Our world revolves around credit, and very seldom can you do much of anything in life without a little bit of creditworthiness. Trying to improve credit can be confusing, and credit scores are also incredibly complex, which makes them very intimidating to a lot of people. Even once you get it up to 650, you may still wonder, "is 650 good enough?" And "what kind of credit can I get with a 650 credit score?"
While 650 may only be counted as "fair" credit, you'll still be able to get credit cards, auto loans, and even car loans. Your rates may be higher, and your terms may not be the best, but it's a starting point to raise it even higher.
If you have your credit score on the rise and need some information on what you can do with it once you hit 650, or if you're already there and looking for options, you're in the right place. We're going to look at exactly what a 650 credit score means, whether it's good or bad, and what exactly you can do with a score of 650.
Is 650 A Good Credit Score?
If you have a 650 credit score, your score is considered "fair" by the FICO credit-scoring methods. The "bad" category of credit scores doesn't start until your score drops to 630 or lower, generally, but those still won't disqualify you from everything.
While your 650 credit score isn't considered "good", it also certainly won't exclude you from getting some decent financial products like credit cards and loans. You'll see higher APRs on your credit card approvals, and any approvals for auto or home loans will also have some sub-optimal terms, but you'll be able to get better offers with time.
How Are Credit Scores Calculated?
One thing that intimidates most people about their credit score is not knowing exactly how the credit giants calculate it. Several factors are taken into account and given differing "weights" when used to calculate your score. Your FICO credit score will usually be a reflection of your payment history, the number and types of credit accounts you have, your credit utilization ratio, and the length of your credit history.
Easy Ways To Improve Your Credit Score
Keep A Solid Payment History
Payment history is one of the more heavily-weighted factors that determine your credit score. Maintaining a long history of paying on time, every time, will help you raise your score more than any other active contribution you can make. Be aware of your credit lines' terms for grace periods and late payments so that even if you're going to be late, a day or two may save you from having that late payment be reported to the bureaus.
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Reduce Balances & Utilization
If you have credit cards and loans, it probably goes without saying, but pay down the balances on them as quickly as you can to raise your credit score. Not only are low balances good because they mean you carry little debt, but your credit utilization looks much better, which affects your credit score. Your credit utilization is your current total credit limit from all accounts versus how much of that limit is used. So, if you have three cards with a $1,000 limit on each, and a little over $330 on each one, your utilization is going to be approximately 33%.
Avoid New Credit Lines
One of the often-misleading factors of credit score calculation is the number and types of accounts, which leads people to try to open new accounts in the hopes it will raise their score. New credit lines can actually hurt your credit score if you have too many of them, and if you have a habit of carrying a balance, they can get you into some significant financial trouble as well. Another downside to opening new credit lines is the credit "hard pulls" or "hard inquiries" made into your credit history, which can plague your credit for months or years.
Dispute Incorrect & Inaccurate Credit Information
Each consumer is allowed at least one free credit report each year from each of the three main credit reporting bureaus, and this is crucial to keeping your score in check. Common credit monitoring apps like Credit Karma let you actively monitor items on your report, which are to be kept free of inaccurate information. If you see anything on your report that is not completely correct, dispute it immediately, and the creditor or owner of the debt will need to verify the information within 30 days or delete it from your credit report.
Keep Old Credit Cards Open
Too many new cards can hurt your credit, but keeping your older accounts open and active can help your score go up significantly. Even if you carry a balance, keep the cards open, paid, and in good standing. Older accounts will be more valuable to your credit score than newer accounts, and they are an opportunity to improve your payment history without opening new accounts constantly.
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Credit Cards For A 650 Credit Score
With a credit score of 650, you may be looking for a credit card or two to continue building a solid payment history and a good mix of revolving credit lines. Often, though, there are so many options that it can be intimidating. Here are two cards that have very high approval odds for applicants with 650 credit scores.
Total Visa Card
The Total Visa Card offers a super-fast application and approval process online, with most applicants getting their decision seconds after applying. The Total Visa Card works like any other Visa credit card and is accepted around the country and online.
The Total Visa Card is an unsecured credit card, so you won't need to pay a large deposit, but other fees are needed. The card does require an account setup fee or "program fee" when you activate your card, as well as an annual fee that will be charged to the account automatically on each account anniversary.
First Access Visa Card
For a card that is known for approving when other credit providers cannot, the First Access Visa Card offers an easy way to continue building solid credit without a lot of hassle. The card requires that the cardholder maintain an open checking account that can be linked to the card, and it reports to all three credit bureaus monthly.
The First Access Visa Card is unsecured, so no large prepaid deposit is needed, and applicants can see a credit line of up to $300. Applications can be filled out entirely digitally, and most applicants can get their approval answers in just 10 minutes. There is no annual fee for the First Access Visa Card.
What Kind Of Home Loan Can I Get With A 650 Credit Score?
A 650 credit score will even qualify you for home loans from some lenders; you may just have to shop around a bit to find the best terms for your finances.
The FHA Rate Guide will allow applicants to search lending options for both purchases and to refinance from up to 4 lenders. They have a robust network of national banks that may be able to help homeowners with a credit score of at least 650 to secure a home loan from one of their partner lenders. The application typically only takes a few minutes and is used by millions to find FHA homes.
One of the larger lenders that has special programs for borrowers with a 650 credit score, Wells Fargo has many options to help people get a home loan. They have programs for low-income borrowers, applicants with limited credit history, and arrangements for those that cannot commit large down payments. They have lower upfront costs than many other lenders, and they have options that also don't require mortgage insurance.
Looking for a home loan with a 650 credit score often means applying to several lenders and comparing terms. LendingTree does that all for you, by allowing you to submit one application which lenders then compete over. You will have your pick of mortgage lending offers so that you can pick the one with the interest or terms you find most favorable. You can receive up to 5 offers with only a few minutes' work on the application.
A 650 Credit Score Is Well On The Way To Good Credit
Even though a 650 credit score is still only considered "fair", it's a significant step up from the lowest category of "bad" credit. Wisely using some of the credit products that become available at a score of 650 can help you continue to build an effective, good credit history.
If you've been working to improve your credit, 650 is when you'll begin to see more potential approvals for auto loans and mortgage lenders, so you know you're on the right track. Stay cognizant of your payment habits, and you'll be on the way up from 650.
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Shawn Manaher is a former financial advisor, has founded 5 online businesses, and is a coach, speaker, podcast host, and author. He's been featured on Forbes, The Consults Corner on TAE Radio, The Writing Biz, What's Your Story, and more.