630 Credit Score. Is a 630  Good Credit Score or Bad?

Borrowers tend to ask “is 630 a bad credit score?”

With a credit score of 630″, then you have a basic level of financial intelligence.

But there are a few things that can be improved. Scores that are below 630 are considered poor. So there is a chance that you can be denied for loans or credit cards or pay higher interest rates. Having a low credit score means that you’re less likely to pay off your payments and that you’ll accumulate over thousands of dollars of debt.

Around 10% of the credit cards are in the 600-640 range. Second, 10.6% are ranged between 550-599, based on a 2017 report from Experian.

Basically, the impact of a 630 score on your financial life tends to depend on if you’re taking an effective course of action to restore your credit or if you’ve been struggling to pay off your debt.

As a rule of thumb, you should check your credit reports. You can obtain a free credit report from one of the three credit checking agencies: Equifax, TransUnion, and Experian. And in this guide, we’ll help you check your score, and create a strategy to help raise it in the long term.

Ready?

Let’s begin!

What Does a 630 Credit Score Mean?

So you know about credit agencies, credit bureaus, and credit reports.

But what is a 630 credit score?

A score that’s in the 630 range is considered “Average Credit.” While it’s better than having No Credit, you’re still not eligible for things such as better interest rates, more cash back rewards, and be accepted for any credit card.

Based on Equifax, the average national credit score in 2012 was 696. This means that you’ll still have put in some effort in order to meet that score.

Most credit scoring companies (Equifax, TransUnion, Experian)  consider these following factors when viewing your credit score:

• Amount Debt Owed
• Number of Credit Accounts
• Payment History
• New Credit Inquiries
• Credit History Length

For instance, if you’re carrying debt, you should focus on paying off existing credit card balances. If you have a lot of inquiries on your credit card report, we suggest that you hold off getting a new credit for around 6 months – 1 year.

And of course, you can increase your credit score by paying off subscriptions, payment plans, and other expenses on time. Keep your debts low and add your accounts only when you need them.

Ultimately, what’s makes up a good or bad credit score will depend on your lender. But you can get an idea of how lenders can view your applications by viewing your credit score and comparing it to others.

What Can a 630 Credit Score Get You?

Tip: The best way you can fix your bad credit is by taking a down payment on a secured credit card. This deposit reduces the risk on the issuer’s end, which allows you to get approved regardless of your current credit score.

Remember, don’t think of the 630 credit score good or bad, but as a number you can improve over time.

While you can attempt to get a credit card with fair credit, but if you’re not approved, take the secured credit route. Multiple credit card rejections will result in a multitude of hard inquiries on your credit report which makes it harder to improve it.

Here is a table that shows what you’re eligible for:

No matter what credit score you have, we suggest that you review the credit report for any hidden errors underneath and dispute them. With a 630 Credit Score, think of yourself in the middle in the credit card spectrum.

While you’ll be allowed access for some benefits (i.e.: Favorite store credit card, No foreign Fees,

etc.), banks can still reject you if you request for a higher loan. Thus, it’s best that you continue to improve on this score to ensure that you reap the full benefits from your credit history.

What Does It Mean If You’re at 630 Credit Score and Rising?

If you have a 630 Credit Score and it’s still rising, good job! You’re on the way to obtaining good credit. But still, you might be rejected for a few credit offerings from companies. To further explain, here is an example scorecard on how your credit card analysis will look:

• Hard Credit Inquiries: A: (Less than 3 within the past 24 months)
• Debt Load: B – (0.36 – 0.42 Debt to Income Ratio)
• Account Age: B (Average line of credit: 7-9 Years old)
• Account Diversity: C (Less than 5 accounts or two account types)
• Public Records and Collections Accounts: B (1 public record/collections account)
• Credit Utilization – C:  (10 – 29%)
• Payment History: D Under 98% On-Time Payments

When looking at this scorecard, you can see that there are a few things you’ll need to improve to increase your credit score. One of the quickest aspects you can change is the payment history. Make sure that you’re on track with your financial payments to ensure that your score doesn’t drop.

Think about your credit utilization. Are you spending too much of your credit limit due to your impulsive spending habits? We suggest that you pay your bill off on time in order to improve your score. The longer you “max your credit”, the longer it will take to increase your points. So make sure you keep the utilization under 30% to ensure that your score will increase in the future.

And here’s one tip that can help you improve your credit score:

Keep Your Finances In One Place

The best way to protect your credit score is through using financial management software. For instance, Personal Capital is a platform that aggregates all of your financial accounts in one place where you can see where you’re optimizing your money.

