A 620 credit score is considered a “fair” score. That means it’s higher than a “poor” score yet lower than a “good” one.
Your credit score is a three-digit number that summarizes how well you’ve handled debt in the past and how well you currently pay your bills. Put simply, it helps lenders determine how likely you are to repay a loan on time. With a 620 credit score, you will likely qualify for some loans and lines of credit, but you will probably pay more for the privilege.
Read on to learn more about what a 620 credit score means and the types of loans you can qualify for with a 620 credit score.
What Does a 620 Credit Score Mean?
A 620 credit score means you fall into a group of people with a lower credit score than other Americans — as mentioned, it’s a “fair” score, and a bit towards the lower end of that range.
The average credit score in the U.S. was 715 in the third quarter of 2023. Some lenders choose not to lend to individuals with a 620 credit score, and borrowers with scores in the “good” range typically receive better borrowing terms. Those with a 620 credit score may be considered subprime borrowers, because they have a less than average credit rating.
There are two scoring systems in the United States: FICO® Score and VantageScore. FICO and VantageScore both range from 300 to 850.
To give you some context of where a 620 credit score falls into the mix, the categories and the credit score ranges include:
- 800 to 850 FICO score: Exceptional
- 740 to 799 score: Very good
- 670 to 739: Good
- 580 to 669: Fair
- 300 to 579: Poor
What do FICO and VantageScore use to determine your credit score? They use a mix of factors, including your:
- Payment history (your record of on-time payments)
- Amount you owe vs. your credit limit
- Length of credit history
- Credit mix (handling various types of credit well can reflect well on you)
- Recent credit applications (fewer can indicate that you are a responsible borrower).
Now, let’s look at whether you can get a credit card, auto loan, mortgage, or personal loan with a 620 credit score.
Can I Get a Credit Card with a 620 Credit Score?
Yes, you can likely get a credit card with a 620 credit score. However, you may face:
- Higher fees
- Higher APRs
- Fewer rewards
You can tap into secured or unsecured credit cards with a 620 credit score. Secured credit cards are a type of credit card that requires a cash deposit to serve as collateral. For example, you may put down $500, which will act as your credit limit. When used responsibly, these kinds of cards may help you “graduate” to an unsecured card.
Unsecured cards don’t require you to put down a deposit. Also, in terms of unsecured cards vs. secured cards, the unsecured ones typically carry better perks, rewards, as well as lower fees and interest rates. But you may need a credit score of 700 or higher to qualify for cards with all the bells and whistles.
Can I Get an Auto Loan with a 620 Credit Score?
Yes, you can usually get an auto loan with a 620 credit score, but it may take some research, and you may not be offered the most favorable terms. Generally, lenders like to see a minimum credit score of 675 to qualify for car financing. Again, the higher your credit score, the less risk you’re perceived as posing to your lender. You may consider building your credit score to get better interest rates and terms.
What is the process of getting an auto loan? Getting an auto loan involves determining your budget, applying for auto loan preapproval, shopping for your car, and comparing dealership and other offers. Then, finalize your auto loan and begin repaying the loan.
Can I Get a Mortgage with a 620 Credit Score?
You’ll typically need a 620 FICO score to qualify for a conventional mortgage loan, so if your other qualifications are solid, you may have offers to compare. Similar to auto loans, however, the credit score requirement depends on your lender. Certain mortgage loans, like Federal Housing Administration (FHA) loans, may allow you to have a lower credit score to qualify.
Here are a few types of mortgage loans and their credit score requirements:
- Conventional mortgage: A conventional mortgage is a loan that a government agency does not insure, or back. As mentioned, you can typically qualify for a conventional loan with a 620 credit score, but remember, other factors, such as your income, come into play.
- FHA loans: An FHA loan is backed by the FHA, under the Department of Housing and Urban Development. You can typically borrow an FHA loan with a credit score minimum of 500. What does “backed” mean? The government doesn’t lend directly to you — the federal government insures the loan to protect your lender if you stop your mortgage payments. However, this “backing” allows you to qualify with a lower credit score with a low down payment — as low as 3.5% of the home purchase price.
