650 Credit Score: Is It Considered Good or Bad?

Wondering if your credit score is high enough to get the financial benefits you need? After all, your credit rating influences what kind of loan you can get, your chances of approval, your interest rates, and more. Around 11% of Americans have a 650 credit score, so you’re definitely not the only one who wants to know what it can and cannot do for you.

According to FICO and VantageScore, 650 falls into a fair range, which means that your choices will be more limited compared to the holders of if you were to have a good or excellent score. Still, the benefits you can access largely depend on your lender’s requirements.

Is a 650 credit score good? Relatively speaking, yes, but there’s a lot of nuance. In this article, we’ll discuss this rating in more detail and explore tools you can use to improve your creditworthiness.

Сredit Score 650: What It Is and Which Factors Affect It

A credit score, which can range from 300 to 900, is a measure of your creditworthiness. The higher the score, the more trustworthy you appear to lenders.

So, is 650 a good credit score? The answer is quite ambiguous, and it also depends on your lender’s opinion on the matter. Certainly, 650 won’t open all the financial doors for you — for that, you’ll need either a good (690+) or an excellent (720+) rating. Still, at 650 you can qualify for numerous financial products (car loan, mortgage, etc.), although probably at suboptimal interest rates.

Here are the key factors that determine your credit rating:

• Your payment history (card payments, bills, and any other payments to lenders);
• Credit mix (refers to the variety of accounts you have);
• Credit utilization (anything above 30% is considered high credit use);
• Ages of your open accounts (the longer your credit history is, the better);
• New credit (opening a new account triggers a hard inquiry, which can temporarily lower your score).

Your score can also be calculated differently depending on the system used. Still, all the factors mentioned above will significantly impact the result.

Is a 650 Credit Score Good or Bad? Key Pros and Cons

What can you do with a credit score of 650? This level of creditworthiness grants you access to numerous financial services. Here are some of the benefits you can expect:

• Access to secured and even some unsecured cards;
• Plenty of lenders consider this score decent;
• Good chances of getting approved for a mortgage loan;
• Usually sufficient to rent an apartment.

While a credit score of 650 grants you a lot of benefits, you should keep in mind that the services you can access will come with some limitations. The most common ones include:

• It is impossible to get credit cards with good rewards and cashback;
• Higher interest rates for loans;
• Higher auto insurance rates;
• Higher mortgage rates.

You can access decent loans with a credit score of 650, but you have to be prepared that your rates will be higher compared to individuals with higher ratings.

Best Ways to Improve a Credit Score of 650

Now that you know the answer to “What is a 650 credit score?”, we can discuss the best ways to improve it, as it is still far from excellent. By taking just a few simple steps, you can access more favorable conditions for your loans and much more.

Be diligent about your bill payments

This is one of those steps that cannot be skipped, no matter what. If you aim to improve your credit rating, you should pay your bills on time. Your bill payments are tracked by both VantageScore and FICO systems, making your financial discipline exceptionally important. If you frequently forget to pay bills on time, consider setting up automatic payments.

Consider using a secured credit card

Secured cards are ideal for improving credit ratings. When you get a secured card, you need to make a certain minimum deposit that will be used as your credit limit. The responsible use of a secured card improves your score, as your information will be reported to bureaus such as TransUnion, Equifax, and Experian.

Get a credit-builder loan

If you don’t know where to begin with loans yet want to use them to improve your score, you should consider a credit-builder loan. This loan differs from the usual one in that a lender deposits the loan amount into a savings account. You can then access the money when the loan is repaid. In this way, you can both save money and work on building your score.

Another crucial part of score improvement is responsible credit management. Here are the strategies you should stick to:

Minimize your credit usage

Another factor that will inevitably influence your score is your credit utilization ratio. Regardless of how much credit you have access to, you should avoid using more than 30% of the available sum if you can help it. Credit utilization of over 30% is not viewed favorably by lenders and will drop your score. If you manage to maintain a single-digit utilization, you will see your score improve more quickly.

Be on top of your credit reports

Once a year, you can get free reports from all three major credit bureaus. You should use this opportunity, as regular report monitoring allows you to correct potential errors and keep track of your financial life.

Have a good credit mix

You should try to maintain a good mix of credit types — loans, mortgages, and cards. However, consider whether or not you can make all the associated credit payments on time, as otherwise, even a good credit mix will only lower your rating.

Final Thought

So, is 650 a bad credit score? It is certainly not bad, but there is plenty of room for improvement. If you want a credit card with good rewards and cashback, you should start working on your score. Paying your bills on time, lowering your credit usage, and opting for a secured card can help you with that.