What Can You Expect From Credit Cards for Excellent Credit?
Here’s what you should expect from credit cards for excellent credit:
Rewards earning: All but one of the cards for excellent credit surveyed earn at least 1.5 points per dollar or 1.5% cash back on purchases in bonus categories.
Sign-up bonus value: You can earn a sign-up bonus worth at least $50 on 64% of cards for excellent credit. More than a quarter of the cards surveyed offer a sign-up bonus worth more than $500.
Annual fee: You’ll pay no annual fee with 45% of cards for excellent credit. About 27% of cards for excellent credit have an annual fee of more than $100.
APR: Most credit cards for excellent credit have a minimum APR between 15% and 18.99%.
Benefits: Nearly all cards for excellent credit have valuable benefits, with most offering travel accident insurance, travel credits, priority boarding, free checked bags, hotel status and other valuable cardholder perks.
What Is Excellent Credit?
With excellent credit, your score falls in the top tier of credit scores. The two main credit scoring models are FICO and VantageScore.
On FICO’s scale of 300 to 850, score ranges are:
Exceptional: 800 to 850
Very Good: 740 to 799
Good: 670 to 739
Fair: 580 to 669
Very Poor: 579 and lower
With an exceptional FICO credit score, your credit rating is far above the national average, which is about 700. Around 20% of consumers in the U.S. have an exceptional credit score. Lenders are more willing to extend credit to borrowers at this level because only about 1% of consumers with credit scores of 800 or higher are likely to become delinquent.
Using the VantageScore 3.0 model, score ranges are:
Excellent: 750 to 850
Good: 700 to 749
Fair: 650 to 699
Poor: 550 to 649
Very Poor: 300 to 549
An excellent VantageScore means you’re in the top 30% of credit scores. With this kind of credit score, you are among the most likely to get the best rates and terms on credit cards.
How Can You Get Excellent Credit?
The highest range of both scales, excellent credit may seem out of reach or mysterious for some consumers. But the path to excellent credit is neither secret nor simple. Generally, having excellent credit means you’ve maintained a near-perfect payment history for an extended period of time while keeping balances and new credit accounts at a manageable level.
Your credit score is determined by these five factors:
- Payment history
- Amounts owed
- Length of credit history
- Credit mix
- New credit
Payment history is the most important factor that influences your credit score with FICO and VantageScore. That means if you expect to have excellent credit, you should pay all your bills on time, every time. But attaining excellent credit also means you must demonstrate exceptionally low credit risk, and simply paying your bills on time isn’t going to get you there.
Lenders are looking at how much credit you use and how much credit is available to you. Generally, they don’t want to see you use more than 30% of your available credit on any card.
This tells them you’re not in the habit of maxing out credit cards while you’re also unable to pay your bills. But if you have a lot of available credit, that also could be a risk because you could run up larger balances than a consumer with lower credit limits.
The length of your credit history is an especially important factor for achieving excellent credit. Paying your bills on time for a few months shows commitment, but staying on top of payments for years tells lenders they probably don’t need to worry about missed payments from you in the future.
A longer credit history provides lenders more payment data to determine your risk. If your credit history is short, you may need more time to achieve an excellent credit score.
Although it is not a crucial factor in earning an excellent FICO score, your mix of credit products can have an influence. You may see a bump in your score if you can demonstrate a successful payment history on a variety of accounts, such as credit cards, loans or a mortgage.
New credit, which includes hard credit inquiries and new accounts, is another small factor that is helpful but not crucial. When you open several new credit cards in short order, this indicates an increase in credit risk. If you’re working toward excellent credit, slowing down on credit card applications and other credit inquiries is probably a good idea.
What Are the Pros and Cons of Excellent Credit?
The advantage of having excellent credit is clear: You’re much more likely to be approved for credit products and may qualify for the best terms.
“If you have excellent credit, you usually have your pick of credit cards,” says Gerri Detweiler, education director for Nav, which helps business owners build credit. “It will likely open the door to the best interest rates and the most lucrative rewards.”
Perhaps surprisingly, even consumers who have excellent credit present risk. With excellent credit, you may get access to exceptionally large credit lines – larger than you might ever need. Although a major credit line offers big buying power, it can be a liability if you have a lapse in judgment and go on a spending spree you can’t afford, or if an authorized user runs up charges.
