650 Credit Score. Is 650 a Good Credit Score or Bad?

No matter what score you have, there’s always room for you to increase it over time. Remember, Credit scores can either make or break your financial livelihood, so its best to stay on track with it to prevent any long-term issues. So what makes a good credit score? We’ll help you find out in this short guide.

What is a 650 Credit Score? And what does it say about my financial reputation?

It seems like a simple question to ask at first, but there a few complicated mechanics behind it. This is also true when trying to get a good credit score.

In fact, trying to create a clear definition of good credit is like defining the concept of beauty,

It’s always defined in the eye of the beholder. But when referring to your credit score, what is good will depend on the lender’s opinion.

Basically, different credit lenders have different criteria on what makes a good credit score. For instance, if you’re applying for a loan, one lender might reject you while another lender will offer you credit.

This is because they will view your credit score differently. For borrowers, having a 650 credit score means that you still have time to improve your credit score if you’re willing to take an active role of controlling your expenses.

What Does a 650 Credit Score Mean?

To credit lenders, have a 650 credit score is “fair credit.” While you’re making better financial decisions than borrowers in the 500 range, you still have to remain diligent in your financial payments in order to achieve a good credit score.

Small issues or mistakes have prevented you from obtaining a high credit score. For instance, you might have an accidentally overcharged credit card or missed a few payments, but you’ve probably avoided some mishaps such as bankruptcy in the past.

The national average for FICO scores is at 675, which is slightly higher than your 650 score. Since it’s fair credit, you don’t have to view your 650 credit score good or bad. Fortunately, you have a great opportunity to improve your financial standing!

In fact, having a 650 credit score is close to the “Good” credit range. With some work and effort on your end, you’ll be able to reach (and probably exceed) this score range. This could lead to access to a larger range of loans and credit, at lower interest rates.

The best way to improve your 650 credit score is by conducting a thorough check of your FICO score. The report that is delivered with your credit score will give you detailed analysis and tips on how to increase it.

If you are active with your finances and focus on the issues discussed in the report, you might see some steady improvements, and a broader access to loans if you come across them. Thus, if you have a 650 score, try to work on establishing a good credit history if you want to reach the “Good” tier of credit.

What Can a 650 Credit Score Get You?

But the question still remains, “is 650 a bad credit score?”

As we stated earlier having a 650 credit score isn’t the best score on the credit spectrum. You’ll need at least a 700 or higher to obtain “good credit”. You have fair credit, meaning that you can get a loan or a credit score, but you’ll find it difficult to obtain an apartment rental and personal loans.

Here, you can learn what you can and cannot do with a 650 credit score.

As you can see by this graph, there are a few limitations. While you can obtain credit cards with 0% financing, no creditor is going to give you a card from your favorite airlines. Thus, its best to

When looking at your credit history, here is a scorecard that lenders will give your current score:

Credit Scorecard – My Credit Score is 650

• Payment History – C – 98%
• Credit Utilization – B – 10-29%
• Debt Load – A – 0.28
• Account Age – B – Average account is 7-8 years old
• Hard Credit Inquiries – A – Less than 3 in the past 24 months.
• Public Records and Collections Accounts – A – 0 public record and collection accounts
• Account Diversity – C – 2 account types or about 5-9 total accounts.

Remember, this scorecard is not final. It’s a representative of a scorecard that a borrower with 650 might have: A lot of A’s and B’s, but no failing grades to be found.

What Does It Mean If You’re at 650 Credit Score and Rising?

First, let’s discuss on what makes a good credit score. Here are some defining factors that lenders look into when viewing your loan application.

• Your credit score is determined by the amount you owe, applications for obtaining new credit, and your payment history.
• Your credit score might be different depending on what credit bureau calculates it (Experian, TransUnion, Equifax).
• Credit scores that are under 660 are considered sub-prime. This means that credit users of this rating will have higher rates and increased difficulty of getting a loan.

Some borrowers tend to ask “is 650 a good credit score”. The answer will vary depending on what creditor you’re attempting to get a loan from.

