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Homeownership is expensive, no matter what type of property someone owns. And the cost of homeowners insurance can vary greatly depending on where someone lives, the size of the home, and the type of insurance.

If you’re debating whether you can afford to buy a single family home or a condo, make sure to factor in condo insurance vs. homeowners insurance costs. Keep reading for the full lowdown.

What Is the Difference Between Homeowners Insurance and Condo Insurance?

The difference between homeowners insurance vs. condo insurance is fairly straightforward. Both protect homeowners financially, but the policies differ in the scope of their coverage. (Neither policy should be confused with mortgage insurance, which is totally different)

Homeowners insurance protects most of the property someone owns (inside the home, outside the home, and the surrounding area). Condo insurance protects only the interior of the home. Because multiple condos share one building, the exterior and area around the condo are the responsibility of the homeowners association (HOA) master insurance policy.

You can learn more about both types of coverage by shopping around with online insurance brokers.

How Does Dwelling Coverage Differ for Home Insurance vs Condo Insurance?

When it comes to homeowners vs. condo insurance, how dwelling coverage works varies:

•   Homeowners insurance: Dwelling coverage is based on how much it might cost to completely rebuild the home.

•   Condo insurance: How much dwelling coverage is needed is based on what the HOA master policy covers. For example, some master policies may cover select interior structures (like drywall or ceilings) or the entire interior.

Recommended: First-Time Home Buyer’s Guide

How Does Liability Coverage Differ?

For liability insurance, coverage needs can also be different for condos and homes.

•   Homeowners insurance: Liability coverage extends to the entire property (inside and outside the home).

•   Condo insurance: Covers accidents that happen inside the condo.

How Does Personal Property Protection Differ?

Personal property protection works similarly whether someone has a homeowners policy or a condo policy. This type of coverage is designed to protect the policyholder’s belongings from damage and theft. HOA master policies don’t include this coverage, so condo owners need to make sure they purchase it. Both homeowners and condo owners can benefit from personal property protection.

Cost of Homeowners and Condo Insurance by State

To get a better idea of what each type of insurance costs, let’s look at the average condo insurance vs. homeowners insurance costs by state.

As with most insurance, you can lower your premiums by choosing a higher homeowners insurance deductible.

Condo Insurance vs Homeowners Insurance Cost

Once someone is ready to buy homeowners insurance or condo insurance, price is likely top of mind. When it comes to the average condo vs. homeowners insurance cost, homeowners is $1,680 per year and condo is $429 per year.

Types of Condo Insurance

There are a few types of condo insurance to be aware of:

•   Personal property. When someone has personal property protection, they can be reimbursed for the cost of repairing or replacing their belongings, such as clothing and electronics, up to a certain amount.

•   Loss of use. If the owner needs to leave their condo to stay in a hotel during repairs after a covered incident occurs, loss of use coverage can help pay for things like hotel stays and dining out.

•   Liability. Liability coverage can help out if the condo owner is legally responsible for damage or injuries caused to someone else due to an accident that occurs in their condo.

•   Dwelling. This type of coverage steps in to pay for replacing or repairing everything in the condo unit (starting from the drywall in) after a covered loss.

•   Loss assessment. If an accident occurs in a shared area of a condo’s property (like the pool, stairs, or clubhouse), then the HOA master policy is the first line of defense. However, if damages exceed the amount that this policy will cover, then the residents may end up responsible for covering the remaining costs, which is where loss assessment coverage can come to the rescue.

Recommended: The Difference Between Homeowners Insurance and Title Insurance

Condo Insurance Benefits

While the HOA does have some insurance coverage that protects parts of condo units, residents really need to have their own condo policies to make sure they’re fully protected. The benefits of condo insurance are many, from covering repairs to replacing belongings after a break-in to paying medical bills after a guest slips and falls.

Condo owners who are still unsure what sort of policy to choose may benefit from reading How Much Home Insurance Do I Need?

Types of Homeowners Insurance

These are the main homeowners policy options:

•   HO-1: Only dwelling protection. Also known as hazard insurance.

•   HO-2: Includes personal belongings and extra perils on top of basic coverage.

•   HO-3: Includes dwelling, belongings, and liability coverage. This is the most popular type of coverage.

•   HO-4: Applies to policyholders who rent out their home and want liability and personal property coverage.

•   HO-5: This is a comprehensive policy that usually applies to brand-new homes and comes with extra coverage.

•   HO-6: The term HO-6 is another way of saying condo insurance.

•   HO-7: This type of coverage is for mobile homes.

•   HO-8: Robust coverage for older and historical homes.

It’s always possible to change homeowners insurance policies if someone decides they want more coverage.

Homeowners Insurance Benefits

The type of homeowners policy someone has influences the benefits of their policy. Generally speaking, the point of this insurance is to financially protect homeowners from disastrous events that can destroy a home, but it can also protect against theft and liability.

If you have a mortgage, homeowners insurance may be required by your lender.

The Takeaway

If someone owns a home or a condo, they need some type of insurance coverage to protect themselves from financial hardship. Homeowners policies typically include dwelling coverage for the building itself, while condo policies do not. Both cover the contents of the home, and may include liability coverage too. The average annual cost of a homeowners policy is $1,680, while the average annual condo policy is $429.

