Is A 650 Credit Score Good?
August 8th, 2012 | Author: Stephanie
[M]any people are confused as to what constitutes a good credit score as well as what it takes to get a good credit score. It is important to clear up any confusion, because these days credit scoring can determine much more than your eligibility for the best rates on personal loans and credit cards. Most insurance companies use your credit standing to determine your rates on auto or homeowner’s insurance. A growing number of employers are reviewing credit reports to determine whether a candidate for a job or a promotion is really an honest person.
Unfortunately, 650 is no longer considered a good credit score. It was considered average or above-average before the economic downturn of 2008, but when more people started defaulting on loans and filing bankruptcy credit scoring standards became much higher.
You need to have at least a 680 to be competitive for credit cards with high limits and low interest rates. A 650 is not necessarily a terrible credit score, but it does indicate a history of some credit problems.
Keep in mind that just paying your bills on time is not enough to earn a 680 or higher credit score. A lot of that mysterious number
has to do with how long you have used credit and how high the balances are on your existing accounts. If you have $10,000 of credit card limits and owe $3,500 or more on them you will probably not earn the best credit scores.
Even with a 680 credit score, you could still have trouble getting great interest rates especially for home and auto loans. You really need to get your score up to 720 to 850. An 850 is pretty elusive unless you have had absolutely pristine credit for many years and never keep a high balance on your credit cards. A 720 takes some time to earn but is not as much of a holy grail as an 850.
If you have a credit score around 650, your financial situation is not necessarily hopeless. Other factors can help boost your chances of getting credit, especially if your aim is to borrow money for a new home rather than a luxury vacation. Mortgage lenders probably will not give you the best interest rates with a 650, but if you have a steady job and a cash down payment you can still probably get a home loan. Some credit card companies will also still lend to you, though do not expect five or six-figure credit limits.