Is a 650 credit score good or bad? Credit scores are used to provide a snapshot of your financial health.
They’re used by lenders to determine whether you’ll be approved for a loan, as well as what interest rate you’ll be charged.
Additionally, credit scores are also used by insurance agents and credit card issuers when determining your rates.
A good credit score can save you thousands of dollars in interest on loans and insurance policies.
Learn more about whether a 650 credit score is good or bad and what it could mean for your financial future.
Is a 650 Credit Score Good or Bad?
In order to understand whether a 650 credit score is good or bad, you first need to understand how credit scores are calculated. Experian, one of the major credit reporting agencies (CRAs), breaks credit scores down into categories. All scores are set on a scale between 300-850.
• Excellent: 750-850
• Good: 700-749
• Fair: 650-699
• Poor: 550-649
• Very Poor: 300-549
As you can see from the scale above, a score of 650 falls into the low end of the fair range. This means that while you will likely be approved for most types of credit, you’ll end up paying higher interest rates.
There are specific credit card offers for people with fair credit scores, They may not have the best terms or rates, but they’re meant for those who present a certain amount of risk.
Factors that Impact Your Credit Score
Now that you know that a 650 credit score falls into the fair range, you may be wondering what you can do to raise your score even higher.
The VantageScore Model, which was created by Experian, TransUnion, and Equifax, uses 6 weighted criteria to calculate your score. They are ranked from most influential to least influential factors.
Your payment history is the single most important factor in calculating your VantageScore credit score. While you can’t erase previous missed or late payments, you can improve this portion of your credit score by making all your future payments on time and in full. If you have missed payments in the past, they can stay on your credit report for up to 7 years.
Age of Credit and Type of Accounts
This is a highly influential factor in determining your credit score. It considers the length of your credit history and the type of accounts you have.
Keep your oldest accounts open and active, and strive for a mix of installment loans such as mortgages and car loans, and revolving debt such as credit cards.
Percentage of Credit Limit Used
The percentage of your available credit that’s being used is another highly influential factor in determining your credit score. Aim to use 30% or less of your available credit limits on revolving debt.
The total balances of your debt across all account types are a moderately influential factor. Try to keep your total debt as low as possible and pay down any existing balances.
Recent Inquiries and New Accounts
Whenever you apply for a new account your credit report is pulled by the lending agency. This is known as a hard pull. While this is considered a less influential factor, it is best to avoid applying for or opening too many new lines of credit in a short time frame.
Another less influential factor is the amount of credit you have available. Only open as much credit as you need.
Is a 650 Credit Score Good or Bad?
A 650 credit score is considered fair. You will likely be approved for credit but may end up paying a higher interest rate. By paying attention to the 6 criteria used to calculate your credit score you can raise your VantageScore over time and improve your financial future.