now on can help improve your score, but opening more credit cards to collect rewards is not a good way to manage your debt.

Nonetheless, if your credit score suffers from past mistakes that you have since corrected, or if your credit history is simply inadequate to put you in the upper tiers, you can still take part.

(Photo by JGI/Jamie Grill/Getty Images)
Bad credit can end up costing you tens of thousands of dollars over your lifetime. (Photo by JGI/Jamie Grill/Getty Images)

Rewards strategies for those with less-than-excellent credit

Poor credit (FICO score of 550 and below)

This group makes up less than 10% of all scores and if you land in this range, you probably won’t be approved for a points- or miles-earning credit card. However, there’s a chance you may be approved for a “secured credit card,” which requires a cash deposit and works similarly to a credit card. Although this won’t earn you a ton of points and miles, it can help you build trust with lenders and creditworthiness for the future. You can use a secured credit card just as you’d use any other credit card.

Related: Secured vs. unsecured credit cards

A good option for people in this boat is the Discover it Secured, which gives you 2% cash back at gas stations and restaurants on up to $1,000 in combined purchases every quarter, and 1% on everything else. Plus, at the end of your first year, Discover will match all the cash back you’ve earned that year. The card has no annual fee, and by getting approved, keeping your credit utilization low and paying your bills on time, you’ll be establishing credit with a reputable lender.

Another option is the SkyPass Visa Secured Card from U.S. Bank. The card offers 5,000 SkyPass bonus miles after your first purchase and 1,000 bonus miles at renewal. The card has a $50 annual fee and all purchases earn 1 point per dollar spent. Korean SkyPass offers some great award redemption opportunities, including round-trip business-class flights to Europe for just 80,000 miles.

If you’ve applied for a secured card but keep getting denied, be aware that over-applying creates multiple credit inquiries which can have a negative impact. If you simply can’t get approved, obtain a free copy of your credit report to find out exactly what is holding your score down.

If you aren’t approved for a secured card, you could pick up a rewards debit card. The options are few and not as lucrative as they used to be, but there still are some debit cards that earn points and miles. For instance, the Delta SkyMiles World Debit Card offers 5,000 bonus miles after your first PIN Point of Sale or signature-based purchase within the first 90 days. It earns 2 miles for every $2 dollars on Delta purchases and 1 mile for every $2 dollars spent on all other PIN Point of Sale or signature-based purchases, with a cap of 4,000 miles per month. The card has a $95 annual fee and is only available to Signature Advantage Checking Account holders. Rewards debit cards are especially useful for expenses like tax and mortgage payments that normally wouldn’t earn rewards without incurring a fee.

Subprime credit (FICO score of 550-620)

Roughly 15% of Americans fall within the “subprime” range. If you’re among them, your score is likely being affected by negative factors such as defaulted loans or credit cards, bankruptcy or foreclosure. You’ll probably need to wait until your score increases to get approved for the most rewarding cards, but there are other good options out there in the meantime.

For instance, you could start with a simple cash-back card like the Capital One® QuicksilverOne® Cash Rewards Credit Card, which gives you a flat 1.5% cash back on all of your purchases. QuicksilverOne is helpful if you’re having trouble getting an adequate credit line, since you can be automatically considered for a higher credit line in as little as six months. This card comes with a $39 annual fee.

The information for the Capital One QuicksilverOne card has been collected independently by The Points Guy. The card details on this page have not been reviewed or provided by the card issuer.

Woman wearing yellow sweater sitting on yellow sofa at home and shopping online with credit card. (Photo by Kerkez / Getty Images)
(Photo by Kerkez/Getty Images)

Acceptable credit (FICO score of 620-680)

A little less than 20% of Americans fit this description, and this is where you really start to have options. You most likely won’t be approved for premium travel rewards cards in this range, but you can still take advantage of some lucrative offers. Also, by managing your credit closely in this range, you can start to move toward a “good” or “excellent” rating, which can help you save considerably on future loans.

Your goal at this point is to build relationships with top card issuers by making payments on time and keeping your credit utilization low, so that down the road you have a better chance of being approved for more lucrative products. Two strong options at this level are the Chase Freedom (No longer open to new applicants) and Chase Freedom Unlimited cards. Both of these cards carry no annual fees and can earn you significant Chase Ultimate Rewards points. When you have these cards alone, those points are no different than cash back, but if you also have an Ultimate Rewards-earning card like the Chase Sapphire Preferred Card, the Chase Sapphire Reserve or the Ink Business Preferred Credit Card, you’ll be able to transfer your points to a variety of travel partners. TPG’s valuations peg Ultimate Rewards points at 2 cents apiece so you’ll essentially be doubling your return when you pair the cards.

The information for the Chase Freedom has been collected independently by The Points Guy. The card details on this page have not been reviewed or provided by the card issuer.

Related: Maximize your wallet with the perfect quartet of Chase cards

The Freedom card rewards you with (5% cash back) 5x points per dollar on up to $1,500 in eligible spending on rotating quarterly bonus categories like gas stations, grocery stores and department stores (activation required). New cardholders get a $200 (20,000-point) sign-up bonus after spending $500 in the first three months on the Freedom card and the Freedom Unlimited.

If you prefer a card with no annual fee that allows you to transfer your points to travel partners without having to get another card, there’s The Amex EveryDay® Credit Card from American Express. It earns 2 points per dollar at U.S. supermarkets for up to $6,000 a year in purchases, and 1 point per dollar after that and elsewhere. New cardholders get 10,000 Membership Rewards points after spending $1,000 within the first three months. It’ll likely take a while until you’ll be able to book a coveted redemption like Singapore first class, but you’ll be off to a good start.

