Key Highlights
Here are the main things to know about having a 650 credit score:
- A 650 credit score is considered a fair credit score, placing you in the subprime borrower category.
- While you can qualify for various loan options and a credit card, your interest rates will likely be higher.
- This score is below the U.S. average, but it’s a solid foundation for improving your credit history.
- You may qualify for certain home loans, like an FHA loan, with this score.
- Reviewing your credit report for errors and practicing good habits can help raise your score.
Understanding a 650 Credit Score
So, is a 650 credit score considered good or bad? A 650 credit score lands you in the “fair” score range. It’s not a bad score, but it’s not considered good, either. It suggests to lenders that you’ve managed your credit responsibly for the most part, but there may have been a few slip-ups in your credit history.
This number is a snapshot of your creditworthiness, calculated by credit bureaus using complex credit scoring models. What a 650 credit score means is that you can access credit, but you might not get the most favorable terms. Let’s explore what having this score means for your financial opportunities.
What a 650 Credit Score Means in the U.S.
In the United States, a 650 credit score places you squarely in the fair credit score category according to the most common scoring model providers, FICO and VantageScore. While FICO defines the fair range as 580-669, VantageScore considers it 601-669. This means you’re not in the poor credit zone, but you haven’t quite reached good credit status.
Lenders often view borrowers in this credit score range as “subprime,” which indicates a slightly higher risk. As a result, while you can still get approved for loans and credit cards, the terms might be less appealing than those offered to people with higher scores. The major credit bureaus—Experian, Equifax, and TransUnion—compile the credit report data used to calculate this score.
Common reasons for having a 650 score can include a history of a few late or missed payments, carrying high credit card balances relative to your limits, or having a relatively short credit history. Examining your credit report can reveal the specific factors impacting your score.
Where 650 Falls on the Credit Score Scale
A 650 score is a fair score, but it’s important to understand where it fits in the broader picture. Most credit scoring models, like FICO and VantageScore, use a scale from 300 to 850. Your score of 650 is below the average US credit score, which is around 714. This means there’s definitely room for improvement to reach a good credit score or even excellent credit.
Being in the fair credit score category means you are on the cusp of the good credit score range. With a few positive changes to your financial habits, you could see your number climb into a more favorable tier, unlocking better loan terms and interest rates.
Here’s a general breakdown of where a 650 score falls within the common credit score range categories:
| Credit Score Category | FICO Score Range | VantageScore Range |
|---|---|---|
| Excellent Credit | 800-850 | 781-850 |
| Good Credit | 670-799 | 661-780 |
| Fair Credit | 580-669 | 601-660 |
| Poor Credit | 300-579 | 300-600 |
Loan and Credit Card Options with a 650 Credit Score
Having a 650 credit score affects your chances of approval by placing you in a middle ground. You’ll likely qualify for some types of loans and credit cards, but you may not have access to the most premium offers. Credit card issuers and lenders will look at your fair credit score and see you as a potential customer, but one with a bit more risk.
This means you can probably get an auto loan, personal loan, or even some types of a home loan. However, your approval might come with higher interest rates or lower credit limits compared to someone with a good or excellent score. Let’s look at the specific options available to you.
Types of Mortgages Available and Approval Chances
Yes, you can absolutely qualify for a mortgage with a 650 credit score! While some different lenders have stricter requirements, your fair credit score meets the minimum credit score for several popular home loan programs. Your income, debt, and down payment will also play a significant role in your approval.
One of the most accessible options is an FHA loan, which is backed by the Federal Housing Administration. These loans are designed for borrowers with less-than-perfect credit. With a score of 580 or higher, you can qualify for an FHA loan with a down payment as low as 3.5%, though you will have to pay mortgage insurance.
Other potential mortgage options for you include:
- VA Loans: If you are a veteran, active-duty service member, or eligible spouse, you may qualify for VA loans, which often have no down payment or minimum credit score requirement.
- USDA Loans: For purchasing a home in an eligible rural area, these loans also often come with no down payment requirement.
- Conventional Loans: While the minimum credit score is typically 620, a 650 score may require a larger down payment and a lower debt-to-income ratio to qualify.
Auto Loans, Personal Loans, and Credit Cards: What to Expect
With a 650 score, your chances of approval for an auto loan are quite good, though you can expect higher interest rates than someone in a better score range. For example, borrowers in the 620-659 range see average rates that are significantly higher than those for prime borrowers. It’s crucial to shop around with different lenders to find the best possible terms for your situation.
Similarly, you should be able to qualify for a personal loan. Marketplaces that look beyond just your credit score can be a great option, as they consider your income and overall financial picture. For credit cards, your options are a bit more varied. Credit card issuers might not approve you for premium rewards cards, but you can likely get a standard or subprime credit card.
If you struggle to get approved for a traditional card, consider these alternatives to build your payment history:
- Secured Credit Cards: These require a cash deposit that becomes your credit limit, making them easier to obtain.
- Store Credit Cards: Retailers often have less stringent approval criteria for their branded cards.
How a 650 Credit Score Affects Interest Rates and Renting
Your credit score directly influences the interest rates you’re offered on loans and credit cards. With a 650 credit rating, lenders see you as a moderate risk, which translates to a higher average interest rate. This means your monthly payments will be larger and you’ll pay more over the life of the loan compared to someone with a higher score.
Beyond borrowing, your score can also impact your ability to rent an apartment. Many landlords run a credit check as part of the application process. While a 650 score isn’t usually a deal-breaker, it is a factor they consider. We’ll explore what you can expect for both interest rates and renting.
Typical Interest Rates You Might Receive
What interest rates can you expect with a 650 credit score? Generally, you will face higher rates than borrowers with good credit. Lenders reserve their best rates and better interest rates for applicants with higher credit scores because they are seen as less risky. Your 650 credit rating places you in a subprime category, meaning the cost of borrowing will be more expensive.
