A FICO® Score of 650 is generally considered a fair credit score. While it indicates that you're managing credit, it's lower than the average U.S. credit score and suggests there's room for improvement to access better financial products and terms.
Understanding a 650 FICO Score
A 650 FICO® Score places you within a population of consumers whose credit may be seen as fair. This score is lower than the average U.S. credit score, which means lenders might view you as a higher risk. Statistically, a notable percentage of consumers with credit scores in the Fair range are likely to become seriously delinquent in the future, which explains why lenders may offer less favorable terms.
Credit Score Ranges Explained
Credit scores are typically categorized into ranges, each indicating a different level of creditworthiness. Understanding these ranges can help you benchmark your 650 score:
| FICO® Score Range | Category | Implications |
|---|---|---|
| 800-850 | Excellent | Best rates, easiest approvals |
| 740-799 | Very Good | Very good rates, easy approvals |
| 670-739 | Good | Good rates, generally approved |
| 580-669 | Fair | Higher rates, some approvals, limited options |
| 300-579 | Poor | Difficult to get approved, very high rates |
Note: A 650 falls within the "Fair" category.
What a Fair Score Means for You
Having a fair credit score like 650 has several practical implications when you apply for loans or credit:
- Higher Interest Rates: Lenders often charge higher interest rates on loans (like mortgages, auto loans, or personal loans) and credit cards to applicants with fair scores, compensating for the perceived higher risk. This means you'll pay more over the life of the loan.
- Fewer Loan Options: You might find it harder to qualify for prime loans or credit cards with attractive rewards and benefits. Lenders may offer subprime options, which typically come with less favorable terms.
- Security Deposits: Some landlords or utility companies might require a security deposit before providing services or renting property, reflecting the increased risk.
- Loan Denial: While not always the case, there's a higher chance your applications for new credit might be denied, especially for competitive offers.
Steps to Improve Your 650 Credit Score
While 650 is not considered a "good" score, it's a solid foundation from which to build. Improving your credit score can unlock better financial opportunities. Here are actionable steps you can take:
- Pay All Bills on Time: Payment history is the most significant factor in your credit score. Make sure all your credit card payments, loan installments, and other bills are paid by their due dates, every time.
- Reduce Credit Card Debt: Aim to keep your credit utilization ratio (the amount of credit you're using compared to your total available credit) below 30%. Paying down high credit card balances can significantly boost your score.
- Avoid Opening Too Many New Accounts: While a mix of credit types can be beneficial, opening too many new accounts in a short period can lower your score, as it suggests a higher risk to lenders.
- Check Your Credit Report Regularly: Obtain a free copy of your credit report from each of the three major credit bureaus (Equifax, Experian, and TransUnion) at least once a year. Dispute any errors you find, as inaccuracies can negatively impact your score. You can access your free credit reports at AnnualCreditReport.com.
- Maintain Old Accounts: Keep older credit accounts open, even if you don't use them frequently. A longer credit history can positively impact your score.
By consistently practicing good financial habits, you can steadily improve your 650 credit score and move into the "good" or "very good" ranges, opening doors to better financial products and terms.
