Generally, a credit score lesser than 650 is considered poor, but there is always room for improvement.
With a credit score of 600 and odd, lenders may think that you have defaulted in the past and more likely to do so in future and your application for credit card and loans may be denied.
Many people do not even know about credit scores until they apply for a loan and got rejected for having a bad score.
People just live their lives and making transactions at will never knowing how it is affecting their score. Some think that their credit score is in good shape as they don’t miss any payments, but there more than just payment history alone, event hough it is a significant portion of your score.
Along with your payment history, your credit utilization, types of credit card you hold, how much time your accounts are open etc.
According to a recent report from credit Bureau Experian, more than 10% of people fall in the range of 600-650 and 12% fall between 500-600.
But people with a credit score can qualify for some loans but at the cost getting the loan at huge interest rates. Let’s see some of the credit score range and how they qualify with the lenders:
|Credit Score||Quality||How Lenders view Your Score|
|300-500||Very Poor||Lenders will straight away reject your application. Better start to rebuild your score by making on time payments|
|500-600||Poor||You are still not in the qualifying range, but you are in the edge and within 3-6 months of regular payments, your score will improve considerably|
|600 – 650||Bad||You can qualify for some loan but at the cost of heavy interest rates|
|650 – 750||Good||Loans are available easy and you are also eligible for valuable benefits in the form of low interest rates and wide ranging perks|
|750 – 850||Very Good||You are on top of the list and you’ll be flooded with offers for loans at very low interest rates and terms favourable to you.|
Understand why you have such low score
If you don’t know why you have such a low credit score, then better check your credit reports. From each of the credit reporting agencies, you can get a free credit report every year. See if there is any mistake in your report like payment done on the due date being marked as late payments or any issues, which can be fixed easily with the credit bureau. If your low score is attributed to many delinquencies or high utilization of credit, then you should really look into rebuilding your score by making on-time payments and maintaining your credit utilization limits etc.
If your credit score is rising?
In case you are building your profile score and finally made it to 600 till now, lenders may notice that and would allow you to qualify for some products that were once deemed ineligible for you before, but you might need to pay higher interest rates. But if you are badly need of money, then you can very well take these.
People less than a credit score of 630 might qualify for some secured cards or retail cards which might require lower scores than that of the banks. If you are going for car loans, chances are that might your foot on some wheels as auto loans are different than personal loans, as the vehicle is the collateral here and you may qualify if you have the required income levels to repay the loan, irrespective of the lower credit score.
If your credit score is on the decline?
If your score is at 600, but you are on the decline, it’s a different story altogether. It means you had made some late payments or defaulted on some recently and your account is unstable as of now. So lenders will definitely think twice to give you loans even at higher interest rates at this time.So better clear all your debts and pay the pending balances on your credit card bills and hope for the best in the next 2 or 3 months.