The Indigo Mastercard is a popular option for people looking to rebuild their credit score. In fact, Indigo’s website states the card is ideal “for those with less than perfect credit.” As with any credit card offer, however, doing your homework is essential before making the jump and applying. Here are three factors you should know as you consider applying for the Indigo Mastercard:
You Can Pre-Qualify with a Soft Inquiry
One of the Indigo Mastercard‘s best features is that it will not hurt your credit score to inquire about your suitability for the card. Indigo conducts what is known as a “soft pull” to pre-qualify potential applicants.
A “soft pull” is a type of credit check where the credit card issuer pulls basic information from a credit file instead of pulling their entire credit history. Because a soft pull has no impact on credit scores, it is preferable to hard inquiries. Those with low credit scores can immensely benefit from credit cards that only require a soft pull, as they may provide better odds of receiving new credit.
The Indigo Mastercard Great for Building Credit
Building credit is difficult. Whether you are establishing it for the first time – or trying to recover from a bankruptcy, foreclosure, or another financial hit – finding a lender willing to extend credit is challenging.
Credit builder credit cards, like the Indigo Card, are vital lifelines in this credit journey. The Indigo Card reports to all three major credit bureaus – TransUnion, Equifax, and Experian – meaning exercising financial responsibility can pay dividends quickly.
Finding a quality credit card, like the Indigo, is just one piece of the puzzle, however. The other part is using the card responsibly.
Payment history is the single biggest impactor of the FICO credit scoring model. This means paying your balance on time every month is the best way to boost your credit score. Part of making on-time payments each month is paying the statement balance in full. Paying in full eliminates the need to pay interest on the card, saving you money and simultaneously building your credit score.
It Features a Modest Credit Limit
Paying in full each month is also essential because the Indigo Card comes with a relatively modest credit limit to start. The initial credit line with Indigo is $300.
Paying off account setup fees is a great way to establish a solid payment history, however. Once those fees are taken care of, paying in full is essential for keeping credit utilization low. Credit utilization, or how much you are using of your available credit lines, accounts for 30% of a FICO Score. Ideally, you want to keep your credit use below 10%, as this is the fastest way to improve your credit score. If that isn’t possible, however, aim for less than 30% usage.
Is the Indigo Mastercard Right for You?
Like any subprime credit card, the Indigo Mastercard has its pros and cons. The biggest drawback with the card is the low credit limit. Fortunately, this downside is tempered with the knowledge that the card does not require a cash deposit, like a secured credit card.
The Indigo’s most significant upside is that it provides a decent avenue into credit repair for those who might not find a card from other banks. And, since Indigo conducts a soft inquiry to pre-qualify potential applicants, there is less worry about rejection.
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