To tell you frankly, do not ask for any car loan, and you can leave aside a house loan, if you happen to have a 650 credit score. That’s because, most lenders would consider it as below average, and so, would refuse to sanction the loan. Even though the average credit score in the United States vary, depending on rise and fall in economic conditions, it usually hovers around 670 to 690 most of the time. Exceptions, however, occur in the Midwest states where it often goes up by 20 or more points above the average figure. So it is no wonder that lenders would be reluctant to invest their money on a person whose creditworthiness is as low as 650. As you see, a 650 credit score is not quite great.
If you think that the financial institutions will take a rather dim view of your below average credit score because of the ‘great depression’ that have hit the US economy, you are wrong in assessing the situation. Even during the best of the times, a 650 credit score could not qualify you for car loans or high-end credit cards. Since the economic gloom, the situation obviously has worsened further.
However, if you still insist on availing a loan with a 650 credit score, you should know that you will be inviting trouble if you do so. There are lenders in the country who grant loans to people displaying a low credit score. But they will be charging them abnormally high interest rates for a 650 credit score. They issue such terms that it might become virtually impossible for you to carry on. As a result, you might end up thinking that it would have been better for you not to take the loan in the first place.
What Should You Do With a 650 Credit Score?
The best course left before you when you find your credit score has slid down to 650 or less, is to bring it up to a good figure, say around 700 or 750. Of course, there is no reason as to why you will not be able to make it if you follow the principles listed below.
- Do not neglect to pay your bills on time – In fact, you should make it a habit of paying bills timely. Remember, late payments are invariably reflected on your credit report. Keep this in mind and you can raise it from a 650 credit score.
- Maintain assorted credit accounts – One of the reasons behind such poor credit score could be due to the fact that you never had different types of credit. You should have at least two different types of credit and pay back both in time. For instance, keep the credit card balance up-to-date and at the same time, pay your installment loans such as mortgage, also on time.
- Never use the full amount of your credit card – When you have $6000 credit limit on a card, refrain from using the entire amount. The best thing would be to spend only up to 25% of the available credit.
If you make it a point to stick to the above codes at least for a year, your credit score will surely go up. You can then have a better than 650 credit score.