600 Credit Score. Is 600 a Good Credit Score or Bad?
“My credit score is 600! What should I do?”
First, don’t panic. While your score isn’t viewed as “high” to most creditors, you still have enough room to improve.
If you’re looking at your credit score, it’s probably because you’re trying to apply for a mortgage, loan, or wondering how come your interest rates are way too high.
However, your FICO score affects more than whether you’ll get approved for a loan or you’ll be losing out on more than just your loans. This means that your credit score might be affected your job, insurance premiums, and where you live.
It can be unfair because it can be easy to ruin your credit score. Avoiding debt or having a series of missed payments could lead to bad credit without any fault on your end.
Fortunately, getting your credit score back to “good” rating isn’t as difficult as one thinks. While it won’t happen overnight, by paying your payments on time, taking out credit when it’s needed, and taking care of your expenses, you’ll start to see a gradual increase in your credit rating.
First, we’ll start by looking at your 600 FICO score and how it affects your life, and what you can do to improve it.
What Does a 600 Credit Score Mean?
When we think about credit score, we think of them regarding “Good” or “Bad.” In reality, there’s only one number you need to remember, and that’s 660 or 680.
In that number range, that’s where we get in a cut off called “prime credit.” This is the credit mark where banks will start accepting loans, and you’ll start seeing lower rates. Anything that’s under a prime credit score will be viewed as bad, and you’ll have limited options.
But just because you have a score of 600 doesn’t mean you have “bad” credit. It’s very easy to get a score under prime. Just one loan default or missed payment can get you there. Also, maxing out your credit cards can also hurt your score.
And you might have a low credit score because you don’t have a solid credit history. A lot of college students have low-credit because they never had to use a credit card or take out a loan. People who have avoided using credit cards might have a score of 600 or lower.
You also want to avoid credit and debit cards that aren’t building credit because they’ll cause problems in the long term. While it’s not going to stop you from getting employed, it will be difficult to get a mortgage or an emergency loan. You’ll have to be forced to pay higher premiums on your credit insurance.
What Can a 600 Credit Score Get You?
Most borrowers tend to ask, “Is 600 credit score good or bad?”
A credit rating of 600 isn’t good. In fact, it’s not even fair. Instead, a 600 credit score is considered “bad.” This score will make it difficult to be approved for a decent line of credit or loan and can prevent you from landing certain jobs or renting an apartment.
Also, it will costs you around thousands of dollars a year compared to borrowers who have a score of 60 points higher, which was the beginning of good credit.
Here, you can learn about what you can qualify for with your 600 credit score:
|Type of Credit||Are you Qualified?|
|Favorite Store Credit Card||YES|
|0% Financing Credit Card||YES|
|No Annual Fee Credit Card||YES|
|Any Credit Card||NO|
|Large Credit Card Bonus||NO|
|Hotel/Airline Credit Card||NO|
|Best Mortgage Rates||NO|
|Low Auto Insurance Premiums||NO|
|Auto Loan With 0% Intro Rate||NO|
TIP: The best way to build good credit is to start with creating an unsecured credit card. The deposit reduces your issuer’s risk, which makes it possible to get it approved no matter how low your score will be.
Alternatively, you can try a credit card for people with fair credit. However, if you aren’t approved, take the secured credit card route. Repeatedly getting rejected will result in inquiries on your credit report which may harm your score.
What Does It Mean If You’re at 600 Credit Score and Rising?
If your credit score is rising, then you’re probably following these three main rules:
- Always pay your bills on time
- Open new credit when it’s necessary
- Keep your credit balances low
Here’s one strategy you can use to increase your score: Transfer credit balances from a card that’s close to maxing out to other cards to even out your credit usage, David Chung, the managing director for Maryland-based CreditXpert Inc, which gives credit tools to lenders. Or spread out your charges between a couple cards.
While exact percentages will vary based on your profile, “Try to get all of your credit cards up to 20%-30% instead of having an 80% and a lot of zeros in credit cards”, Chung states. “You’re not spending less; you’re just spreading the expenses across different credit cards.”