If you need a new homeowners policy, you can turn to SoFi. We teamed up with Experian to deliver homeowners insurance built for the 21st century — without brokers. Policies are customizable, and getting a quote online takes just minutes.

FAQ

What is the key difference between a homeowners and a condo policy?

The main difference between condo and homeowners insurance coverage is what each type of insurance protects. Condo insurance only protects the interior of the condo whereas homeowners insurance protects the entire property including the outside of the home and the land around it.

Which type of property insurance coverage is more expensive?

Generally homeowners insurance is more expensive (average cost of $2,777 per year) than condo insurance (average cost of $759 per year). That being said, the location, size, and repair cost of the property can lead to a condo being more expensive to insure than a single family home.

What’s the difference between HO3 and HO6?

An HO3 policy protects a single family home with dwelling, belonging, and liability coverage. An H06 policy on the other hand is designed for condo owners to protect the inside of the condo, as well as providing belonging and liability coverage.

Photo credit: iStock/miniseries

Auto Insurance: Must have a valid driver’s license. Not available in all states.
Home and Renters Insurance: Insurance not available in all states.
Experian is a registered trademark of Experian.
SoFi Insurance Agency, LLC. (“”SoFi””) is compensated by Experian for each customer who purchases a policy through the SoFi-Experian partnership.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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Flood insurance is designed to help homeowners, renters, and business owners cover losses caused by a flood. You can buy it to protect a building, the possessions in that building, or both.

Most standard homeowners policies don’t cover flood damage. So this separate insurance coverage is your best option for repairing or replacing property after rising water rises enters your home. In some areas, mortgage lenders can make buying flood insurance mandatory. Even if your lender doesn’t require flood insurance, you may want to consider it.

Read on for information that can help you decide if a flood policy should be part of your insurance coverage.

What Is Flood Insurance?

According to the Federal Emergency Management Agency (FEMA), just one inch of floodwater can cause up to $25,000 in damage. And that damage probably won’t be covered by your homeowners or renters insurance. You can, however, purchase a standalone flood insurance policy to help cover your losses.

A flood insurance policy is meant to cover losses directly caused by flooding or, as FEMA describes it, “an excess of water on land that is normally dry, affecting two or more acres of land or two or more properties.”

If your sewer backed up after heavy rainfall, or rising inland or tidal waters flooded your property, the damage would likely be covered by flood insurance. But if the backup wasn’t caused by flooding, the damage wouldn’t be covered by flood insurance. (Whether it’s covered by your homeowners insurance depends on your individual policy.)

Most people get their flood policy through the National Flood Insurance Program (NFIP), which is managed by FEMA and works with a network of insurance companies across the country. But some private insurance companies also offer their own flood policies, which are not government-backed.

Recommended: Mortgage & Homeowners Insurance Definitions

What Is Included in Standard Flood Insurance?

The NFIP offers two types of flood insurance coverage: one that covers buildings and another that covers the owner’s or renter’s personal contents.

A policy purchased through the NFIP can reimburse up to $250,000 in building damage and typically covers:

•   Foundation walls, anchoring systems, and staircases

•   Detached garages

•   Electrical and plumbing systems

•   Furnaces and water heaters

•   Fuel tanks, well water tanks and pumps, and solar energy equipment

•   Appliances, including refrigerators, stoves, and built-in dishwashers

•   Permanently installed cabinets, paneling, and bookcases

•   Permanently installed carpeting and window blinds

An NFIP policy can provide up to $100,000 in personal property damage, and typically covers:

•   Personal belongings, such as clothing, furniture, and electronic equipment (TVs, computers, etc.)

•   Valuables (like original artwork and furs) up to $2,500

•   Portable and window air conditioners

•   Washers and dryers

•   Microwave ovens

•   Carpets that may not be included under building coverage

•   Curtains and other window coverings

Recommended: A Guide to All Things Insurance

What Doesn’t Flood Insurance Cover?

There are a few things NFIP flood insurance doesn’t cover, even if the damage is directly caused by flooding. Items that aren’t covered include:

•   Any property that’s outside the insured building (such as a well, septic system, deck or patio, fences, seawall, hot tub or pool, and landscaping)

•   Cars and most other self-propelled vehicles and their parts

•   Cash, coins, precious metals, stock certificates, and other valuable paperwork

•   Damage from mold or mildew that could have been prevented by the property owner

Flood insurance also doesn’t cover costs incurred if you have to live in temporary housing because of damage to your property. Unfortunately, neither will the “loss of use coverage” you may have through your homeowners policy. (Loss of use coverage pays those expenses only when the reason you’ve been displaced is covered by your homeowners policy.)

What Does Flood Insurance Cover in the Basement?

The NFIP’s coverage for flood damage in the basement is limited to some specific (usually permanent or attached) items and cleanup. Some examples of what should be covered include:

•   Central air conditioners

•   Fuel tanks and the fuel in them

•   Furnaces and water heaters

•   Sump pumps, heat pumps, and well water tanks and pumps

•   Electrical outlets, switches, and junction and circuit breaker boxes

•   Unfinished drywall for walls and ceilings

•   Attached stairways and staircases

•   Foundation elements and anchoring systems required for building support

Most personal property kept in the basement isn’t covered, including clothing, computers, TVs, and furniture.

