580 Credit Score. Is 580 a Good Credit Score or Bad?
Some borrowers tend to ask “My credit score is 580, how can I fix it?”
When it comes to credit history, your score falls within a range. Having a credit score within the range of 580-669 is known as “Fair” credit. At 580, your score is starting to reach the “Average” side of the credit spectrum.
You need to have a There are some lenders who see consumers within the Fair range as unfavorable credit. Sometimes, they might decline your application due to not meeting their credit standards.
You have to understand that a 580 credit score good or bad is still a sign of your financial status. So its best to improve it, by being proactive and keeping track of your daily expenses.
Other lenders that tend to specialize in having “subprime” lending are happy to help customers who had their scores falling in the fair range. However, they do tend to charge high fees and interest.
You have to think a 580 credit score as a springboard to obtain a higher score. Increasing your credit score is a slow, gradual process, but it’s one that you’ll be able to begin right away. While you share a 580 credit score with thousands of Americans,
In this guide, we want to help you utilize your credit score. 18% of all of the consumers have their FICO store within the 580-669 range. In fact, around 66% of Americans have a good credit score or higher.
Are you ready to live a happier financial life?
Let’s get started!
What Does a 580 Credit Score Mean?
Let’s say that you’re attempting to buy a new home with a 580 credit score. Can your score give you enough leverage to buy a home? You need to understand what is a 580 credit score you can become more financially potent and improve your credit history.
In order to obtain a mortgage, you’re going to need a score of 620 or higher. But there are some companies that can go under 580 for the FHA. But then there are other parameters that make it difficult (debt to life income) if your credit score is under 620.
For example, let’s say that you can qualify for an FHA loan with a 580 credit score, but as discussed in the table below, having a low FICO score will increase the amount of money you’ll be spending throughout the duration of your loan.
However, if your FICO score is under 560, the majority of the lenders won’t consider giving you a large loan if the score is low. The best course of action in this scenario is to find your credit score and take active steps in increasing it over time.
| Credit | Score | Payment | Rate | Added Cost |
|---|---|---|---|---|
| Excellent | 720 – 850 | $1,487 | 4.31% | $0 |
| 700 – 719 | $1,526 | 4.53% | $14,040 | |
| Moderate | 675-699 | $1,558 | 4.71% | $25,560 |
| 620 – 674 | $1,597 | 4.93% | $39,600 | |
| Bad | 580 or lower | $1,676 | 5.36% | $68.040 |
What Can a 580 Credit Score Get You?
As we’ve stated earlier a 580 Credit Score means that you have “Fair Credit Rating.” So you’ll have a lot of improvements to make before you can reap the rewards of the credit industry.
| Type of Credit |
Do You Qualify?
|
|---|---|
| Any Credit Card | NO |
| No-Annual-Fee Credit Card | YES |
| Big Initial Credit Card Bonus | NO |
| Credit Card with 0% Financing | YES |
| No-Foreign-Fee Credit Card | YES |
| Favorite Store’s Credit Card | YES |
| Airline/Hotel Credit Card | NO |
| Best Mortgage Rates | NO |
| Auto Loan with 0% Intro Rate | NO |
| Lowest Auto Insurance Premiums | NO |
| Personal Loan | MAYBE |
| Apartment Rental | MAYBE |
With a 580 credit score, you’ll be able to take out a car loan, but you’ll still encounter some problems. You can’t take out a mortgage loan, even if you have little to no credit. This table demonstrates how much interest you’ll have to pay for a car loan.
| FICO Score | Monthly Payment | Interest Rate | Total Interest Paid |
|---|---|---|---|
| 720+ | $332 | 3.07% | $959 |
| 690-719 | $341 | 4.292% | $1,351 |
| 660-689 | $353 | 6.049% | $1,925 |
| 620-659 | $378 | 9.598% | $3,122 |
| 590-619 | $419 | 15.177% | $5,103 |
| 500 -589 | $432 | 16.909% | $5,742 |
At this score, you might not be able to get an approval for most loans and or obtain an unsecured credit card. If an issuer or lender approves your application, they might not offer the best terms or the lowest interest rates.
But there’s still hope!
To solve this, you have taken better care of your finances. This means that you have to keep track of your credit history, what’s reducing your score, and create strategies in order to improve it. Doing this helps you increase your score and protect your financial health in the long run.
What It Means If You’re at 580 Credit Score and Rising
If you are a 580 and rising, you still can bring your score back up to good standing. Here are some tips to help you manage your credit score so that you can increase your score:
Understand Why You Need Good Credit
Whether you believe that your 580 credit score good or bad, you’re going to need good credit in the long run.
You need to know that having a good credit score is the first step to achieving financial security. You’ll be able to qualify for about any form of credit or loan amount. By understanding why you need good credit, you’re taking the first step to taking your financial health seriously and raise your score.
