When applying for any type of funding, including a credit card, it is very important to understand what your credit score is, and how it impacts your lending terms.  If you have found your score puts you into the "Fair Credit" category, you may be left wondering what exactly that means.

Let's begin by taking a look at credit scores in general.  Credit scores can range anywhere from 300 to 850, and are based upon a person's personal credit history.  The only exception to this rule is for a person with no credit, as he or she typically has a credit score of zero.  This person usually has no credit at all because they have never applied for any type of loan or credit card.

The next step above this is a person with "bad" or "poor" credit.  This means the person's credit category's score can range anywhere from 300 to 619.  Just above bad or poor credit is "fair credit" with a score range of 620 to 659.  Good credit comes next with a score range of 660 to 749, followed by excellent credit with a score range of 750-850.

The credit score is a numerical representation of a person's overall credit worthiness.  Every single person who has some type of credit (such as loan, mortgage, or credit card) has a credit score.  This number helps a potential lender assess exactly how "risky" the borrower is, as the higher the score the less the potential risk.  This number is often the main deciding factor as to whether or not you will be approved for a credit card, as well as what type of credit card you qualify for.  Higher scores mean better offers, with lower interest rates.

Now that you have a better understanding what the category scales are, and a general idea of how a credit score impacts your financial potential, let's take a look at how credit scores are calculated.

A person's personal credit score is determined by assessing five particular areas:

1. Payment History:  Do you make all of your payments on time each month?  How often have you missed a payment completely?  How often are your payments late?
2. The Total Amount Of Money You Owe:  Are all of your credit cards maxed out?  Do you owe much more than you make?
3. How Long Is Your Credit History:  Do you have a lot of brand new accounts with little traceable history?  Have you had most of your cards or loans for an extended period of time that allows creditors to track your behavior?
4. What Type Of Credit Do You Have:  Do you have a mix of credit types, such as credit cards, car loans, mortgages, etc.?  Or do you have just one form of credit such as credit cards?
5. How Much New Credit Do You Have:  Do you have any brand new accounts?  Are all of your accounts ones that have been held for a number of years?

Each and every one of these areas can affect your total credit score.  If you have been categorized with "average credit", all is certainly not lost.  This simply means you have an average credit rating, although it is not completely ideal.

You are most likely eligible for credit cards that are targeted more toward people with your type of credit.  These cards may come with stricter than normal terms, higher interest rates, and annual fees, so make sure to read all the terms and use a bit of caution when applying.