Where Can You Get Flood Insurance?

Federal flood insurance isn’t sold directly by the federal government. Instead, you can buy NFIP policies through private insurance companies, under what’s known as a Write Your Own (WYO) program.

The NFIP partners with more than 50 insurance companies, so you may be able to work with the same insurance agent or broker who helped you purchase your home and auto policies to get flood coverage.

You can get help finding an NFIP provider online at floodsmart.gov/ flood-insurance-provider or by calling the NFIP at 877-336-2627. You also can also check into any private, non-government-backed flood insurance policies that are offered in your area.

You may want to look at including flood insurance as part of your overall personal insurance planning. Don’t wait until you hear predictions of a storm heading your way to start inquiring about a policy, though. There is typically a 30-day waiting period for a flood insurance policy to go into effect.

How Much Does Flood Insurance Cost?

Like most insurance, the cost of a flood policy can depend on the coverage type (building and/or personal contents), the size and age of the building covered, the risk level in your location (based on your flood zone), and other factors, including whether you’re buying a private or NFIP policy.

According to a 2022 Forbes Advisor analysis of flood insurance rates, the average cost of one year of coverage with an NFIP policy is $995. And though that’s not nearly as much as the average cost of a homeowners policy, it can still be a hit to many household budgets.

You may be able to lower the cost of a flood policy by choosing a higher deductible. You can also elevate your home’s electrical panels, heating and cooling systems, and other utilities so they’re less vulnerable to water damage.

For renters, the NFIP offers contents-only policies for as low as $99 annually.

You can also look for a competitive quote on a private flood policy that isn’t backed by FEMA and the NFIP. Just make sure you’re getting a fair price from a stable company that is capable of paying out claims in the event of a major flood.

When Is Flood Insurance Required?

If you have a government-backed mortgage and your home or business is in a high-risk flood area, you are required to have flood insurance. If you don’t have a government-backed loan, your lender may still require that you purchase a flood policy. Even lenders in moderate- to low-risk locations may make it a loan requirement. (You may also be interested in Is Homeowners Insurance Required to Buy a Home?)

Who Should Buy Flood Insurance?

Knowing your designated flood zone can help you decide whether you want to prioritize purchasing flood insurance. You can find your zone by entering your address at the FEMA Flood Map Service Center at MSC.FEMA.gov.

Structures in zones A and V are at the highest risk, while those in zones B, C, and X are considered at moderate to minimal risk. Keep in mind, though, that you can still experience flood damage even if you don’t live in a high-risk zone. According to NFIP data, more than 20% of all insurance claims come from moderate- to low-risk zones.

If you’re moving to a new area where flood insurance isn’t required, you may want to speak with your real estate agent or neighbors about the area’s history and potential for flooding.

How Much Flood Insurance Do You Need?

In many ways, shopping for flood insurance is similar to how you buy homeowners insurance: Calculating how much you’ll need will depend on what you plan to protect and what it might cost to replace if it’s destroyed.

In fact, your homeowners insurance company may give you an idea of what it might cost to rebuild or repair your home if it’s damaged. Then you can add on the value of your furnishings and other personal possessions to decide how much flood insurance you need. (If you’re a renter, you can purchase a policy that covers only your belongings.)

Remember, there are limits to how much coverage you can get through an NFIP policy ($250,000 for a building and $100,000 for the contents). If your needs go beyond those limits, you may want to consider buying excess flood insurance through a private flood policy.

The Takeaway

Most homeowners insurance policies don’t cover flood damage, which can leave a big gap when it comes to protecting your home and belongings. Purchasing a separate flood insurance policy can help fill that gap, and it can be an important part of your overall insurance planning. Flood policies can cover the building itself, its contents, or both. Make sure you understand what isn’t covered by your policy, such as personal belongings stored in the basement or outside. An average flood insurance policy for homeowners costs $995 a year.

How can SoFi help? While we don’t offer flood insurance, we have teamed up with top carriers to help you find reliable homeowners and renters insurance online. With SoFi, you can easily search for the coverage you need at a price you can afford.

FAQ

What losses are covered by flood insurance?

A flood insurance policy covers direct physical losses caused by a flood. That could mean repairing or replacing your home, or the furnishings and other belongings in your home, or both.

How do I know if I’m in a flood zone?

Everyone is in a flood zone, but some areas are at a higher risk than others. You can find your zone by entering your address at the FEMA Flood Map Service Center at MSC.FEMA.gov.

Is flooding covered by homeowners insurance?

Some types of water damage are covered by a standard homeowners policy, but flooding usually is not.

Photo credit: iStock/onurdongel

Insurance not available in all states.
Gabi is a registered service mark of Gabi Personal Insurance Agency, Inc.
SoFi is compensated by Gabi for each customer who completes an application through the SoFi-Gabi partnership.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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There is no minimum credit score needed for a credit card. Even borrowers with poor credit (a score of 300) or no credit card at all can qualify for some credit cards. However, options for bad-credit borrowers are limited and usually come with a high annual percentage rate (APR) and fees. Borrowers with no credit or poor credit may also only qualify for secured credit cards.