This strategy should be used to accompany all of your efforts to reduce your existing debt. If you’re really trying to finesse the system, check the credit reports to see what day your creditors will send updates on payments to the credit bureaus, Chung states.
They are rarely on the same payment cycle such as getting your payment due date. This is why you can pay your card off every month, and your credit report will show that you’re carrying a balance. Then, you should make your payments for several days before the reporting date.
If you’re trying to apply for a mortgage and need to increase your score quickly, you can help this process via rapid rescoring. However, if you have negative information such as bankruptcy, accounts in collections, and late payments, then you’re out of luck.
But through the rapid resourcing process, you can increase your score in a few days by paying off your account balances or increase your score in a few days.
It’s impossible to do this on your own. You’ll need a credit lender that helps with a rapid rescoring service,.Generally, this service will cost about $50 for each credit account on your credit report that will need to be addressed, but it will save you at least thousands of dollars on his loan.
What Does It Mean If You’re at 600 Credit Score and Dropping?
If your 600 credit score is dropping, you need to find out what is causing this issue. Ignoring these signs can lead to you losing more points and potential lenders in the long run.
So here are a few things that could be causing your score to decrease:
- Expensive Purchases: One important factor is how much available credit you have and how much of it you’re using. While its a surprise to some people but, if you make huge purchases on your credit card in one month, you could see your credit score drop even if you do pay off the balance in full during the due date.
- This occurs because credit card issuers usually report your credit card balance on the last day of the billing cycle. This means the balance that appears on your credit card statement is usually the balance that’s on your credit report.
- How to Fix: Fortunately, you can easily correct the impact of your high balance. Start by paying off the balance, avoid making additional card purchases, and wait for your balance to appear on the report.
- You’ve created a new application for credit: Any time you place an application to receive credit, the inquiry is marked on your credit report. Since inquiries take up to 10% of your credit score, borrowers who apply for credit will see a slight reduction in their score.
- How to Fix: Inquiries only affect your credit score for only a year. This means that if you’ve only made one inquiry, you’ll see your score increase within 12 months.
- Your Previous Collection Was Dropped Off Your Credit Report: When you calculate your credit score, FICO places people into different brackets, also known as scorecards. Your credit profile will be compared to other people in your scorecard to calculate your credit score. While you might have been in the top percentages of the scorecard with a collection on your credit report, it can be reduced if there is negative information that enters your credit report
- How to Fix: This credit score drop is out of your control. Fortunately, as long as you continue to pay your bills on time, your credit score will begin to improve.
How to Improve Your 600 Credit Score?
So is 600 a bad credit score? The answer will depend on your financial history and current credit usage.
Remember having a fair credit score won’t increase overnight. Also, foreclosures, bankruptcies, and other negative issues that create a Fair credit score will resolve itself over time. No matter what caused your fair score, you can start handling your credit, which will lead to more credit-score improvements.
Here’s how you can improve your credit score:
- Pay Your Bills On Time: If you can do one thing to improve your credit score, nothing would help you more than bringing your overdue credit accounts to date. As you continue to move forward, make sure you avoid late payments. We suggest that you do whatever you can to remind you to pay your credit bills on time: set calendar alarms, use automatic payments, or write notes and place them where you can see them. In a few months, you will train yourself in habits that will help increase your credit score.
- Create a Debt Management Plan: Debt management plans will help borrowers that feel that they have overextended their credit and unable to track their credit payments. If you work with an authorized credit consulting agency, you can negotiate a simple repayment schedule, closing all of your current credit accounts throughout the process. This is a serious step that might reduce your score in the short-term, but it’s less harmful than bankruptcy, and it will give you a clean start on fixing your credit.
- Make a Credit-Builder Loan: As its name suggests, these are loans given to help borrowers build or shore up their credit profiles, by demonstrating the ability to make monthly payments. Once you take out this loan, the credit union, you’ll gain the cash and interest it gained over time. It’s a great savings tool, but the real payoff is when the credit union will report your current status to the national credit bureaus, which will create a huge boost in your score.
Now that you know everything about your credit score of 600, you have to make a decision. Either you’re going to let your expenses lower your score even further or you’ll be financially responsible to start paying off your bills and restoring your credit.
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.