The information for the Amex EveryDay® Credit Card has been collected independently by The Points Guy. The card details on this page have not been reviewed or provided by the card issuer.

Related: The top credit cards with 0% intro APR

Good credit (FICO score of 680-740)

If you have good credit, you’re among the 25% of Americans who fall into this range, which allows you to really start using your credit score to your advantage. Although all scores within this range are considered “good” and are only separated by 60 points, a 740 FICO score can command much lower borrowing rates. Still, a 680 score puts you within reach of some of the best credit cards out there.

A terrific option to start with is the Chase Sapphire Preferred Card, which offers a sign-up bonus of 60,000 bonus points after you spend $4,000 on purchases in the first 3 months of account opening. Those 60,000 points are worth a whopping $1,200, according to TPG’s current valuations. With this card, you’ll earn 2 points per dollar spent on travel and dining purchases and 1 point per dollar spent everywhere else. You’ll also get perks like a complimentary DoorDash DashPass membership, primary car rental coverage, trip delay protection and no foreign transaction fees. This card has a $95 annual fee. Read more about the Chase Sapphire Preferred Card on our card hub.

Related: What credit score do you need to get the Chase Sapphire Preferred card?

(Photo by Eric Helgas/The Points Guy)

Another strong card option for people in this credit range is the American Express® Gold Card. Its 60,000-point welcome bonus after spending $4,000 on purchases in the first six months isn’t as exciting, but it gets you 4 points per dollar spent on dining worldwide and at U.S. supermarkets (on up to $25,000 per calendar year at U.S. supermarkets; then 1x), 3 points per dollar on flights purchased directly with the airline or at, and 1 point per dollar everywhere else. That equates to a stellar 8% back on dining and U.S. supermarkets and 6% on airfare according to our valuations. The card’s $250 annual fee (see rates and fees) is higher than that of the Chase Sapphire Preferred, but it also comes with more perks, like annual dining credits (up to $120) per calendar year. Read more about the Amex Gold on our card hub.

You may have noticed a large jump in the spending requirements to earn the bonus for these cards compared to the ones mentioned earlier. If you’re climbing back from past credit problems, the last thing you need to do is to spend $4,000 that you can’t pay back on time. However, if you can meet the spending requirements responsibly, the sign-up bonuses speak for themselves.

Related: 11 ways to meet credit card bonus minimum spending requirements

Excellent credit (FICO score of 740-850)

Between 35-40% of Americans have a FICO score over 740. In this range, you’re most likely to be approved for the best products out there, including all of the cards on TPG’s list of the best travel rewards credit cards. However, even if you have excellent credit, the cards mentioned earlier can be useful to have in your wallet, so don’t discount them.

There’s also the Citi Premier® Card, which currently comes with a sign-up bonus of 60,000 ThankYou Points after you spend $4,000 on purchases in the first three months. TPG values ThankYou Points at 1.7 cents apiece, so the bonus alone is worth $1,020. With this card, you’ll earn a solid 3 points per dollar spent on travel — a broadly defined category on this card that includes gas purchases. The card has a $95 annual fee, but unfortunately, you don’t get many perks in return.

(Photo by The Points Guy)

You may have noticed a large jump in the spending requirements to earn the bonus for these cards compared to the ones mentioned earlier. If you’re climbing back from past credit problems, the last thing you need to do is to spend $4,000 that you can’t pay back on time. However, if you can meet the spending requirements responsibly, the sign-up bonuses speak for themselves.

If you’re looking to earn airline miles from the get-go, consider a card like the American Airlines AAdvantage MileUp℠ Card. The card earns American Airlines miles and has no annual fee. It offers 2 AAdvantage miles per dollar spent on eligible American Airlines purchases and at grocery stores and 1 AAdvantage mile per dollar spent on all other purchases, as well as a 25% discount on AA inflight food and beverage purchases. New cardholders earn 10,000 AAdvantage miles (worth $140, based on TPG valuations) and a $50 statement credit after spending $500 in the first three months of account opening. Read more about the American Airlines AAdvantage MileUp Card on our card hub.

(Photo by Eric Helgas for The Points Guy)
(Photo by Eric Helgas for The Points Guy)

Related: What credit score do you need to get the Chase Sapphire Reserve card?

Bottom line

The travel rewards game isn’t just for those with sterling credit. In fact, there are great opportunities to select cards that, when managed correctly, can help rebuild damaged credit. Remember not to overextend yourself trying to meet spending requirements, and to practice sound financial habits. After all, the first commandment for travel rewards credit cards is to pay your balance off in full each month. Even if you don’t currently qualify for the best offers, with time and careful management you can become eligible. The benefits of improving your credit score extend beyond the points and miles you earn, but those rewards make doing so a lot more fun.

If your application is initially denied, that decision isn’t necessarily final. Many people have had success by calling the reconsideration line and explaining their situation. Sometimes your applications will be approved or denied instantly by a computer algorithm, but often the decision to offer you credit lies with a human. If you’re not approved instantly, give the card issuer a call and explain why you’ll be a valuable customer.

For rates and fees of the Amex Gold card, click here.

New to the points and miles game? Check out our beginner’s guide for everything you need to know to get started!


Featured image by Isabelle Raphael / The Points Guy.

Editorial Disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airlines or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

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