Is a 638 Credit Score Bad?
April 30th, 2014 | Author: Megan Eisenhower
[D]id you apply for a loan and find out you have a 638 credit score? If so, you may wonder what that means for you. Is this a good or bad score and how will it affect you?
Your Credit History
One reason for this score could be because you don’t have much of a credit history. If you have never had a loan or never been approved for a credit card or even if you have recent credit, your score may reflect this fact. It takes time to establish credit and your score will be lower until you do.
Another reason for a score around the 638 range is that you have had credit issues in the past but have had good credit for the last two years. As credit ages, it affects your score less. If you have been making your payments on time for the last couple of years, you probably have seen your credit improve.
How a Score of 638 Affects You
Since 640 is the cut-off for many lenders, their automatic systems will probably not approve you for loans or credit. However, if
they also accept manual approvals, you may still qualify. Because 639 and below is usually considered bad credit for most creditors, you may have to explain any negative information or offer more proof about your credit. You may pay a higher rate or require a higher down payment for loans or credit.
For instance, some lenders will accept this score for a home loan, but you may be required to fill out extra paperwork. The lender may ask for proof of rental payments over the last two years or an explanation of any negative information on your report.
If you have credit score of 638, it would be worthwhile to wait to apply for a loan until you can improve your credit those two extra points. Approval will be much easier. While you won’t qualify as good credit for most creditors, having fair credit opens up new opportunities for you. To improve your score, you can pay down any credit balances you have. You may want to open a new account such as a credit card. However, it is not recommended to open accounts if you don’t need the credit. Your credit score will improve over time as long as you continue to make your payments.