- 27 Dec, 2023
Credit Score Check! Is 590 Considered Good or Bad?
Is a 590 to 620 credit score ideal for loan approval?
Are you on a credit score check hunt? We get you. The dilemma is real. If you have been constantly fluctuating between the credit scores of 590 to 620, this blog is for you.
So, come along as we determine whether a credit score ranging from 590 to 620 is sufficient for loan approvals. And that's not all - we will also learn about other alternatives such as a no credit score mortgage.
Credit scores explained
Whether you're applying for a credit card, buying a car, or securing a mortgage, you know that lenders use your credit score to evaluate your creditworthiness.
Simply put, they are a numerical representation of the way you manage your debt and credit payments. It’s a three-digit number used to assess the level of risk involved while the lender lends the money to you.
Credit scores range from 300 to 850 and they’re not just random figures. A lot of factors go into the calculation of your credit score.
In the next section, you will learn how FICO is being used as a common measurement by lenders to determine the borrower’s risk.
5 factors influencing credit scores
While talking about credit scores, you might have come across something called a “FICO score”
FYI - The name FICO is derived from the Fair Isaac Corporation, which is an analytics software company that introduced the FICO score in 1989.
These scores are used during many credit decisions made by borrowers as well as lenders. Here’s a detailed overview of how these factors affect your FICO scores.
Payment History
This is one of the most critical factors affecting your credit score. Lenders want to see a consistent pattern of on-time payments, reflecting your reliability in meeting financial obligations.
Previous bankruptcies, delinquencies, and collections will lower your credit scores.
Credit Utilization
This factor looks at the ratio of your credit card balances to your credit limits. Maintaining a low credit utilization rate is generally seen as positive, as it indicates responsible credit management.
Length of Credit History
The duration of your credit history is also considered. A longer credit history provides more data for lenders to evaluate your financial habits.
Types of Credit
Lenders assess the variety of credit accounts you hold, such as credit cards, mortgages, and installment loans. A diverse mix can have a positive impact on your score.
New Credit
Opening multiple new credit accounts in a short period may be perceived as risky behavior. When people apply for frequent credit, it automatically indicates new financial pressure and your score will get hit.
This can be found out by checking the number of recently opened accounts and recent inquiries for new credit applications.
What does a 590 to 620 credit score get you?
If your score falls between the range of 580 to 669, it is considered to be a fair credit score Borrowers who fall into this category of a fair range are usually seen to have an unfavorable credit history.
So, if you’re one of them, your lenders might decline your credit applications. However, lenders who are specialists in subprime lending will be happy to work with borrowers in the fair range but they charge higher interest rates and application fees.
To answer your boiling question - “Is 590 considered good or bad?” Well, in the lending market, there are no terms such as good and bad!
Instead, we need to ask ourselves questions like -
What score can get me closer to loan and credit card approvals? What should I do to improve my credit score to get approval? What kind of interest rate should I pay for the current status of my credit?
And so on…. Based on your financial situation!
So, the best solution here is to focus on improving your credit scores and not find the answer if a 590 to 620 FICO score is good or bad.
What are we waiting for? Let’s look at the steps you need to take to improve your credit scoreand increase your chances of getting faster loan and credit card approvals.
7 tips to improve your 590 to 620 credit score
As we discussed above, the credit score ranging from 590 to 620 falls within the fair credit category, but we need improvement to overcome challenges and welcome newer financing opportunities.
If you find yourself in this range, the good news is that there are steps you can take to actively improve your creditworthiness. Here’s how you can do it!
Understand your current financial situation
You can start with the first step by reviewing your credit report. Get a copy of your credit report from any one of the major credit bureaus like Equifax, Experian, and TransUnion.
Once you have your report ready, check if there are any inaccuracies or discrepancies.
Identify areas for improvement
When you are checking your report, pay attention to the specific factors that we just discussed above.
Think of it like one of those interesting puzzles you would play as a kid! Doing this will help you identify any areas of improvement and will give you clues on the next steps to be taken to improve your score.