But that doesn’t mean your in a financial rut, with a 650 credit score you still have time to improve it over time. Your best strategy with any credit score above 600 is to boost it to 680. If your current score is at 650, then you only need a small bump to obtain better rates from lenders.

On average, you’ll need at least 6 months in order to boost your score into the “Good” range of credit. Depending on your previous credit history, it could take at least 6 months to a year. Once you’ve reached a 680 credit score, you’ll find it easier to get loans, mortgages, and other offers from lenders.

How Does Credit Lenders View My Score?

Basically, credit lenders use your credit score to indicate how much risk they’ll take when approving your loan/credit. A borrower with a high credit score (680+) are viewed as risk-free, but lenders with a score under 580 are considered as high risk.

With higher risk lending, the lenders have to insure themselves against potential losses later down the line. In order to do this, they tend to make more money from low-credit borrowers, to protect themselves if one of the defaults. They’ll do this by charging them higher interest.

This means that while you have a credit score of 650, credit lenders view you as someone that has “fair credit.” By improving your score, credit lenders will give you lower interest rates, higher loan amounts, and additional benefits when purchasing items from retail stores.

What Does It Mean If You’re at 650 Credit Score and Dropping?

At 650, you’re in between having good credit or having poor credit. But if your score is low, you have to stay alert and take corrective action before your credit situation becomes worse. Once your score reaches the 580 thresholds, it’s going to take some time before you can get it back to good standing.

When you see a drop in your credit score, this means that something in the scoring calculation has received new information to help deliver the new score. Here are a few main components that are used for a majority of credit scoring models.

• Number of Credit Inquiries
• Average Credit Card Limit
• The number of Late Payments
• Credit Card Limit
• Open Installment Loans

To improve your score, take time to find out your current credit balance. A good rule of thumb to remember is that you should not use more than  30% of available credit. These actions will show your lender that you’re a responsible spender, and this could be a positive boost in your credit score.

Next, you have to find out if you’ve currently applied for a new mortgage, car, or payday loan. While that 20% off discount looks good, having too much credit inquiries will have a negative impact on your score.

This is also true for car loans and mortgages – 1-2 of them are most likely to cause your score to drop. Lenders can view this activity and mark you off as a borrower who overspends.

Did you close out a credit card you had for a while? Actions such as this can lead to a reduced score on your end. This factor is a surprise to most borrowers. If you demonstrated responsible credit use over time, lenders would view you as a lower risk.

Pay off your credit card and leave your account open to gain points for total available credit, longevity, and history.

If any of these scenarios are try for you, you’ll be closer to discovering why there’s a recent decline in your credit score. We suggest that you continue to monitor your spending habits and know that the small things add up and can have a significant impact on your credit scores.

How to Improve Your 650 Credit Score?

Improving your credit score requires some planning, patience, and proactivity. Plan your financial payments and create a calendar to help pay them on time.

With patience, understand that your credit score won’t be up to 850 overnight. The credit rating system is designed to reward good long-term financial habits. Continue to make good financial decisions, and you’ll see your score rise over time.

Here are a few steps on how to improve your 650 credit score.

• Reduce Credit Utilization: We suggest that you use less than 30% of available credit each month on your credit card. You can reduce the credit utilization rate by making bigger payments, paying multiple times a month, and by spending less.
• Dispute Negatives: If you can prove that the chargebacks and other negative information on your credit report is incorrect, you can dispute it, and either has it corrected or removed.
• Pay On Time: Paying off your credit at a reasonable time is the most important ingredient in building a good credit history. Paying off your credit card each month creates a track record of responsibility on your end, while one late payment on your credit report can reduce your credit improvements significantly.
• Pay Off Collections Accounts: Once you bring your collection’s account balance down to zero, it doesn’t affect your VantageScore 3.0 credit score.

Conclusion

To conclude, your 650 credit score still has room for improvement. And you can do this by keeping track of your bank accounts, credit history, and make active procedures to raise it gradually. So the next time you obtain your credit report, take action so that you can receive “good credit!”

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.