Is a 600 Credit Score Good or Bad?
- Generally, 600 is considered a fair or low credit score.
- Many creditors require minimum credit scores of 620 or higher.
- Fortunately, adding 20 or more points to your credit score is not difficult or time-consuming.
Achieve financial control. How much debt do you have?
Your credit score is an important number that can affect your life in many ways. It can determine whether you are able to borrow money and how much you pay when you borrow. But what does your credit score mean?
A credit score is a number based on a formula designed to show how risky it is to lend you money. It takes into account how you’ve used credit in the past and how you’re using it now.
If you apply for a mortgage, auto loan, or credit card, your credit score is likely to come into play. Employers might even look at it when you apply for a job. Landlords might consider it when deciding whether to rent to you.
With so much riding on your credit score, you should be aware of what your score is. It would also help to know what impacts that score and how to improve it.
For example, say you have a 600 credit score. This article will discuss whether that’s good or bad. It will also explain some things that might affect it and how you can improve them.
Knowing your credit score and how to change it can empower you financially. It can help you get credit and save money by getting lower interest rates on credit.
Learn more about your credit score better by exploring the following topics:
What does it mean if you have a 600 credit score?
What does a 600 credit score get you?
5 ways to improve your 600 credit score
Is a 600 credit score good or bad: FAQs
What Does it Mean if You Have a 600 Credit Score?
This article will focus on the widely-used FICO credit score. Although there are other credit score models, they generally work in a similar way.
FICO credit scores run in a range from 300 to 850. That range of 300 to 850 is a little misleading because most credit scores are towards the top end of that range. Roughly two-thirds of Americans have a credit score of 670 or better.
Good credit starts with a credit score of at least 670. You have fair credit if your credit score is around 600. A poor credit score is below 580.
Why does this matter? Well, having poor credit can be a disadvantage in many ways:
Getting approved for a loan or credit card may be harder.
You may have to make a more significant down payment to get approved for a loan.
You’re likely to pay a higher interest rate when you get approved for credit than someone with good credit.
Potential employers or landlords that look at your credit history may view you as less reliable than someone with good credit.
In short, a 600 credit score leaves plenty of room for improvement. It’s well worth your while to make those improvements.
What Does a 600 Credit Score Get You?
A 600 credit score affects your ability to get a mortgage or a car loan. It could mean getting higher interest rates or not getting approved for the loan.
Is 600 a good credit score to buy a car?
According to The Federal Reserve Bank of New York, during the second quarter of 2022, 75% of car loans went to people who had credit scores of 640 or better. So, your 600 credit score would definitely be well below the score of most other people getting car loans.
Even if a 600 credit score doesn’t prevent you from getting a car loan, it may cause you to pay a lot more for one.
Experian put together a report on auto lending called State of the Automotive Finance Market Q2 2022. This report puts a 600 credit score in the category considered subprime for car loans.
During the second quarter of 2022, people with subprime credit got an average interest rate of 9.75% on their car loans. That’s more than twice as high as the average rate of the 4.03% that people with prime credit scores got. The Experian report defines prime as having a credit score of 661 to 780.
What would that interest rate difference mean in dollar terms? Suppose you wanted a $30,000 car loan. Crunching the numbers on an auto loan calculator showed that with a 9.75% interest rate, you’d pay a total of $8,024 in interest for a five-year loan.
Now suppose instead of the subprime loan you’d get with a 600 score, you had a good enough score to qualify for a prime loan. On average, that would get you a 4.03% interest rate. On that same five-year, $30,000 car loan, a 4.03% rate would cost you $3,174 in interest over the life of a loan. In that case, having better credit would save you $4,850 in interest.
Is 600 a good credit score to buy a house?
A 600 credit score could reduce your chances of buying a house.
The New York Fed found that during the second quarter of 2022, 90% of new mortgages went to people with credit scores of 664 or higher. That means your 600 credit score would be way below the score of most people who can get a mortgage.
Even if you could get a mortgage with a 600 credit score, it wouldn’t be on the best terms. The size of the mortgage you’d be able to get would be more limited. You might have to come up with a larger down payment to get your loan approved. You almost certainly would pay a higher interest rate than someone with good credit.
Buying a home can be a life-changing experience. A 600 credit score could be low enough to stand in the way of that happening.
5 Ways to Improve Your 600 Credit Score
As you can tell, there are many good reasons you should want to improve on a 600 credit score. The good news is that such a low score leaves plenty of room for improvement. Also, there are multiple ways of improving that score, as described below.
1. Fix errors in your credit report.
The best place to start is by checking that your credit report is accurate.
You’re entitled to one free credit report a year from each of the three major credit bureaus (Equifax, Experian, and TransUnion). You can also enroll in credit monitoring or credit counseling.
The point is to start by taking a look at your credit report. See what’s dragging your credit score down. Did you discover errors or mistakes in the report? Getting those fixed would be a quick way to improve your credit score.
2. Use a smaller portion of your credit.
One factor that goes into a credit score is your current credit use. This includes how much you owe and what percentage of your available credit you currently use.
Paying down some of your debt should help your credit score. This is especially true if you currently use a high percentage of your available credit. Pay down some of your debt so that percentage drops, and you should quickly see your credit score improve.
3. Make payments on time.
Payment history is the single most important factor in determining a credit score. So, a consistent track record of on-time payments is essential to having a good credit score.
To do this, you must use credit regularly to build a good credit history. Make sure those payments are on time to build the right kind of history.
4. Wait before you add new credit accounts.
Having too many new credit accounts can hurt your credit score. Even applying for too many accounts can harm your score.
Pick your spots when applying for new credit accounts. Don’t just jump at any new credit offer that sounds tempting.
5. Choose the right kind of credit.
There are two types of credit accounts. Credit with a set schedule of payments, like a mortgage or a car loan, is called installment debt. Credit, where borrowing and payments are more variable, like with a credit card, is called revolving debt.
Having a balance between installment and revolving debt helps your credit score. Don’t take on new debt just to balance your credit mix. But, when it comes time to borrow, think about what kind of accounts you have and what kind of new account might be a good balance.
Achieve financial control. How much debt do you have?
How long does it take to get a 600 credit score to 700?
If you’re new to using credit, this can happen quite quickly. Just using credit regularly and making your payments on time should increase your credit score. Improving your score will take longer if you have a bad credit history. It can take up to seven years for missed payments to drop off your credit record. However, the sooner you start developing a positive payment history, the sooner your score will improve.
What is a FICO score range?
FICO scores range from 300 to 850. Here are various levels:
Poor Credit: 300-579
Fair Credit: 580-669
Good Credit: 670-739
Very Good Credit: 740-799
Excellent Credit: 800-850
Can credit repair companies fix bad credit instantly?
This is a common claim. It’s probably wise to take it with a grain of salt when credit repair companies use the word “instantly.” Credit repair generally takes some time. But, in certain circumstances, you could see improvement almost immediately. Fixing errors on your credit report and paying down debt are likely the fastest ways of improving your credit score.