Before software, borrowers had to track their financial history through eight different systems to track their financial accounts. Or, users would have to manage their finances uses an Excel Spreadsheet.

Now you can log on with Personal Capital to check the status of your financial accounts and displays your net worth. Also, you can see how much money you’re spending or saving via using its cash flow tool.

Another good feature is its Portfolio Analyzer, which is used to run your investment portfolio through its software to determine what you’re paying. This can help you find out that you’re paying over $1,000 in portfolio fees that you didn’t know you were hemorrhaging.

What Does It Mean If You’re at 630 Credit Score and Dropping?

If your credit score is at 630 and below, you should think about the certain issues that are causing this issue. Credit Scoring Agencies use the information that’s compiled in your credit report history to calculate your credit score.

More recent events that are within your credit history tend to show older activities. With this form of analysis, some pieces of information have more weight than others. Knowing what activities that matter the most can help you find out the steps you need to take in order to work toward getting a better credit score.

• Missed and Late Payments – This is a factor is the most weighted when companies calculate your credit score. About 35% of your credit score is influenced based on the presence of your missed or late payments.
• Credit Card lenders want borrowers that can pay their monthly subscriptions on time. And individuals that have missed payments are more likely to enter an account default (Go around 90 days due without having a credit card payment).
  • If there are missed or late credit card payments posted on your account, you need to create an efficient routine to help pay your credit bills off on time.
• Credit Utilization Rate: Your credit utilization rate takes up around 30% of your credit score. Basically, your credit utilization rate measures how close you are at “maxing out’ your credit card accounts.
  • Credit Utilization Rate Formula: You can calculate your credit utilization rate by using this equation: Balance / Spending Limit * 100  OR Total Balance/ Total Spending Limit
  • To give a further explanation, you can calculate your card’s utilization rate by dividing the balance by the spending limit and multiplying the quotient of those two numbers by 100. Alternatively, you can calculate your card’s utilization rate by dividing the sum of your balances by the sum of your spending limits.

So when looking at your credit score, always make sure to calculate your expensive and credit usage rate. Doing so will help you find out if you need to create a plan to prevent your score from dropping, or continue the good habits and obtain long-term financial growth.

How to Improve Your 630 Credit Score?

“What to do if my credit score is 630?”

Remember, average credit scores don’t become perfect (850+) overnight. To improve your score, you need to develop a strategy that allows you to have control over your finances while also reducing debt. Here are three things that you can do to help improve your 630 Credit Score.

Credit Builder Loan

As its name suggests, credit builder loans are designed to help increase the borrower’s credit profiles. These loans are used to demonstrate the borrower’s ability to make monthly payments regularly.

When taking out one of these loans, the credit union places your borrowed money in a savings account where it accumulates interest. After you’ve paid fully off the loan, you’ll get the interest and the cash that it’s accrued.

This is a great savings tool, but the real benefit comes when the credit unions report your frequent payments to national credit bureaus, which tends to lead to improved credit scores. (Check with your lender to ensure that they are reporting your activity to the 3 credit bureaus before applying for a credit building loan).

Debt Management Plan

Having a good debt management plan is helpful for borrowers who are overextended and unable to make timely payments. Working with an established credit-counseling agency, you can negotiate an effective management repayment schedule, which closes all of your accounts in the process.

This is a major step, that can harm your credit score in the short term, but it’s a less damaging effect than going bankrupt and can give you a fresh start to build credit. Even if a debt management plan isn’t good for you, having a good non-profit counselor to help, you find new strategies to help rebuild your credit.

Stay Away From High Credit Utilization Rates

As we stated earlier, Debt usage, or credit utilization, takes up about 30% of your credit score. By keeping the utilization rate under 30%, you’ll have an increase in your credit score.

Try to have a solid credit mix. Don’t take out unnecessary debt you don’t need, but having a prudent borrowing, including having a combination of installment debt and revolving credit, which can positively impact your credit score.

Conclusion

Having a 630 FICO score is a good point for creating a better credit score. Boosting your credit score into the 700+ range helps you obtain access to fewer fees, lower interest rates, and have more credit options.

You can begin by checking your credit score and obtaining a free credit report. This will help you determine which factors will impact your score the most. We suggest that you look at the different score ranges to find out what creates a good credit score.

Darryl C. Jenkins

Darryl founded Smith Financial Advisors Inc. in 2006 after over 30 years experience in financial services including Mergers & Acquisitions, Investment Banking and traditional Commercial Banking activities at Bank One. Smith Financial Advisors is a Registered Investment Advisor in the State of Illinois. The firm specializes in Investment management, financial planning, and retirement planning.