By boosting your credit score, you’ll have more options for credit cards with better rates, fees, and even rewards, bonuses, and perks. In this piece, we’ll review:

•   How your credit score affects credit card approval

•   The minimum credit score for a credit card

•   How your credit score is calculated — and how you can improve it

•   Credit cards for borrowers with fair, bad, and no credit

How Your Credit Score Affects Your Odds of Credit Card Approval

A good or excellent credit score increases your odds of credit card approval. But if you have a bad credit score, you’re not out of luck. Some credit card issuers have options for borrowers with no credit history or extremely low credit scores.

Before applying for a credit card, it’s a good idea to read the fine print for that specific card. Often, credit card companies will list their minimum credit score requirements for the card. If you’re at the bottom of the stated range, you may have a harder time qualifying.

To avoid getting declined (and having an unnecessary hard inquiry on your credit report), you may want to consider a less competitive credit card that you’re more likely to be approved for based on your credit score.

What Credit Score Do You Need to Get a Credit Card?

While there is no minimum credit score to get a credit card, you’ll need a higher credit score to qualify for the best credit cards available. Typically, travel credit cards and cash-back credit cards are reserved for borrowers with good to excellent credit (670 and above on the FICO scale).

If you have a fair credit score, you might be able to qualify for a decent credit card with a higher annual percentage rate (APR) and limited perks. Experts recommend having at least a 600 credit score to qualify for a standard credit card.

Borrowers with bad credit or no credit at all may be limited to secured credit cards (cards that require a security deposit as collateral), credit-building cards, or high-interest credit cards with high annual fees.

Recommended: How to Avoid Interest On a Credit Card

Tips for Estimating the Credit Score You Need

How can you determine a credit card’s credit score requirements? Here are a few ways to estimate the minimum score you’ll need:

•   Checking the website: Often, the credit card issuer will advertise in plain writing what credit score is required for each of its credit cards.

•   Reading reviews: If the issuer’s website isn’t clear, you may want to check third-party review websites, which often print the recommended credit scores needed for credit cards.

•   Using third-party services. Platforms like Credit Sesame and Credit Karma can predict which credit cards you’ll qualify for with your current credit score — but it’s never guaranteed. Such services also typically offer free credit score monitoring.

•   Getting preapproved. Many credit card issuers offer preapproval for their cards. This means they only initiate a soft pull on your credit report (with no effect on your credit score). A preapproval is not a guaranteed yes; you still have to go through the process, but it can instill more confidence if you’re worried about your chances.

Recommended: Does Checking Your Credit Score Lower Your Rating?

Factors Affecting Your Credit Score

Boosting your credit score is a great way to qualify for more (and better) credit cards. But knowing how to increase your credit score requires that you know what affects your credit score in the first place.

FICO and VantageScore both constantly monitor consumers’ credit and assign them different credit scores based on a consumer’s activity. While the models are similar, each company uses its own proprietary scoring method to calculate credit scores. Both scores range from 300 to 850.

FICO Scoring Method

Your FICO credit score depends on five key factors:

•   Payment history (35%): The largest factor impacting your credit score is your payment history. Making on-time payments not just for loans but for things like rent and utilities will boost your score. Late payments can stay on your credit report for up to seven years.

•   Credit utilization (30%): Using less of the credit available to you can raise your score; on the other hand, maxing out each card in your name every month can lower your score.

•   Credit history (15%): Everything’s better with age, so they say. The length of your credit history plays an important part in your credit score. Responsible credit users should see their scores increase over time.

•   Credit mix (10%): Having a healthy mix of loan types (both installment credit and revolving credit) can boost your score — if managed properly. That means mortgages, auto loans, student loans, personal loans, and credit cards can all help your credit score.

•   New credit applications (10%): When you apply for new credit, lenders will make a hard inquiry on your credit report. Even if you are denied the credit, this inquiry will temporarily lower your credit score, which is how applying for a credit card affects your credit score.

Recommended: When Are Credit Card Payments Due?

VantageScore’s Scoring Method

VantageScore, on the other hand, assigns different factors a value of influence:

•   The most influential factor affecting your VantageScore is payment history, as it is with FICO.

•   Three highly influential factors include the age of credit, type of credit, and credit utilization.

•   A moderately influential factor is the total debt balance you maintain across all loans.

•   The least influential factor is your recent credit activity (opening new accounts, recent hard inquiries, etc.).

Recommended: How Often Does Your Credit Score Update?

Tips for Improving Your Credit Score

Wondering how to improve your credit score to increase your chances of credit card approval? Here are some tips:

•   Understand your credit score: The first step to improving your credit score is knowing how it’s calculated — and knowing what your current credit score is.

•   Make on-time bill payments: Paying bills on time is good for more than just avoiding late fees. It’s also the top factor in determining your FICO score and VantageScore.

•   Decrease your credit utilization: By reducing the amount of purchases on your credit cards — and paying them off in full every month — you’ll decrease your credit utilization, which can boost your credit score.

•   Become an authorized user: If you have no credit history or are repairing bad credit, you may benefit from becoming an authorized user on a loved one’s credit card. If they are responsible with the card, it’s an easy way for you to boost your score without applying for your own card.

•   Keep old cards open: Once you qualify for better credit cards, you may be tempted to close out old accounts. But each of those cards has a credit limit. By keeping the card open but not using it, you decrease your overall credit utilization and keep the average age of your credit higher. The exception: If the card has an annual fee and you’re not using it for anything, it’s probably not worth keeping it open.