- VA loans: No down-payment VA loans are also backed by a government entity — the U.S. Department of Veterans Affairs. To qualify, you must be a service member, veteran, or qualifying surviving spouse with a Certificate of Eligibility (COE) to qualify for a VA loan. Most lenders look for a score of 620, but note that they will consider scores as low as 580.
- USDA loans: With a 620 credit score, you may have trouble getting a USDA loan guaranteed, or backed by the U.S. Department of Agriculture. You typically need a credit score of at least 640 for this loan, but again, they consider other factors when deciding whether to lend to you. You must also meet certain income criteria and purchase a home in a designated rural area.
- Jumbo loans: You will likely not qualify for a jumbo loan, which requires a credit score of 700 to 720 with a 10% to 20% down payment. Jumbo loans exceed the Fannie Mae and Freddie Mac conforming loan limits of $766,500 for a single-unit property. If you live in a high-cost area like Alaska or Hawaii, the conforming loan limit is $1,149,825 for a single-unit property. The number of units you own can increase the conforming loan limit.
Can I Get a Personal Loan with a 620 Credit Score?
You can get a personal loan with just a 600 credit score, but you might not qualify for the best (or lowest) interest rates. A slightly higher credit score of 620 is likely to put you in a comparable position, meaning you may only be offered a higher interest rate and other fees like origination fees.
You might see what offers are available for a debt consolidation loan, which is a personal loan consumers use to pay off high-interest debt like credit cards. Lenders typically require a minimum credit score between 580 and 680 to qualify for a debt consolidation loan.
What Else Can You Get with a 620 Credit Score?
You may have a better chance of qualifying from a store credit card with a lower credit score than what’s required for a regular credit card — a 620 credit score would likely be more than sufficient.
What is a store credit card? A store credit card allows you to get rewards and perks at that particular retailer, such as saving money or getting free shipping. You may even be able to stretch out your payments without having to pay interest.
The downside? These cards typically come with high interest rates and the other obvious downside is that you can only use them at one store.
The Takeaway
A credit score of 620 is in the “fair” range. You will likely qualify for a number of different types of loans and lines of credit with this score. However, you are likely to be offered higher interest rates and less favorable terms (such as fees). Compare offers to find the best deals, and also consider working to build your credit score over time so you have great access to more affordable credit.
This article originally appeared on SoFi.com and was syndicated by MediaFeed.org
SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.
Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .
Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.
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5 Crucial Steps To Start Repairing Your Credit
Negative marks can stay on your credit report for seven or even 10 years. But if you are having trouble managing your finances, don’t panic.
Many people hit a moment at some point when they miss a payment or pay bills late. Or perhaps they face mounting credit card debt or the prospect of foreclosure. If you are grappling with any of these situations, you may wonder how long your credit report will reflect these issues.
While seven years is a typical time period for events to stay on your report and potentially impact your credit score, the time period could be considerably shorter. And as time passes, the effect of these “bad marks” will typically diminish.
Read on to learn more about what can lower your credit score, how long it can take to bounce back, and ways to manage your money responsibly, which can help build your score.
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A credit score gives a numerical value to a person’s credit history. It can help give lenders a big-picture look at a potential borrower’s creditworthiness. These scores (there isn’t just one) give lenders insight into how reliable a person might be when it comes to repaying their debt.
This can influence a lender’s decision on whether or not to loan a person money, how much money they are willing to lend, and the rates and terms for which a borrower qualifies.
Since credit scores are so widely used, it’s easy to see why some individuals may be interested in improving their credit scores. First, it might be helpful to understand the factors used to actually determine your score. Here’s a snapshot of what goes into a FICO® Score, since that is the credit score used by many lenders right now.
