Is 650 a Good Credit Score? Do I Need to Improve It?

When you finally decide to check out your credit score and find out that it is around 650, a common question that arises is if 650 is a good credit score? Do you need to improve it or are you good to pursue buying that home, car, or simply seek out a lower rate on your credit card. For many consumers, the sheer number of companies, options to check your credit score, and what constitutes a good score can be a bit challenging to determine what you need to do next while trying to manage debt at the same time. If you find yourself in this position, you have come to a great place to find out what your credit score may mean and how it can impact you.

Common Questions Asked by Consumers with 650 Credit Scores

If you haven’t checked your credit score in a while, or it’s the first time, having a 650 can be confusing. Many people will wonder if it’s good enough to buy a car? Can they buy a home with it, or do they need to take action to raise the score. Other questions that also arise are if there are negative items on your credit report that are dropping your score to the point that you need to do something to help raise or fix the score?

Credit Score

What Does Having a Credit Score of 650 Mean?

No matter what agency that you look your score up through, the primary purpose of the information is to indicate to a potential lender what your overall credit worthiness is for obtaining credit. This could be for a new home, line of credit, or a car. The score consists of three digits and can range between 350 and 850. If your score falls beneath 350, then that means that you have no credit history. Depending on what agency you look at, the 600-699 range is in the higher end of the fair range of credit scores. For excellent credit your score would have to be between 750-850, and good credit is 700-750. Poor credit ratings fall between 350-600.

What is the National Average Credit Score?

The average credit score for Americans has been on the rise in recent years. According to CNN, most Americans are more aware of their credit score, and 650 will actually put you slightly below the new average of 700. Northern states still come in a little above the national average with Southern states a bit below. Since the recession, consumers have become more aware of some of the big impacts on their credit and have taken positive action to help keep their credit on the “good” side of the formula. The good thing is that with a 650 it’s definitely in the realm of possible to get a loan for a car or home, your interest rate just may be lower than someone with higher credit. If you have some time before making that big purchase decision or loan application, it is also very possible that you can improve your score in as little as three months to see a bigger benefit when it comes time to get that loan.

What are the Negatives with a 650 Credit Score?

A 650 will still show you as a bigger risk to banks when seeking out a new loan. In the cases where you will get approved, you will pay a higher interest rate than someone with a better score. The “payback” to the bank or organization providing you the loan is getting paid more money in the form of interest payments for the increased risk. When you apply for a loan with a 650 credit score, you are going to pose greater risk than someone who comes through the door with a 700 or higher credit rating since they have proven that they will pay back money in a consistent manner constituting lower risk to the lender.

How Can You Improve Your 650 Credit Score ?

No matter where you sit, there are a number of things that you can do to improve your current score of 650. Taking proactive action to determine where you sit and the negative impacts on your score is a great first step. With some persistence and hard work, you can definitely get your score even higher. The following are some steps to consider for raising your credit score above 650:
Step 1 : Take a hard look at your credit report. You are entitled to look at your report from the three major agencies (Equifax, Experian, and Trans Union) once a year for free, so you don’t even have to try out a paid service if you don’t want to do so.
Step 2: Identify errors in your report and fix them. Things as small as your address or name not being listed correctly can have an impact. When you submit a change or correction, the credit agencies are required to fix it for no fee.
Step 3: Figure out what is lowering your credit. This could vary from late payments, liens, bankruptcy, or your balances on credit cards simply being too high. The current credit score formulas reward you for using but not maxing out your credit cards. Coming up with a plan to reduce the balances below 30% of the available credit will have a nice, positive impact on your credit score.
Step 4 : If you have been late on your payments, start paying all of your bills on time this month. This has a significant impact on your credit score. Next is to consider following the advice of someone like Dave Ramsey, or a collection of experts online and pay down your debt. A technique that many have used to success over the past is to start knocking out the smallest bills first while continuing to pay your minimum payments on your accounts.
Step 5 : Continue to monitor your game plan for increasing your credit score and adjust your approach (or refine it) as you make progress.

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