•   Only apply for credit cards when you need them: Each time you apply for a credit card, the issuer enacts a hard inquiry on your credit report, which lowers your score. Because of this, it’s a good idea to wait at least six months between credit card applications — and only apply when you need to. Choose your credit card applications wisely.

Recommended: Tips for Using a Credit Card Responsiblya

Getting a Credit Card with Bad Credit

Bad credit is not a death sentence on your chances of getting a credit card. In fact, you can find credit cards on the market designed specifically for people with bad credit. However, such cards typically have high fees and interest rates.

If you’re worried about high fees and rates, a secured credit card for bad credit may be the better option. Some secured credit cards even approve borrowers without conducting a credit check and have no APR. The big difference between a secured vs. unsecured credit card is that secured credit cards require a security deposit, which acts as the card’s credit limit.

Alternatively, bad-credit borrowers may be able to qualify for a retail credit card. While retail credit card credit score requirements vary, many are available to borrowers with limited or bad credit.

Recommended: What is the Average Credit Card Limit?

Getting a Credit Card with Fair Credit

With a fair credit score (580 to 669 per FICO), you won’t qualify for the top rewards credit cards available. That being said, it’s still possible to get approved for an unsecured credit card with no annual fee and limited perks.

Interest rates tend to be higher for those within this credit score range, but if you can pay the card off in full every month, you won’t have to worry about racking up credit card debt. Eventually, you may even improve your credit score enough to graduate to a rewards credit card with a better rate and terms.

Getting a Credit Card with No Credit

What if you have no credit history at all? Believe it or not, you can still qualify for a credit card with no credit history — though your options may be more limited.

Like borrowers with bad credit, you can likely qualify for no-frills secured credit cards if you can come up with the security deposit. Alternatively, borrowers without an established credit history can ask a close friend or family member to be added as an authorized user on their card. There are also credit cards designed for those who are currently enrolled in school.

The Takeaway

While there isn’t a minimum credit score for a credit card, having a good to excellent credit score improves your chances of approval for the top credit cards on the market. If you have a bad credit score or no credit history at all, you may be able to qualify for secured credit cards or credit cards. However, you’ll generally face higher fees and APRs.

Even if your credit score is not as high as you might like, there are likely options available if you are seeking a credit card, though they may not come with all the perks. If your score is fair or poor, look into secured credit cards or ways to build your score.

Whether you're looking to build credit, apply for a new credit card, or save money with the cards you have, it's important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.

FAQ

Can you get a credit card with limited or no credit history?

Yes, you can get a credit card with limited or no credit history. Borrowers with no history can look for secured credit cards or consider becoming an authorized user on someone else’s credit account. Without credit history, however, you likely will not qualify for low-APR credit cards or rewards credit cards.

Can I get a credit card with a score of 600?

Yes, with a credit score of 600 (in the fair credit range), you may qualify for basic credit cards that offer limited perks, if any. You likely will not be able to qualify for a rewards credit card. However, credit card issuers may at least approve you for an unsecured credit card, though likely with a higher APR.

What is the easiest card to get approved for?

If you have no credit history (or a limited credit history) or a bad credit score, the easiest card to get approved for is typically a secured credit card. Secured credit cards present lower risk to credit card issuers because borrowers must make a security deposit that serves as collateral.

Photo credit: iStock/Antonio_Diaz

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

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Figuring out whether you will get approved for a credit card is seemingly simpler now with credit card approval odds calculators. These tools can offer guidance, highlighting credit cards with high approval odds in your favor. However, they are not always reliable.

Still, learning how to leverage the approval odds information that these tools provide can be helpful. You can use the insights to make yourself a more desirable borrower for credit card companies, thus increasing your future approval odds.

What Are Credit Card Approval Odds?

Credit card approval odds inform you of the likelihood that you’d get approved for a particular credit card. How these approval odds are determined, including which details are assessed, can vary between services and card issuers.

For example, a credit card approval odds calculator might suggest that, based on your credit score and income, you have an 80% chance of getting approved for a credit card. It might also offer you a few credit cards with high approval odds to explore.

Checking Your Credit Card Approval Odds

Using a credit card approval odds calculator offers a glimpse of your approval chances, but not a promise. That’s because a credit card company or credit card marketplace can’t provide a 100% assurance of your approval without going through a formal underwriting process.

Underwriting is the step where a lender or issuer evaluates your credit portfolio and application details (like existing debt and income) to calculate whether it would be a risk to loan credit to you. Since this process can only happen after an application is submitted, a tool that states you have high approval odds doesn’t mean your eventual approval is guaranteed.

Prequalifying for a Credit Card Approval

There are a couple of ways to obtain a pre-screened credit card to gauge your approval odds: Receiving a pre-qualification offer or requesting a pre-qualification from a credit card issuer.

Using a Prescreened Offer

Based on your general information from the credit bureaus, card issuers might send you an unsolicited prescreened offer stating that you might be qualified for its credit card.

At this step in the process, the card company has only looked at limited markers, like whether you’ve met its minimum credit score requirement. It hasn’t performed a hard credit check, nor evaluated your existing debt or income to base an approval on. However, if you receive a pre-qualification offer, this can be a positive sign that your approval odds are better than if you hadn’t received it.

