The average credit score in the United States is 714, but what does it mean if your credit score is much lower than that? Is 600 a good credit score? Why is a credit score important in the first place?
If you’re asking yourself these questions, you’re in the right place to find your answers. Having a good credit score is important for all sorts of factors in your life such as getting an apartment, opening new credit cards, and so on. There are also several factors that could raise or lower your credit score.
If you don’t know how to keep track of these factors, your credit score might start to drop and you might not know how to fix it. So, what should you do if you have a low credit score and how can you fix it? Keep reading and learn more about credit scores, especially what to do if your credit score is only 600.
Is 600 a Good Credit Score?
Be for you start wondering whether or not 600 is a good or bad credit score, you should first understand the general range of credit scores and what those ranges mean. The lowest range is between 300 and 579. This range is considered poor.
It is quite difficult to get a score that is exactly 300 since you would have to do just about everything wrong with your finances. If you have a poor credit score, you will find that it will be quite difficult to do anything that has anything to do with your finances. For example, most banks and lenders won’t give you loans or mortgages.
It will also be very difficult to get credit cards, open bank accounts, move to new apartments, and so on. But fortunately, if your score is 600, you won’t have a poor credit score and you won’t have quite as hard of a time with your finances. The next range above the poor range is the “fair” range which spans from 580 to 669.
Even though fair sounds a lot better than poor, having a fair credit score still isn’t all that great. It certainly is not a good credit score. A truly good credit score is the next step up from a fair credit score and it ranges from 670 to 739.
Once you have a good credit score, it will be much easier to get loans, mortgages, credit cards, and so on. But what if you only have a fair credit score? The problem with a 600 credit score is that it is on the lower end of the fair credit range.
This means that it is closer to a poor credit score than a good credit score.
The Reality of a 600 Credit Score
While you can certainly enjoy some financial freedom with a fair credit score, many lenders and banks still won’t give you any loans or mortgages, even if you really need them. It will also be quite difficult to open accounts with high-quality and prestigious banks and next to impossible to get luxury credit cards.
But keep in mind that your credit score is never stuck on one number. If your credit score is 600, that doesn’t mean that it has to stay that way for the rest of your life. To change your credit score, you will need to figure out why it is so low in the first place.
Once you narrow that down, it will be much easier to figure out how to improve your credit score. With enough work and determination, you can soon end up with a very high credit score and perhaps even an excellent score. But where should you start?
What Is Ruining Your Credit Score?
If your credit score is only 600, you are dangerously close to a poor credit score. If you continue to make financial mistakes, your credit score might continue to drop until it reaches the threshold of 580. It might even plummet lower than that until it reaches the 400s or even 300s.
This, of course, is the last thing you want for your credit score. As mentioned before, the lower your credit score is, the harder it will be to get certain things done in your life. For example, if you’re looking to get yourself a new home but need a mortgage to do so, you’ll never be able to get that mortgage if your credit score is only 600 or even lower.
Since you don’t want to put your life on hold because of meager credit score problems, it is important to figure out what might be lowering your credit score. Usually, the roof of the problem is quite simple. There are only a few things that could cause your credit score to drop or hover at 600.
For one, your age has a lot to do with it. Young people tend to have credit scores in the 600s. This is because they’re just starting out in life and don’t have hardly any credit history.
How Age Affects Your Credit Score
They haven’t had the chance to do anything that might improve their credit score. Older individuals, on the other hand, tend to have much higher credit scores, often in the 700s or even 800s. This is because they have had many years to work on their credit scores, perhaps even decades.
They also have more experience surrounding the different factors that could affect one’s credit score. For that reason, they are naturally more careful when making decisions about factors that could affect their score. If you are young and your credit score is 600, you shouldn’t be too worried as there is plenty of room and time for your credit score to grow.
However, if you are already older and your credit score is only 600, you may have a problem. More often than not, a low credit score has to do with a person’s spending habits and history. To sort this out, you will want to think back to what you have bought with any lines of credit in recent months.
Other Factors That Decrease Your Credit Score
Suppose you buy something with a credit card. To maintain a good credit score, you need to pay back whatever you spent with your credit card in a certain period of time. If you are late when paying back what you owe, this will damage your credit score.
If you are only late once and for the first time, you may be excused from any damage to your credit score. However, if you are repeatedly late when paying off what you owe, this will soon start to show on your credit score. The damage to your credit score will not only depend on how often you are late but also on how long your payments have been late.
For example, if you happen to pay back what you owe a day or two after the deadline, the consequences likely won’t be that serious for your credit score. However, this is a different story if you wait weeks and even months before paying back what you owe. The longer you wait, the worse the consequences will be.
This is not only the case with your credit cards either. Paying off other bills is also very important.
If you find yourself unable to pay your bills on time, your credit score will only continue to drop. Some people might not know that their bills are late because they don’t check their status online.
Some people might even be afraid to check their bills, so they simply ignore them. This is not a good approach to your bills if you want to start improving your credit score. Instead, you will need to face what you owe head-on, otherwise, you might have to deal with a credit score of 600 for much longer than you want.
The Role of Your Total Available Credit Usage
Your credit usage rate also plays a big part in your overall credit score. Your credit usage rate, as the name suggests, involves how much of your credit you use on a regular basis. For example, suppose you have a credit card that allows you a total credit usage rate of $4,000.
Then, suppose you buy something for $2,000. This means you are using 50% of your total available credit. This is not a good thing if you’re trying to improve your credit score.
This is because you’re only supposed to use a small fraction of your credit score. As a rule of thumb, you should only ever use around 35% of your total available credit. Some people believe that you should use even less than this, around 30% or even 25%.
Of course, sometimes it is very difficult to keep your credit usage so low. However, if you want to improve your credit score as fast as possible, it is important to keep your credit usage as low as possible. If you are having a hard time figuring all this out, credit coaching services and classes about how to improve your score can certainly help you out.
How to Improve Your Credit Score Fast
You have already seen that paying your bills on time and using only a small percentage of your credit is very important for improving your credit score. But what else can you do to make sure that your credit score goes above and beyond 600? Your credit history plays a big part.
Your credit history is nothing more than how long you’ve been using credit. Of course, there isn’t much you can do to help this factor. If your credit history is relatively new, this will negatively impact your score, but not by much. As your credit gets older, over the years, your credit score will improve as a result.
While you can’t control your credit history, you can control your debt. Debt has a lot do to with your credit score. Having a lot of debt is never a good thing.
Not only can it damage your credit score but it can also strain your finances and add stress to your life. Outstanding or late debt is something you certainly don’t want to deal with if you’re trying to improve your credit score. Outstanding debt will lower your credit score in no time at all.
However, you can ensure that you never have this problem as long as you stay on top of your debt. This is easier said than done, but there are certain ways you can make managing your debt easier. For example, you can try forming a budget plan for yourself.
This will make it easier to save up money so you can pay off all of your debts. To create a good budget, you need to separate your wants from your needs. For example, you might want to get a manicure or buy a new jacket, but these are wants and they will only cut into your budget.
If you set these wants aside, you can save up money for things that you need. In particular, you need to pay off your debts so they will stop affecting your credit score in a negative way. If you approach the problem this way, you will find that you will be able to improve your credit score in no time.
What You Need to Know About Credit Scores
Is 600 a good credit score, you might ask? 600 is considered a fair credit score, although it is in the lower section of the fair credit range. 600 is not a great score to have, but fortunately, there are many ways you can improve this score.
For example, you can pay your debts on time, use a certain percentage of your credit, and seek help with credit coaching. Contact us here to learn more.