- Your payment history accounts for approximately 35% of your FICO Score, making it one of the most influential factors. Even just one missed or late payment could potentially lower a person’s credit score.
- Credit utilization ratio accounts for 30% of your score. Credit utilization ratio is your total revolving debt in comparison to your total available revolving credit limit. A low credit utilization ratio can indicate to lenders that you are effectively managing your credit. Typically, lenders like to see a credit utilization ratio that is less than 30%.
- The length of your credit history counts for 15%, and that may be a good reason not to close an account that you use infrequently. It might help add to the length of your history.
- Your credit mix accounts for 10% of your score. While not a good reason to go out and open a new line of credit, the bureaus do tend to prefer to see a mix of accounts vs. just one kind of credit.
- The last component, also at 10%, is new credit, meaning are you currently making a lot of requests for credit. The number of hard credit inquiries in your name could make it look as if you are at risk of financial instability and are seeking ways to pay for goods and services.
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Negative factors like late payments and foreclosures can hang around on your credit report for a while. Generally, the information is included for around seven years.
Bankruptcy is an exception to this seven year guideline—it can linger on your credit report for up to 10 years, depending on the type of bankruptcy filed. Bankruptcies filed under Chapter 7 can be reported for up to 10 years from the filing date. Bankruptcies filed under Chapter 13 can be reported for seven.
While a late payment will be listed on a credit report for seven years, as time passes it typically has less of an impact. So if you missed a payment last month, it will have more of an effect on your score than if you missed a payment four years ago.
These numbers are important to know when you are working to build your credit.
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Here’s a look, in chart form, at how long it takes for different negative factors to drop off your credit report.
Sofi
Checking your credit report can help you stay on top of your credit. You’ll also be able to make sure the information is correct, and if needed, dispute any mistakes. There could, for instance, be a bill you paid long ago on your report as unpaid, or perhaps account details belonging to someone else with a similar name erroneously wound up on your report.
There are three major credit bureaus — Equifax®, Experian®, and TransUnion®. Once a year you can request a copy of your credit report from each of the three credit bureaus, at no cost. You can visit AnnualCreditReport.com to learn more. Checking in with each report may feel a little repetitive, but it’s possible that the credit bureaus could have slightly different information on file.
If you find that there are discrepancies or errors, you can dispute the mistake. You’ll have to write to each credit bureau individually. Generally, you’ll need to send in documentation to support your claim. Once you’ve submitted your dispute letter, the bureaus typically have 30 days to respond.
It’s possible that a bureau will require additional supporting documentation, which can lead to some back and forth within or sometimes after the 30 days. It could take anywhere from three to six months to resolve a credit dispute, though some of these situations will take more or less time depending on complexity.
(Learn more: Personal Loan Calculator)
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Sometimes, resolving issues on a credit report isn’t enough to build a bad credit score. On the bright side, credit scores aren’t permanent. Here are a few ideas for helping you to build your credit.
Improve Account Management
If you’re struggling to keep up with accounts with a variety of financial institutions, it could be time to simplify. Take stock of your investments, debts, credit cards, and savings or checking accounts. Is there any opportunity to consolidate?
Having your accounts in one, easy-to-check location can make it simpler to ensure you never miss an alert or important deadline. Automating your finances and using your bank’s app to regularly check in with your accounts (say, a few times a week can be a good cadence) can make good money sense as well, helping you keep on top of payment deadlines and when your balance might be getting low.
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Did you know that your payment history (as in, do you pay on time) is the single largest factor in determining your credit score? Lenders can be hesitant to lend money to people with a history of late payments. So make sure you’re aware of each bill’s due date and make your payments on time. One idea? As mentioned above, you could set up autopay so you don’t even have to think about it.
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It could help to set a realistic budget that leads to a fair credit utilization ratio, meaning that your credit balances aren’t too high in relation to your credit limit. Some accounts will let you set up balance alerts that can warn you as you inch closer to the 30% guideline of the maximum you want to reach. Another option could be paying your credit card bill more frequently (for example, setting up a mid-cycle payment in addition to your regular payment).