Checking the Card Issuer’s Website

You don’t always have to cross your fingers in hopes that a card issuer will give you a prescreened offer. Some credit card issuers offer a pre-screening form that you can fill out to see if you’re pre-qualified for its card. If your preferred card doesn’t let you request a pre-qualification, you might find more insight on the issuer’s website about what’s required for approval.

While you’re on the card issuer’s site, it’s helpful to review its response timelines so you can track your pre-qualification or application progress. This includes the timeline for an application decision, as well as how long it takes to get a credit card if you’re approved.

What To Do if You Prequalify

If you prequalify for a credit card, you can choose to submit an application. Doing so will require a hard credit inquiry before a decision is made, which can temporarily have an effect on your credit score.

Additionally, you can continue shopping around for different cards to see if another product offers a lower interest rate or better incentives.

Recommended: How to Avoid Interest On a Credit Card

What To Do if You Don’t Prequalify

If you don’t pre-qualify for a credit card, you can proceed in a few ways:

•   Hold off on getting a new card. Too many hard credit inquiries might flag you as a high-risk borrower who’s reliant on credit. If you’ve recently had multiple inquiries on your credit, consider waiting a couple of months before re-applying for a new card.

•   Work on your credit score. All card issuers look at your credit score to see if it meets its minimum requirement. A higher credit score is a positive indicator that you’re a responsible borrower.

•   Apply for a secured credit card. A secured credit card is a credit-building card in which you deposit money or collateral in a certain amount. This amount acts as your credit limit.

•   Appeal the decision. If you applied for a credit card and were denied, the issuer must legally inform you of the reason for the denial. If you can provide more information that might sway the issuer in your favor, you can ask them to reexamine your application.

Recommended: Tips for Using a Credit Card Responsibly

Tips for Improving the Likelihood of Approval

Whether you’re getting a credit card for the first time or adding a new card to your rotation, there are a few steps you can take to improve your approval odds.

Reviewing Your Credit Report

Your credit report gives credit card issuers a comprehensive view of your borrowing habits to date. Since it’s a highly scrutinized factor when approving applications, review your credit report before submitting an application.

Check that all accounts, their statuses, and the amounts are accurate. If you spot an account that looks outdated or incorrect, reach out to the credit bureaus immediately to dispute it.

Taking a Look at Your Credit Score

In addition to ensuring your credit report is accurate, evaluate where your credit score stands today. Credit scores are the most common credit card requirements that influence your approval odds. For instance, if a card issuer explicitly states that its minimum credit score required is 720, but your score is 650, your credit card approval odds might be low.

Recommended: Does Applying For a Credit Card Hurt Your Credit Score?

Minimizing Your Debt

Keep your debt-to-income (DTI) ratio as low as possible. Credit issuers use this ratio as a way to determine whether you can afford to pay back potential purchases made on the card. The ratio is based on your aggregate monthly debt amounts divided by your gross monthly income.

Stating All of Your Income

As mentioned above, your income is one of multiple factors used to determine your credit card approval odds. A higher income can reduce your DTI ratio, making you a less risky customer to extend credit to.

You can include various types of income sources on your application. This might include your salary from your full-time job, earnings from a side gig, Social Security benefit payouts, and alimony.

Managing Payment History and Credit Utilization

Staying on top of your existing loan and credit card payments keeps your credit score healthy. This means paying at least the minimum amount due, and making those payments on time every month.

Additionally, be aware of how much of your total credit limit you’re using, compared to how much credit you have access to. This ratio is called your credit utilization ratio. There’s no golden credit utilization ratio to keep in mind, according to FICO, but the lower it is, the better.

Recommended: When Are Credit Card Payments Due?

Comparing Cards Carefully

With so many credit card products on the market, choosing a credit card that suits your borrowing needs and qualifications can help you find the right card.

Ensure you’re comparing credit cards with the same credit card features between different cards to accurately determine their pros and cons. Some considerations to make when comparing credit cards include:

•   APRs. The annual percentage rate, or APR, is how much you’ll pay in interest if you carry a balance on the card. The lower the interest rate, the better.

•   Balance transfer costs. Some issuers offer a zero-interest balance transfer promotion for a limited period, while others don’t. Similarly, some credit cards charge an additional balance transfer fee.

•   Penalty APRs. If your account becomes delinquent, some card issuers impose a higher penalty APR on your existing balances and future transactions. Make sure you understand how a credit card works and which rules apply.

•   Fees. Certain cards charge an annual fee just for the privilege of carrying the card. This fee is in addition to interest charges you might pay for rolling over a balance, month over month.

•   Rewards program. If you’re after credit card rewards, compare the details of each card’s program. For example, look at whether rewards points or miles are tiered or offered for specific categories, or if there’s a flat rewards rate for all purchases.

•   Incentives. You might encounter special promotions, like a welcome bonus or promotional 0% APR. These added perks should factor into your decision.

Recommended: What is a Charge Card?

The Takeaway

Although a credit card approval odds calculator or tool can offer broad guidance about whether you’ll be approved, it doesn’t replace a card issuer’s underwriting criteria. The credit card company relies on its own underwriting team to ultimately decide whether your application is approved. This decision is based on the specific information on your application and your creditworthiness.