Consumers with excellent credit also have more to lose from credit mistakes. According to a FICO analysis, a near-excellent FICO credit score of 780 could plunge by 90 to 110 points from a payment that’s more than 30 days late. But a good credit score of 680 could expect a smaller drop of 60 to 80 points from the same type of delinquency.
What Can You Get From Cards for Excellent Credit?
Cards for excellent credit typically offer valuable rewards and cardholder benefits. And with excellent credit, you may be able to qualify for the lowest APR a credit card offers.
“From better introductory offers to exclusive perks, having an excellent credit score opens the door for better credit card options,” says Chelsea Hudson, senior public relations officer and personal finance expert at rebates website TopCashback.com.
Here is an idea of what types of rewards and benefits you can expect when you have excellent credit.
Valuable rewards: Typically, cards for excellent credit earn at least two points per dollar on select bonus categories. Some earn more, such as cards that receive 5 percent cash back on quarterly rotating bonus categories. Most offer flexible redemption options, which may include getting cash back, transferring points or airline miles to travel partners, or cashing in rewards with multiple options, such as a free stay with a hotel group that has various brands.
Lucrative sign-up bonuses also are common among cards for excellent credit. Many offer sign-up bonuses worth at least $150. Some are worth more than $500.
Cardholder perks: Although rewards can be valuable, cardholder benefits are what really set apart cards for excellent credit. Benefits are almost always available with these cards. Cards at this level may offer top-tier benefits, including travel credits, free hotel stays or flights, free baggage privileges, priority boarding, elite hotel status and airport lounge access.
Many cards for excellent credit provide travel protection, such as trip cancellation or interruption insurance, or auto rental collision insurance. These benefits can help you save money on travel and make your trip more enjoyable. Other card benefits often include extended warranty coverage and purchase protection.
Interest rates: Consumers with excellent credit can typically expect to qualify for some of the lowest rates available on credit products, and credit cards are no exception. Cards for excellent credit often have minimum APRs of 18% or lower. Some have APRs of 13.99% or less. And the cards may offer 0% introductory APRs, which are often available for 12 to 18 months.
High credit limits: You may get more access to credit with an excellent score, as some cards at this level offer high limits. A high credit limit can come in handy, whether you plan to make a large purchase, transfer a balance or stash away a card for emergencies.
High-limit cards offer flexibility, giving you room to pay down large balances that on lower-limit cards would eat into your available credit and potentially drop your credit score.
“Higher credit limits will make it easier for you to transfer a balance from a more expensive card without getting close to your credit limits if you need to consolidate debt,” Detweiler says.
How Can You Qualify for a Card for Excellent Credit?
Excellent credit can open many doors and save you money. But having excellent credit doesn’t necessarily mean you’ll be approved for every credit card available. Credit card issuers consider more than just your credit score, and other factors could keep you from being approved for a card.
“Having an excellent credit score is no guarantee that you’ll get approved for a new line of credit,” Hudson says. “Your income, for example, plays a big role when determining if you qualify for a card. Other factors that can lead you to be denied are if you have too many credit cards, too much debt or even if your credit report hasn’t been updated with the most recent information.”
If you have excellent credit and you’re denied a card unexpectedly, consider factors beyond your credit score. What is your income? How does your level of debt compare with your income? How many credit cards have you opened recently?
Work to improve the factors you can before you apply for another credit card. When shopping for credit cards, see whether the issuer offers prequalification, which will tell you whether you’re likely to be approved with no effect on your credit score.
Is a Card for Excellent Credit Right for You?
Cards for excellent credit usually offer the best features. But your credit needs may not align with what top-tier cards provide. Lucrative rewards and benefits are common among cards for excellent credit, but you may have different priorities when choosing a credit card, such as getting the absolute lowest APR or avoiding an annual fee.
Although cards designed for excellent credit may offer low APRs, no annual fees and other valuable features, that doesn’t mean you have to get one. Depending on your needs, a card for good credit could be a better choice, so consider all credit cards available to you.
“Even if you have a lot of choices, it’s still important for you to carefully evaluate each offer to find the best card for you,” Hudson says.