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When it comes to paying off debt, having a plan can help. For example, using a credit card can be an effective way to build your credit history, but if not used responsibly, credit card debt can be incredibly difficult to pay off.
Not only that, it could end up impacting your credit score (say, if your credit utilization ratio creeps up above 30%, as noted above). As a part of your plan to build your credit after negative factors have occurred, you might consider putting a debt repayment plan into place.
Your finances and personal situation will be a major factor in the debt payoff plan that works best for you. If you need some inspiration, the methods below may be helpful to reference in your quest to pay off debt. If you decide that one of these options works for you, here’s how you might go about them.
(Learn more: Personal Loan Calculator)
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The snowball method of paying off debt is pretty straightforward.
- To put it into action, you would organize your debts from smallest to largest, without factoring in the interest rates.
- Then you’d continue to make the minimum payments on all of your debts while paying as much as possible on your smallest debt.
- When the smallest debt is paid off, you’d then roll that money into debt payments for the next smallest debt — until all of your debt is repaid.
This strategy is all about changing behavior and building in incentives to help keep you going. Starting with the smallest debt means you’d see the reward of paying it off faster than if you had started with the larger debt. While this method can help keep you motivated and laser-focused on eliminating your debt, it isn’t always the most cost effective, since it doesn’t take into account interest rates.
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The debt avalanche method encourages you to focus on your highest-interest debts first.
- Prioritize debts with the highest interest rates by putting any extra cash towards them.
- Continue to make the minimum payments on all of your other debts.
This technique could help save money in interest in the long run. And it could even help you pay off your debts sooner than the snowball method.
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The fireball method combines the snowball and avalanche methods in a hybrid approach designed to help you blaze through costly debt so you can focus on the things that matter most to you.
- The first step in this method is to go through all of your debts and categorize them as either “good” or “bad.”
- “Good” debts are those that tend to contribute to your financial growth and net worth; they also tend to have relatively lower interest rates. Good debt might be a student loan that helps you launch your career or a mortgage that allows you to own a home.
- Debts with high interest rates that don’t go towards building wealth (such as credit card debt) are often considered “bad.” With this method, you can list your “bad” debts from the smallest amount to the largest amount.
- Then you’d take a look at your budget and see how much money you have to funnel toward making extra debt payments. While making the minimum monthly payment on all outstanding debts, you’d direct the extra funds toward the bad debt with the smallest amount due.
- When that smallest balance is repaid in full, you’d apply the total amount you were paying on that debt to the next smallest debt. Then you’d continue this pattern, moving through each outstanding bad debt until they are all paid in full.
An important note: While you are moving through your higher-interest debts, you would still follow the normal payment schedule on your lower-interest debts.
By focusing on the debts with the highest interest rates first, this method could save you some change when compared with the snowball method. And, since you’re then targeting bad debt from the smallest balance to the largest, you could still benefit from the same psychological boost as you see your debt shrink, one payment at a time.
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Having financial goals could possibly help you streamline your efforts. If you’re actively working toward saving for, say, a down payment, you may feel less inclined to spend money elsewhere.
You could try setting short-term, mid-term, and long-term goals. In the short-term your goals might be as simple as tracking your spending and setting up a budget. Or perhaps saving for a big vacation that’s a year or so away. For mid-term goals, you might think about something a little further out, like buying a house or saving for a child’s education. Long-term goals are often things like (you guessed it) saving for retirement.
Writing down your goals and setting a time for when you’d like to reach them can help you set up your plan.
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If you are working on building your credit and want to pay down your credit card balances, one option could be a personal loan to consolidate that high-interest debt.
This article originally appeared on SoFi.comand was syndicated byMediaFeed.org.
SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.
Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .
Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.
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Featured Image Credit: Andrii Zastrozhnov/istockphoto.