Pay on time
Making consistent on-time payments is one of the most impactful ways to improve your credit score.
Add reminders on your phone or set up automatic payments to ensure you never miss a bill’s due date.
This can be done using different apps and all you need to do is invest your time in getting your bills sorted and reminders set.
Reduce your credit card balances
If you’re on a mission to improve your credit scores from fair to good, then you need to decrease your credit card balances, especially if they are close to the credit limit.
The lower your credit utilization, the higher the chances you have of attracting a positive credit score.
This lets your target lenders know that you’re not completely reliant on credit and loans and that you’re brilliant at managing your credit payments.
Settle all your outstanding debts
If you have a larger mix of outstanding debts, work on resolving them. Negotiate payment plans or settlements with your lenders so that it is easier to move up the 620 FICO score model from fair to very good.
Try to have a credit mix
As much as you like a mix of flavored ice cream, having a similar mix of credit types is also preferable.
Different-purpose credit cards, and installment loans, can positively impact your credit score.
But, if you’re unable to handle too many credit cards and loans, it is better to stay away as the credit mix is largely dependent on how well you handle the repayments.
Avoid opening too many new accounts
As we said earlier, opening multiple new credit accounts within a short period can be viewed as risky behavior and also shows your need for more external funds.
So, don’t get influenced by any ads online, and limit new credit applications to avoid a negative impact on your FICO score.
Alright, are you ready to implement these tips into practice? Get your scores on track and explore personalized loan options here at Home Loan Rate of Interest.
We know you are all set to improve your credit score. But wait, there is more to this blog.
Let’s say you’re in immediate need of funds to buy a new home and you don’t have enough time in hand to implement these actionable tips. What’s next? There is a way and we will show you how in the next section.
No credit score mortgage: An alternative solution
You didn’t see that coming, did you? We love providing solutions to you. Here’s an alternative to satisfying your urgent need for funds to buy a home.
A no credit score mortgage!
Yes, most of the loan programs and lenders have minimum credit score requirements. But, it is possible to skip the credit score dilemma and qualify for a mortgage without a credit check.
Wondering how? Let’s see.
Look for a co-signer
Adding a creditworthy co-signer will help you get your loan approved faster even if you have a poor or no credit score at all.
Find a sweet person who will be willing to share the responsibility for your loan and its repayment. They don’t have to make the monthly payments, you have to do it.
Your co-signer could be your parent, close friend, or your sibling. Remember, your loan and repayment history will impact their credit too. So, you gotta be way more responsible.
Make a larger down payment
Higher down payments mean lesser risk to the lender when they offer you a mortgage. Even if you default, your lender can recover their money as you’ve already contributed a large portion of your loan in the form of a down payment.
Go for a manual underwriting process
Your lender analyzes your repayment potential by examining your credit, your finances, and your desired house to check if they are willing to provide a mortgage to you.
This process when automated takes much less time than the manual method. But, the automated process of underwriting requires you to submit your credit scores.
At the same time, the manual underwriting process is used for a no credit score mortgage.
Here, a loan officer personally visits to review your financial statements to understand your creditworthiness.
Here, you provide details such as a couple of years’ worth of document proof such as timely rent payments, utility bills, and any other recurring expenses. But, this will take some time, so you need to wait with patience.
No credit score mortgage serves as a light of hope for many individuals who are in urgent need of funds to buy a home. As with any financial decision, thorough research, and professional guidance are key to making informed choices.
Is a credit score of 620 enough?
In conclusion, the question of whether a 590 to 620 credit score is enough or not depends on various factors. While a credit score of 620 falls within the "fair" range, it's essential to recognize that lenders may have different criteria and expectations.
This score might be sufficient for certain loan approvals, but the terms and interest rates offered could be influenced by other aspects of your financial profile.
If you want to maximize your financial opportunities, it's crucial to view a credit score as just one element in the broader context of other requirements that need to be ticked off while securing a mortgage.
Whether you aim to secure a mortgage, obtain a credit card, or pursue other financial goals, a proactive approach is a must, and if you want to make the right choices, follow our blog and stay updated.