Lenders place their borrowers in credit tiers, and with a good credit tier, you’ll be able to have the best credit offers available.
A good credit score gives you the option to obtain credit offers that are not available to most customers. For instance, you’ll get the following:
- Low Monthly Payments
- Auto Loans with 0% Financing
- Best Interest Rates on Loans
- Easy Screening for New Employment
- Introductory and Bonuses
Borrowers who have a credit score of 700 or higher will receive the best mortgage rates available. Since you have a credit score of 580, you can improve your score by demonstrating good habits (paying bills on time, utilizing your credit, etc.) so that you can reap the rewards.
Maintain Good Credit Habits
Good credit habits start with budgeting, planning, paying on time, and spending logically.
Paying your bills at the right time is the main rule. However, making more than your due payments is a good practice. This will help you pay off your loans on time and faster than the average rate. Even paying a bit more than the minimum will help save a lot of your interest.
Credit utilization is another important factor to understand. As you gain experience with your credit, the card issuer might raise your credit card limit. But because you’re charged to charge about $5,000 doesn’t mean that you should.
Here’s a good rule of thumb, use less than 30% of your entire credit history by building a healthy credit score. This means that keeping your monthly balance under $1,500 if the credit limit is at $5000.
What Does It Mean If You’re at 580 Credit Score and Dropping?
Borrowers with little credit experience tend to ask, “Is 580 a bad credit score?”
In order to create a good credit history, you’ll have to form a line of credit. The easiest way to start is by opening a credit card. If you have a low score or its non-existent, then you’re going to have to apply for a store card or a secured card.
- Secured Card: For a secured credit card, you use your personal income as collateral. Usually, you’ll place down a deposit of around $100 or more in the bank. This amount acts as your credit limit. Once you’ve shown the credit companies that you’re financially responsible, then you can take back your deposit and then upgrade to a credit card.
- Store Card: People who have a low credit score can still obtain game cards because the banks tend to approve users who apply in the store. The only catch is that they have high-interest rates if you’re unable to make your payments on time.
Avoid Credit Card Debt
By only purchasing items that you can pay in full, you won’t accumulate credit card debt. If you’re currently in debt due to credit card misusage, then try to pay the minimum that’s due each month.
Paying off your credit on time is the first indicator of financial responsibility. We suggest that you apply for a personal loan, and use the money from that loan to help pay off your credit card debt. Usually, credit companies have interest rates as low as 4.25%, and the team is approving people credit scores that’s lower than 550.
After paying off your credit card debt, don’t close them! Instead, make one large purchase per month to help pay off your credit in full. Closing your credit cards will lower your utilization rate and remove information that damages your score based on your length of history category.
Protect Your Score
Once you’ve obtained a better credit score, make sure to protect it by following these steps:
- Pay on time – Any missed or late payments will negatively affect your score
- Keep your credit utilization rate below 30%.
- Make sure to check your credit reports for signs of fraud and accuracy – Borrowers are entitled to having one free report a year from the three credit report bureaus (Experian, TransUnion, Equifax)
How to Improve Your 580 Credit Score?
Dispute Negative Account Information
Remember, your credit bureau occurs 30 days after your dispute request. If your creditor is unable to verify the accuracy of your account, late payment, or whatever you’ve been disputing, then they will work to delete this negative history.
I’ve seen credit borrowers get around 10-15 accounts removed in about 30 days by disputing them. Most of these people have negative items on their credit report, so a large amount of accounts that’s been deleted isn’t unusual.
This will help you significantly increase your credit score. There will be times where they won’t remove the dispute, that’s okay as well.
How to Contact Your Collection Agencies
If you have a collection of bills with small balances placed on them, you need to call the collection agency. By talking to them, you can help remove charge-offs and other negative marks on your credit account.
Tell the collection agency that you’re requesting a pay for delete. Basically, a pay for delete is when you pay the amount that you’ve owned, and they remove the negative account from your credit history. Make sure that you write down the creditor’s name, and the extensions you’ve communicated with.
Also, you’ll need “pay for delete” letters in writing from the collection agency. This shows that they will agree to remove the negative mark from your report in exchange for paying the agreed upon amount.
In some cases, you’ll be able to settle your account for less than what you’re owed. However, we suggest that you pay off your credit account in full so you can fully remove it from your credit history.
Conclusion
Basically, you still have work to do if you have a 580 credit score. To improve it, make sure you take the time to find out what’s reducing your score and create a plan and strategy to remove them from your account. By doing this, you’ll save more money and obtain more lucrative offers from credit agencies!
Share in the comments below if you have any financial tips to improve your rating!
Darryl founded Smith Financial Advisors Inc. in 2006 after over 30 years experience in financial services including Mergers & Acquisitions, Investment Banking and traditional Commercial Banking activities at Bank One. Smith Financial Advisors is a Registered Investment Advisor in the State of Illinois. The firm specializes in Investment management, financial planning, and retirement planning.