Whether you're looking to build credit, apply for a new credit card, or save money with the cards you have, it's important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.

FAQ

Does getting rejected for a credit card hurt my credit?

A credit card pre-approval rejection doesn’t hurt your credit since pre-approvals typically involve a soft credit check. However, if you move forward with a credit card application that involves a hard credit inquiry, your credit score might temporarily drop, regardless of whether you were approved or denied.

Are credit card approval odds accurate?

Generally, credit card approval odds calculators offer guidance toward credit cards with good approval odds. However, they don’t provide a 100% guarantee that you’ll be approved. There have been reported cases of tools claiming that a consumer has high approval odds with a card, only to get denied upon applying. The card issuer is the only entity that can accurately say whether you’re approved for a credit card.

How can I improve my credit card approval odds?

The best way to get good approval odds for credit cards is to minimize high-risk borrowing practices. One way to achieve this is by building your credit score. Keep your credit balances low, make timely monthly payments, maintain long-standing credit accounts, and avoid opening multiple new lines of credit in a short period.

How do you guarantee credit card approval?

There’s no way to absolutely guarantee credit card approval to any particular card. Card issuers base their decisions on a number of factors, like your credit history, credit score, income, credit utilization, debt-to-income ratio, and more.

Photo credit: iStock/akinbostanci

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

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When you get preapproved for a credit card, this means you’ve met initial criteria to receive an offer to get a credit card. In other words, you’ve popped up on a list of consumers that fit the bill for a credit card company’s requirements and are being invited to sign up for a card.

In this piece, we’ll discuss exactly how preapproved credit card offers work, the difference between what preapproved for a credit card means vs. prequalifed, and the pros and cons of preapproved offers.

What Is a Preapproved Credit Card Offer?

As mentioned, a preapproved credit card offer is when a credit card company officially invites you to apply for a specific credit card. Credit card issuers usually use criteria pulled from credit reporting agencies to extend these offers. If you fall within the parameters of the credit card requirements set by the card issuer, then you may receive an offer — either via email, snail mail, or over the phone — to formally apply for approval for the card.

How Do Preapproved Credit Card Offers Work?

While it sounds promising, getting a preapproved credit card offer doesn’t necessarily mean you’re guaranteed to get approved for a credit card. Even if you’re preapproved, you’ll need to properly apply.

When you do, the credit card issuer will look over your application and usually request additional financial and personal information. The credit card company will also check your updated credit report to figure out if your credit still meets the criteria it referred to when it sent you the preapproved offer.

Preapproved vs Prequalified Credit Card Offers

The terms “preapproved” and “prequalified” often are used interchangeably when it comes to prescreened credit card offers. And within the realm of credit cards, they often are one and the same. But in other types of lending, they mean different things.

Prequalified offers are usually requested by you, the consumer. To get prequalified, you typically need to provide basic personal and financial information. During the screening process, the credit card issuer will check your credit. However, it will only conduct a soft pull, which won’t impact your credit score. After reviewing the info you submitted, the credit card company will let you know if you’re likely to get approved.

Preapproval, on the other hand, is when you’re prescreened for offers by the credit card company. These credit companies work with the three major credit reporting agencies — Equifax, Experian, and TransUnion — to come up with a list of consumers that meet their lending criteria.

With both preapproval and prequalification, you’ll still have to submit to a hard credit inquiry and potentially provide additional financial information to actually get approved for the loan product. Keep in mind that unlike a soft inquiry, a hard credit inquiry will temporarily affect your score.

Benefits of a Preapproved Credit Card

Now that you know what preapproved means for a credit card, you may be wondering what the benefits are. In general, these are the upsides of preapproval, whether for a valuable rewards card or a virtual credit card.

Indicates Your Odds of Approval

Perhaps the most obvious benefit of getting preapproved for a credit card is that you’ll have a better sense of how likely you are to ultimately get approved for the card. Although preapproval is not a guarantee of eventual approval, if a credit card issuer has already selected you to apply and your financial situation hasn’t drastically changed, you’re likely within the required parameters to get the card.

Won’t Impact Your Credit Score

One of the major benefits of getting preapproved for a credit card is that it won’t impact your credit score. To get preapproved, the card issuer does a soft pull of your credit. Only if you decide to formally apply for the card will the credit card company do a hard pull of your credit.

Could Allow You To Secure More Competitive Terms

Getting preapproved for a credit card may allow you to secure a lower interest rate than you’d otherwise be able to get. This is because the lender is effectively advertising the card to you in order to get you to apply. Keep in mind, however, that your rates aren’t set until after you formally apply.

Recommended: How to Avoid Interest On a Credit Card

May Provide Access to Better Intro Offers

Another advantage of a preapproved credit card is that it might come with more lucrative perks than what’s more widely advertised to the public. You might be privy to cards with more attractive sign-up bonuses or introductory earnings opportunities. For instance, a cash-back credit card might offer a higher initial earnings rate through preapproval offers.

Could Get a Longer Intro APR for Balance Transfers Cards

For balance transfer credit cards that allow you to transfer your existing debt over to the new card, you might be able to get a lower introductory annual percentage rate (APR) for longer through preapproved offers. This longer introductory period could make it easier to pay off your balance in full before the regular interest rate kicks in.

