Score Advice

What Is a Fair Credit Score?

A fair credit score is generally considered to be a FICO® Score of 580 to 669. The FICO Score was created by the Fair Isaac Corporation and is used by many lenders as they make lending decisions. FICO Scores often range from 300 to 850 and most FICO Scores fit into one of five categories: very poor, fair, good, very good and exceptional.

There are several different types of credit scores and most of them are based on the information collected in your credit reports. FICO Scores and scores by VantageScore are two of the most common types, and the specific ranges may vary from score to score.

Why Do I Need to Know My Credit Scores?

You need to know your credit scores because they are often used by lenders and banks as they decide whether to offer you credit, such as a credit card, mortgage or auto loan. Having a fair credit score can influence the terms of a credit offer, such as the mortgage interest rate or how much the required down payment will be.

Do I Have a Fair Credit Score?

Once you know your FICO Score, you can check to see what range it falls into by using the table below. About 20% of Americans have fair credit scores and a FICO Score from 580 to 669 falls in the fair credit score range. A credit score below 580 is considered to be very poor.

FICO Score Ranges:

Credit ScoreRating% of PeopleImpact
300-579Very Poor17%Credit applicants may be required to pay a fee or deposit, and applicants with this rating may not be approved for credit at all.
580-669Fair20.2%Applicants with scores in this range are considered to be subprime borrowers, meaning their credit standing is less than what is normally desired.
670-739Good21.5%Only 8% of applicants in this score range are likely to become seriously delinquent in the future.
740-799Very Good18.2%Applicants with scores here are likely to receive better than average rates from lenders.
800-850Exceptional19.9%Applicants with scores in this range are at the top of the list for the best rates from lenders.

Do I Want a Fair Credit Score?

You want the best credit scores possible in order to help save yourself money when you need to take out a loan or get credit. Fair credit scores mean you are seen as sub-prime by lenders, which means you are likely going to get less favorable terms than someone with a higher credit score. That can mean higher interest rates and even outright rejection.

Improving your credit scores over time, moving from fair to good and beyond, will boost the chances that you'll qualify for credit with more favorable terms. In general, having good credit scores may help improve your financial situation. Here are some reasons why you would want to earn higher credit scores:

  1. Higher credit scores can earn you lower interest rate loans for your home loans, car loans, student loans and personal loans.
  2. Higher credit scores can make for lower monthly payments on your loans. If you receive a lower interest rate, then you likely will have lower monthly payments required.
  3. Credit card offers will provide better credit card rewards and deals such higher percentage cash back choices, 0% interest rates and higher credit limits.
  4. Having higher credit scores can make it easier to be approved for renting a home or apartment.

What Lowers My Credit Score?

The behaviors that can impact your credit scores vary depending on which credit scoring model is being used. The most commons items that can affect your credit score are:

  • Late Payments: When bills for things like loans and credit cards are paid after the due date.
  • Poor Payment History: The total number of late payments and how late the payments are.
  • High Credit Utilization Rate: How much you owe compared to how much credit is available to you.
  • Credit History and Mix: The length of time you've had credit along with the different types of credit accounts you have.
  • Total Amount of Debt: All of your outstanding debt, across all of your credit accounts.
  • Negative Public Records: Bankruptcies, civil judgments, or tax liens.
  • Credit Inquiries: When you apply for too much credit within a short period of time.

How Can I Improve My Credit Score?

Improving your credit scores really comes down to the same categories of behavior that can get your score in trouble. You'll just need to throw the car into reverse and start doing the "right things." If you stay on course, over time your credit scores will likely improve, and so can your access to credit. Those actions include these:

  1. Pay Your Bills: Establishing a positive payment history is the single most important factor in many credit scoring models. So, pay your bills on time and if possible, pay them off in full each month per the agreement you have with the loan or card issuer.
  2. Improve Your Credit Utilization Ratio: Either lower the amount of credit that you have in use, or increase your credit limits to ensure that you don't use more than 30% of your available credit at any given time.
  3. Don't Over Apply: Only apply for credit when you really it and don't apply for a bunch of different lines of credit at the same time.
  4. Look for Errors: Pay close attention to the information on your credit reports and be sure to dispute any errors that you come across.

Establishing good credit habits like these can make a difference and help you improve your credit scores over time.

Editorial Disclaimer: Opinions expressed here are author's alone, not those of any bank, credit card issuer, or other company, and have not been reviewed, approved or otherwise endorsed by any of these entities. All information, including rates and fees, are accurate as of the date of publication.
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