Wondering if your credit score is up to snuff?
If you have a 620 credit score, you aren’t alone. Tens of thousands of borrowers in the United States are in the same boat, and usually for the same reasons.
While a 620 credit score could use some improvement, if you’re looking for a guaranteed approval with competitive rates, it does fall into the “fair” credit score range.
In the article below, we’ll break down the factors that could be responsible for your 620 credit score, walk through your personal finance lending options, and share some surefire strategies for boosting your lower credit score.
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Is 620 a Good Credit Score?
A FICO credit score, as reported by the three major credit reporting bureaus (Equifax, Transunion, and Experian), of 620 is considered to be “fair,” whereas a score of 670 puts you in the “good” range. Typically anything below 670 falls into the bad credit range or poor credit scores.
For reference, around 17% of individuals have a “fair” FICO score, which ranges from 580 to 669. Most lenders rely on the FICO scoring models versus VantageScore, amongst other things like credit card balances and debt-to-income ratios, when determining your creditworthiness.
If you’re not sure what your credit score is, you are entitled to a free credit score annually in the United States.
Here’s the outlook for a 620 credit score:
- Credit range: Fair creditworthiness
- Mortgage Loan Type: Limited options
- Personal loan: Limited options
- Auto loan: Limited options
- Unsecured credit cards: Limited options
- Apartment rental: Potential approval
- Secured credit cards: High approval
Several credit issues can result in a score of 620. Individuals with “fair” credit scores usually have late monthly payments on their credit reports, some of which may have gone to collections.
Some of these issues can stay on your credit report and drastically hurt your score for several years if they aren’t removed.
A 620 is right on the border of the credit requirements for some loans, such as a conventional loan.
Though you may be approved for installment loans or revolving lines of credit with a 620, you won’t get very competitive interest rates.
To earn the most competitive rates and gain access to more sources of funding, it’s important to work to build your score.
We’ll provide you with some pointers below.
How to Improve a 620 Credit Score
With a 620, you’re on your way to a good credit score. Here are a few tips that can help you take your credit score to the next level, with some nearly instant results and others paying off long term:
- Get your payment history on track. 35% of your credit score is based on your payment history, so you should prioritize making all of your future payments on time, automating payments when you can. You should also catch up on missed payments as they hurt your score more the longer you leave them unsettled.
- Pay off your debts. Credit utilization accounts for another 30% of your credit score, so you should focus on paying down your loan amounts or debts to see a major improvement to your score. If any of your accounts have gone to collections, contact them to get the collections account removed from your credit report as it can impact your score for 7 years otherwise.
- Don’t submit too many applications. A credit score of 620 will limit your funding options, and every application you submit will likely result in a hard inquiry that can drop your score even further. Apply for new lines of credit wisely and research the lender’s credit requirements before applying. If you’re applying for a home or auto loan, try to submit all applications within 14 days to limit the damage done to your score.
- Get a secured credit card: Secured credit cards are designed to help people with limited credit histories and low scores to improve their credit with responsible use. With a 620, you can absolutely get approved for a secured card. To yield the best results, try to only use 10% of your available balance, never using more than 30%.
- Be an authorized user: If a loved one is willing to help out with your goal of building up your new credit score, they can add you to one of their credit card accounts as an authorized user. That way, your payment history, credit utilization, and credit mix could see a quick improvement when payments on the account are made on time.
- Report your rent: If part of your problem is having a limited credit history and you’re looking to demonstrate timely payments, you can pay to have your rent reported to the three credit bureaus with RentReporters. Likewise, Experian Boost will report your utility payments.
- Hire a credit repair company: Sometimes, credit repair is best left to the experts. If you’re having a hard time getting entries removed from your credit report or feel that you’re in over your head, a credit repair company can help get you on track and take the headache out of improving your score.
Can You Get a Loan with a 620 Credit Score?
You’re right on the edge of being approved for several types of loans with a 620 credit score. For others, your approval odds are high.
In any case, you’ll likely face steeper APR, deposit requirements, and income requirements due to your “fair” credit score.
Here’s a closer look at your eligibility for loans and credit cards.
Mortgage Options with a 620 Credit Score
Your mortgage approval, whether a refinance, government-backed loan, a conventional loan like Fannie Mae, or Freddie Mac, odds with a 620 truly depend on what mortgage lender you apply with.
Take a look at the credit requirements as a future or current homeowner for each of the mortgage options below:
|Mortgage Type||Minimum Credit Score|
|VA loan||No minimum set by VA; some lenders require a score of 580 or 620|
|FHA loan||500 with 10% downpayment, 580 with 3.5% downpayment|
|USDA loan||No minimum set by USDA; most lenders require a 640|
|Traditional home loan||620-640|
VA loans (government agency-backed loans) are incredibly advantageous for members of the military and veterans, and you can get approved with some lenders with a 620.
You’ll also have no trouble getting approved for an FHA (Federal Housing Administration) loan, which is targeted towards home buyers with “low” or “fair” credit scores.
If you’re looking for a traditional home loan, based on your score, your income and down payment will play a more significant role in the approval process and mortgage rates.
Keep in mind, borrowers with higher credit scores usually skate past private mortgage insurance as well.
Auto Loan Options with a 620 Credit Score
Lenders take on a big risk when they issue auto loans, so their rates can be quite high.
That’s especially true if you have a “fair” credit score. With any score lower than a 700, getting approved for an auto loan can be tricky.
A lot of credit issuers are willing to extend car loans to individuals with a 620 credit score, but your interest rates could amount to a few thousand dollars more interest than you would with a “good” credit score.
You should also note that your approval odds and rates will be better if you apply for a used car.
The good news is, you should be able to get an auto loan with your current credit score.
The better news is that you could easily get an even more competitive loan with a little work to improve your credit.
Personal Loan Options with a 620 Credit Score
Even more good news, you can be approved for a personal loan with a 620 credit score; however, it will come with higher rates.
You may want to start your search with a credit union. These financiers often offer a lower APR than banks and other local lenders.
At the same time, some online lenders are made with you in mind, with more competitive personal loans tailored towards people with “fair” or even “poor” credit scores.
You can also qualify for the loans below with a 620:
- Emergency loan
- Debt consolidation loan
- Installment loan
What Is the Best Credit Card for a 620 Credit Score?
With a fair credit score, you could be eligible for both secured and unsecured credit cards.
Essentially, unsecured credit cards come with a credit limit based on your score and income.
Secured cards, on the other hand, usually limit your credit limit to the amount of money you deposit, with the potential to grow over time based on your payment history. They have very low credit score requirements.
The higher your score is, the more money will be available to you each month. Your score could also determine your eligibility for low rates, limited fees, and rewards.
Once again, you should check each card’s score requirements before applying and only apply for one of the best credit cards for fair credit and not higher credit scores.
If you are denied approval for an unsecured card, or it comes with higher interest rates and fees, a secured card can still help you, improving your credit variety, payment history, and credit use.
Don’t forget to limit your applications as submitting several can do more harm than good.
Boost Your 620 Credit Score Today
Whether you’re on your way to rebuilding your credit after liens or bankruptcy brought it down, or you’re a college grad with nothing but student loan repayments on your credit report, a 620 is a great stepping stone.
With some strategic steps, you can improve your score by dozens of points quickly and work your way up to an excellent credit score.
If you haven’t already, sign up for a credit monitoring service like Credit Karma so you can track your score, understand changes to your report, and find specialized offers and suggestions for boosting your score.
From there, start paying down debts and catching up on your missed payments, using credit lines wisely to improve your score.
If you need even more assistance, don’t hesitate to contact an expert, taking advantage of credit repair services to get your score where it needs to be.