09 Jul What Credit Score Do I Need for A Credit Card?

Have you ever wondered what score you need to get a credit score? The answer is that it depends on whether you would like a secured or unsecured credit credit card. An unsecured credit card usually needs a score of at least 610, whereas a secured credit card doesn’t necessarily need a high credit score.

Credit cards are a great way to build credit if you make payments on time and don’t spend all or a lot of your credit limit. Read on to understand why credit scores impact access to credit cards, what scores you need for the types of credit cards, and how you can use credit cards to build better credit.

Unsecured Credit Cards

Unsecured credit cards usually command higher credit scores. This is because they are not backed by a deposit or collateral. If you default, the creditor could lose their money. Often, the lender will charge higher interest rates and require a positive credit history.

A positive credit score is calculated by taking into account on-time payments, low utilisation rates (how much credit you use concerning how much credit you have available), and the diversity of your credit portfolio. Creditors look at all of these things when looking at whether to loan you money.

To access unsecured credit, you’ll usually need a credit score of at 610, preferably one over 650 to 800 or more. The higher your credit score, the better terms, like lower interest and a higher credit limit, you’ll be offered.

Secured Credit Cards

Secured credit cards usually don’t require a high credit score or a lengthy credit history. These credit cards are more accessible because you provide a deposit that becomes a limit for how much credit you can spend. If you default, the bank or lender can use the deposit you put down acting as your credit limit to recover your limit.

Secured credit cards are a good option for people with lower credit scores looking to build credit. They have more lenient approval criteria– almost anyone can get a secured credit card. Remember, carrying a balance will incur interest, just like an unsecured credit card. It’s important to pay your balances on time and in full each month.

Secured credit cards aren’t usually great if you’re looking to make larger purchases. Let’s say you put down a R3 000 deposit. You’d have to use only R1 000 of the limit each month to maintain a positive utilisation rate.

How to Use Credit Cards to Build Credit

If you can’t access an unsecured credit card yet, try an unsecured credit card. Remember to maintain a utilisation rate. This shows creditors you’re not a high-risk consumer, one that will blow all their money without thinking.

Once you’ve shown that you’re responsible with credit by paying your balances on time and maintaining a low utilisation rate, you can ask your bank to convert your credit card to an unsecured one. Maintaining positive credit behaviour will lead to you building a high score, which will help you secure favourable bond or auto loan terms.

If you have questions about building your credit score, be sure to contact Credit Boost. Also, be sure to check out our free credit check tool! All we need is your ID number and contact details. You’ll have a full credit report that includes your score in minutes.