Easier for You

Because credit card companies have vetted you and know that you’ve passed its criteria, you don’t have to spend time researching cards. Instead, these offers are coming to you. Still, when choosing a credit card, it doesn’t hurt to take a look around to make sure this is truly the right fit for you.

Drawbacks of a Preapproved Credit Card

While there are benefits of preapproved credit card offers, there are drawbacks to them as well.

Might Not Be the Best Card for You

While you don’t have to jump through the same hoops as you would looking for a credit card on your own, the credit card you’re preapproved may not be the right one for you. It might be a good idea to spend some time doing your own research and understanding differences in how credit cards work even if you do get preapproved.

Could Get Flooded With Unwanted Offers

Preapproval offers may lead to getting a lot of unsolicited emails, mail, or phone calls. Especially if you’re not in the market for a new credit card, you could feel inundated with offers you don’t necessarily want or need.

Potential for Theft of Personal Information

There’s a chance that a would-be identity thief can intercept your prescreened offer and get ahold of your name and mailing address. The good news is that prescreened offers are one of the least likely forms of identity theft. Plus, an identity thief would likely need information beyond what’s included in a preapproval offer.

Data Privacy Issues

This is not very common, but there’s a chance that your name, address, and other personal information are stored in databases for consumers that qualify for prescreened offers. This means that in the instance of a data breach, your information could be accessed.

Temptation to Open More Cards

Receiving preapproved offers for credit cards may tempt you to open a new credit card you don’t necessarily need, especially if the preapproval offer includes a lucrative sign-up bonus or an extended introductory APR offer. Especially if you’re already set with your lineup of credit cards, this might entice you to take on more cards than you can comfortably manage.

When You May Need Credit Card Preapproval

You might want to receive a preapproved credit card offer if you’re in the market for a new credit card and would rather not go through the full process of researching credit cards. As you know you already meet certain lending criteria, the odds of getting approved for a card are improved.

Keep in mind, however, that you don’t need to get credit card preapproval in order to apply for a credit card. If you’re getting a credit card for the first time and have a limited credit history, for instance, you’re likely not going to get so many preapproval offers — but that doesn’t mean you can’t still try applying.

Recommended: What is the Average Credit Card Limit?

Tips for Getting a Preapproved Credit Card Offer

If you’d like to get preapproved offers, you’ll want to opt in by visiting OptOutPrescreen.com . From there, you can choose to get these offers through the mail, email, or via phone.

Instead of waiting for offers to come to you, you can also get preapproved by visiting a credit card issuer’s website and applying for prequalification. This typically requires providing basic personal and financial information.

Recommended: How Long It Takes to Get a Credit Card

Tips for Improving Your Chances of Preapproval

While you can still get preapproved for offers with not-so-great credit, you’ll get offers with the most favorable terms and rates with a strong credit score. To keep your credit score game strong and thus improve your chances of improval, make sure to do the following:

•   Avoid late payments

•   Keep your credit utilization rate low

•   Aim to keep cards open

•   Don’t apply for too many new accounts

•   Maintain a diverse mix of different forms of credit

Recommended: When Are Credit Card Payments Due?

How Does a Preapproved Credit Card Impact Your Credit Score?

A preapproved offer for a credit card doesn’t impact your credit score. As we talked about, lenders will do a soft pull of your score, which doesn’t affect your score.

But if you decide to apply for a card, the credit card issuer will do a hard pull of your credit. This will most likely ding your score, though generally only temporarily.

Recommended: When Are Credit Card Payments Due?

Opting Out of Preapproved Credit Cards

If you don’t want to get flooded by preapproval offers, you can decide to opt out. Visit the website OptOutPrescreen.com and follow the simple steps outlined on the website to do so. You then won’t be included on lists to get considered for preapproval for five years.

Recommended: Does Applying For a Credit Card Hurt Your Credit Score?

The Takeaway

A preapproved offer for a credit card means you’ve met certain lending criteria to most likely get approved for a specific card. You’ll still need to officially apply to secure approval though. But if your credit score and financial history are the same as when you initially received the offer, there’s a high likelihood you’ll get approved.

Whether you're looking to build credit, apply for a new credit card, or save money with the cards you have, it's important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.

FAQ

How long does it take to get a credit card if you are preapproved?

It depends on the credit card and credit card company. If you’re preapproved for a card, you’ll still need to officially apply. If you do get approved for a card, it could take anywhere from five business days to two weeks for your card to arrive in the mail.

Can you get denied after preapproval?

In some cases, yes. For instance, if your credit or financial situation changed between the time you received a preapproved offer and when you applied, you might get denied.

Can I get a credit card if I am not preapproved or I don’t qualify for a credit card?

Yes, you don’t need to get preapproved for a credit card; it simply nixes a few steps and boosts your odds of getting a card. However, you will need to qualify for a credit card to get it. This happens if you meet the credit card company’s lending criteria. If you do, you’ll have a chance of getting a particular credit card.

Should I still apply if I am not preapproved for a credit card?

Just because you aren’t preapproved doesn’t mean you won’t be able to get a particular credit card. Spend some time doing your homework to figure out which cards are a good fit for your needs and financial situation. When choosing a credit card, it’s important to check the rates, credit limits, and fees.

Photo credit: iStock/akinbostanci

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

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