Building your credit history doesn’t happen overnight, but sometimes you need to work on your score is where you want it to be.
When this happens, it can be hard to know what to expect when you apply for a loan or credit card. You might be worried about higher interest rates or wondering if there are special loans for your credit score range.
This article dives into how you can use your 600 credit score to acquire the credit you need now. We’ll also explore what you can do to keep momentum when building your credit score beyond the 600 range.
A credit score is a three-digit number that works as a snapshot of your credit history. Lenders use your score as a baseline to determine your creditworthiness.
Credit scores range from 300 to 850 for both of the most popular scoring models: FICO score and VantageScore.
For both models, the higher your score, the better. A higher credit score often gives you access to better loan terms than lower credit scores.
Both scoring models have proprietary formulas to calculate scores using credit report data from the three major credit bureaus: TransUnion, Experian and Equifax.
This data includes:
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There are no set criteria for what makes a "good" credit score or a "bad" credit score. The idea of a “good” score is generally used to describe a score that lets you acquire credit with reasonable terms. A good credit score for one person might be considered higher or lower than ideal for another.
The most important thing to remember when analyzing your credit score are your credit goals. For example, you may want a higher score to secure a low interest rate on a home loan, but you can qualify for a good credit card with a much lower score.
While a good credit score is arbitrary, “Good” is often used to describe a specific credit score range.
A FICO credit score between 670 and 739 is usually considered to be in the Good range. Scores 740 and above are considered even better, ranging from “Very Good” to “Excellent.”
A credit score in the low to mid 600s falls in the “Fair” credit category, which ranges from 580 to 669. A Fair credit score often gives you much more access to credit than a score in the “Poor” credit score category.
Moving from a credit score in the 500s to the 600s opens up plenty of new credit opportunities.
Lenders are likely to see borrowers with a 600 credit score more favorably than someone with a score in the 500s. This means you could get better loan terms, like a lower interest rate, or qualify for new types of credit.
For example, the minimum credit score for many mortgages is 640. Some lenders’ credit score requirement is only 620 for a mortgage loan.
If your score is in the 600s, you may qualify for conventional loans instead of relying on government mortgage programs like FHA loans.
Additionally, having a score in the 600s could qualify you for new types of credit cards. You may be able to get an unsecured card with a higher credit limit than a secured credit card.
There are many different loan options you might qualify for with a score in the 600s. Average rates for common loan types include:
Your actual rates for loans, credit cards, and other types of credit will vary widely based on the type of loan and other factors.
Some lenders, for example, put less weight on your credit score than others. They generally use your income and savings information to determine your creditworthiness, rather than your credit history.
A score in the lower-600 range generally gives you access to lots of different loan options. However, improving your score into the higher 600s or the 700s will give you even lower interest rates and more favorable credit terms.
If you’ve already built your score from the 500s to the 600s, it’s important to keep that momentum going. You don’t have to aim for a perfect credit score, but the process of raising your score usually includes developing healthy personal finance habits.
Like improving your score from the 500 to 600 mark, increasing your score through the 600s takes discipline and time. Try these tips to help you stay on track:
Credit utilization is one of the most important factors to your credit score. A high credit utilization ratio means you’re using most of the credit that’s available to you. This can cause lenders to think you’re relying too much on credit.
Keep an eye on how much of your credit limit you use. You should aim to use less than 30% of your total available credit at any one time. Generally, credit utilization is calculated based on all of your available credit.
For example, you have two credit cards. One has a $500 limit and the other has a $1,000 limit. Your total credit limit is $1,500. You spend $100 on your $500 card and $200 on your other card. You’ve used $300 of your $1,500 limit or 20%.
Missed payments or late payments can quickly hurt your credit score—and erase all of the work you’ve put into building it so far. Making on-time payments is usually the key to a good credit score.
Be aware that it might take a long time of making on-time monthly payments to see a difference in your score. It’s impossible to tell how fast responsible credit habits will affect your score.
By staying on course and paying your bills on time, you give yourself the best chance of getting your score into the Good range.
Knowing what’s happening on your credit report can help you make choices that improve your score.
Possible Tip: Be sure to report fraud as soon as possible if you see anything that’s out of place on your report. This could help you avoid the expensive and stressful unfortunate event known as identity theft.
A Good credit rating starts around a 670 credit score. If you’re in the 600s, you’re well on your way to having a Good score. Once you hit the Good range, you’ll likely start to notice much better credit terms.
You may be able to get a loan with a much lower down payment, for example. Your credit card options will likely increase to include options with no annual fee and better rewards.
If you’re looking to buy a house, you’ll probably start to qualify for conventional loan programs.
While improving your credit score to 600 or beyond can help you access better terms and new accounts, it’s only one part of your financial picture.
Remember that your credit score doesn’t define you—or your worth.