This higher cost is how lenders balance the risk associated with lending to someone who doesn’t have a perfect credit history. Improving your score is the most effective way to qualify for lower rates in the future. Even a small increase in your score can lead to significant savings over time.
To give you an idea, here are some typical average interest rate ranges you might see for different loans with a fair credit score:
| Loan Type | Average APR for Fair Credit (601-660) |
|---|---|
| Auto Loan (New Car) | Around 9% |
| Auto Loan (Used Car) | Around 13% |
| Personal Loan | 13% to 20% |
| Mortgage (30-Year Fixed) | Can be 1-2% higher than for top-tier scores |
Can You Rent an Apartment with a 650 Credit Score?
A 650 credit score will generally not prevent you from being able to rent an apartment. While landlords do check your credit report, it’s just one piece of the puzzle. They are primarily looking for red flags in your payment history, such as evictions, collections from previous landlords, or a pattern of late payments.
With a fair credit score, a landlord may have some questions but is unlikely to reject your application based on the number alone, especially if you have a stable income and a clean rental history. They want to see that you are a reliable tenant who will pay the rent on time each month.
To strengthen your application, you can offer to pay a larger security deposit, provide letters of recommendation from previous landlords, or show proof of a steady income. Having a solid credit history with no major blemishes will work in your favor, even if your score isn’t perfect.
Steps to Improve a 650 Credit Score
The good news is that a 650 credit score is a great starting point for building toward higher credit scores. The key is to focus on the factors that have the biggest impact, such as your payment history and credit utilization. Making timely payments is the most important habit you can adopt.
You should also regularly check your credit report for any errors or signs of identity theft that could be holding your score down. Limiting recent credit applications and managing your existing credit wisely are also crucial. Below are some healthy habits you can start today to improve your score.
Healthy Credit Habits to Adopt
Adopting healthy credit habits is the most reliable way to raise your credit score. The most critical factor in your score is your payment history, so establishing a track record of timely payments is your top priority. Always pay at least the minimum amount due on all your bills before the deadline.
Another significant factor is your credit utilization ratio, which is the amount of revolving credit you’re using compared to your total credit limit. Experts recommend keeping this ratio below 30%. For example, if you have a $1,000 credit limit, try to keep your balance below $300. Paying down your credit card balances is a quick way to improve your credit utilization rate.
Here are some other powerful habits to build a stronger credit history:
- Check for Errors: Regularly review your credit reports for mistakes or fraudulent activity. Disputing inaccuracies can provide a quick boost.
- Don’t Over-Apply for Credit: Too many applications in a short period can temporarily lower your score. Only apply for credit when you truly need it.
- Consider a Secured Credit Card: If you have trouble managing traditional credit, a secured credit card can help you build a positive payment history without the risk of overspending.
- Maintain a Good Credit Mix: Having a combination of different credit types, like installment loans and credit cards, can be beneficial over time.
How Long Does It Take to See Improvement?
Improving your credit score doesn’t happen overnight, but you can see positive changes relatively quickly if you’re consistent. Rebuilding your credit history takes time and patience. Actions like making timely payments and paying down balances on your credit accounts can start to reflect on your credit report within one to two months.
However, moving into a new score range, like from fair to good, will take longer. Most people who adopt the right habits can see some noticeable improvement within a year. The more positive information you add to your credit file, the more your credit score will grow.
Negative marks, like late payments or collections, will have less of an impact as they age and will eventually fall off your report after seven years. The key is to focus on consistent, positive actions now. By doing so, you’ll be well on your way to achieving a higher score and better financial opportunities.
Frequently Asked Questions (FAQ)
Understanding credit can be confusing, but it’s important to get the answers you need. Common questions include what constitutes a good credit score and how factors like payment history and credit utilization affect it. Many wonder how a score of 650 is perceived by credit bureaus or how it limits borrowing options. Additionally, people often ask about the best ways to improve their score, such as managing credit card balances or ensuring timely payments. Don’t hesitate to ask questions—personal finance is a learning journey!
Can I get approved for a mortgage with a 650 credit score?
Yes, you can get approved for a mortgage with a 650 credit score. You may qualify for an FHA home loan with a low down payment, although you’ll likely have to pay mortgage insurance. Lenders will also review your entire credit report, income, and existing debts during the approval process.
How can I quickly raise my score from 650 to 700?
To raise your score quickly, focus on two key areas: your payment history and credit utilization. Make all timely payments and pay down your credit card balances to get your utilization ratio below 30% of your credit limit. These actions can have a significant and relatively fast impact on your score.
Is 650 below the average credit score in the U.S.?
Yes, a 650 credit score is below the average credit score in the U.S., which is around 714. A score of 650 falls into the fair credit score category. While it’s not a poor score, it’s just below the good credit score range, which typically begins at 670.
Conclusion
In summary, a credit score of 650 is often seen as a modest rating that can open some doors but may also bring challenges in securing the best loan terms. Understanding what this score means for your financing options, from mortgages to credit cards, is crucial for making informed decisions. By adopting healthy credit habits and being proactive about improving your score, you can pave the way towards better financial opportunities. Remember, every small action contributes to enhancing your creditworthiness. If you’re ready to take control of your finances, don’t hesitate to reach out for a free consultation to discuss strategies for boosting your credit score and unlocking greater financial potential.
Frequently Asked Questions
How long does it usually take to improve a 650 credit score?
It takes time, but you can see improvements to your credit score within a few months by making timely payments and reducing debt. Significant jumps, like moving to a new score category, often take about a year of consistent effort. A longer length of credit history with positive marks will lead to a higher score.