Your credit score is a three-digit number which has a significant impact on all areas of your financial life. This number will determine whether or not you are approved for a loan, mortgage, lines of credit and credit card accounts. Lenders look at your credit score to gauge their risk level when considering a request for credit. The higher your score, the higher your chances of becoming a borrower.
Your credit score will also affect the terms and conditions associated with your account, to include interest rates and fees applied to the account. This powerful number doesn’t stop there; it is also viewed by insurance companies to determine policy rates and potential employers- if part of your duties involve handling finances. With so much at stake, it becomes clear why a good credit score is important.
Credit Score Range
The range in which your credit score falls has changed over time. If you haven’t recently checked to see what your score falls under, it is important to learn so now. A few points in either direction can move your score from good-to-great or average-to-poor. Consider the following FICO scoring range to see where your score falls.
- 579 or lower – Very Poor, the chances of qualifying for any type of credit are slim.
- 580-619 – Poor, you may qualify for credit and loans for bad credit consumer.
- 620-659 – Below Average, qualify for more loans but rates and terms will be high.
- 660-699 – Average, better than average but still not qualifying for favorable terms.
- 700-749 – Good, qualifying for loans and credit is no problem and rates get better.
- 750-849 – Excellent, a score in this range is the best possible with the most favorable rates and terms reserved for consumers in this elite group.
As you can see, a credit score of 650 is considered average in this range. A person with a 650 credit score could easily make changes in the way they manage their finances to move into the next higher range which improves their chances of qualifying for loans and credit.
Other Factors Which Determine Credit Worthiness at 650 credit score
There is a big focus on credit score and where it falls within the scoring range, however that is not the only factor lenders consider. To better determine how much you can get with an average credit score of 650 you must first look at the type of loan or credit for which you are applying.
Are you in the market for a balance transfer credit card to help consolidate debt? Or are you hoping to buy a new car or purchase a home? The type of loan as well as the lender will play a huge role in whether or not you qualify for credit. Mortgage loans generally have very specific requirements including a minimum credit score. If your credit score does not meet the minimum requirements, you do not have the opportunity to even apply for a mortgage loan. Other forms of credit and loans may have more flexibility in determining who is eligible and who is not. In these cases, your actual credit history and an evaluation of your current financial situation may be taken into consideration when determining eligibility.
If your credit score is 650 or “average”, any move in an upward direction will benefit you in the long run with better interest rates and lower debt balances.