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Is 625 A Good Credit Score

What Is A Bad Credit Score Range

Credit Score Basics | Dollars and $ense

Bad credit score = 300 549: It is generally accepted that credit scores below 550 are going to result in a rejection of credit every time. If your score has fallen into this range, improving your score is going to take some work.

Filing for bankruptcy can bring a score down to this level. Statistically, borrowers with scores this low are delinquent approximately 75% of the time. But if you continue to make your payments on time, your score should improve. There are certain types of loans, like home loans, that are hard to get with a score in this range, but there are still options for getting a mortgage with bad credit.

How To Build Your Car Credit

Its important to check your credit score before you start shopping, so you know your baseline. The best way to improve your credit in preparation for an auto loan is to pay your current car loan on time, every month. But here are other ways to improve your credit score in addition to or instead of that if you dont currently have a car loan:

  • Pay all bills on time
  • Reduce your credit card debt
  • Keep your credit accounts open
  • Dont apply for other types of credit for six months before applying for a car loan

There are two main credit score models that can produce your credit score:

FICO Score. Your FICO Score, developed by Fair Isaac Corporation, is the most commonly used credit score method by far. It heavily weighs your payment history and how much debt you have compared to your credit limits. It takes about six months of credit history to develop a FICO Score.

VantageScore. The three major credit bureaus developed the VantageScore with the aim to more accurately reflect consumer behavior and risk. Your total credit usage and credit mix are the most important factors in your VantageScore. It takes only about a month of credit history to develop this credit score. Heres specific guidance on how to get a car loan with no credit.

Whats A Good Credit Score

So, what is a good credit score, anyway? Lets start at the beginning.

According to the Government of Canada, a credit score is a 3-digit number that represents how likely a credit bureau thinks you are to pay your bills on time.1 It can be an important part of building your financial confidence and security.1 For example, building a good credit score could help you get approved for loans and larger purchases, like a home.1 You may also be able to access more competitive interest rates.1

There are two main credit bureaus in Canada: Equifax and TransUnion.1 These are private companies that keep track of how you use your credit.1 They assess public records and information from lenders like banks, collection agencies and credit card issuers to determine your credit score.1

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What Counts Towards Your 625 Credit Score

In essence, your credit score tells you whether you have a responsible credit management and a history showing that you have been financially stable. So what factors contribute to showing that you are fiscally responsible and stable?

The first and most critical factor will be your overall payment history. This is simply whether you have paid all of your bills on time. There are also a variety of aspects of your payment history that your credit rating will include, including how late you were on your payments , how many bills you paid and how many you did not, if any of your accounts have gone into collections and if you have a history of foreclosures, bankruptcies, and debt settlements.

The second biggest factor that counts towards your credit score is the total amount of money that you owe. Again, there is a variety of aspects of this that goes into your 625 credit score. One such example is the amount of your allotted credit that you have used up. Heres a piece of advice: the less you owe on the credit, the better your credit score will be.

Another aspect of your amounts owed is how much money you owe on each of your loans, including your credit cards, your car payments, and your mortgage payment. The best way to have a positive credit rating here is to have a variety of credits and loans and to manage each of them in a very responsible manner.

Can You Buy A House With 652 Credit Score

625 Credit Score

If your credit score is a 652 or higher, and you meet other requirements, you should not have any problem getting a mortgage. Credit scores in the 620-680 range are generally considered fair credit. There are many mortgage lenders that offer loan programs to borrowers with credit scores in the 500s.

Read Also: What Credit Score Do You Start At

Fico Score Vs Credit Score

The three national credit reporting agencies Equifax®, Experian and TransUnion® collect information from lenders, banks and other companies and compile that information to formulate your credit score.

There are lots of ways to calculate a credit score, but the most sophisticated, well-known scoring models are the FICO® Score and VantageScore® models. Many lenders look at your FICO® Score, developed by the Fair Isaac Corporation. VantageScore® 3.0 uses a scoring range that matches the FICO® model.

The following factors are taken into consideration to build your score:

  • Whether you make payments on time
  • How you use your credit
  • Length of your credit history
  • Your new credit accounts

Buying A House With No Credit

If your credit score is low because you havent borrowed much in the past, you have a thin credit file.

Some people buy everything with cash instead of using credit cards, which is a sign of fiscal responsibility thats not reflected in a credit score. In this case, your lower credit score doesnt reflect your willingness and ability to repay a loan.

As a result, many lenders will look at alternative records not included in your credit report, like rent and utility payments. This can help first-time home buyers get approved even without an extensive credit history.

Similarly, if youve had credit issues in the past like bankruptcy or short sale its still possible to buy a house.

A bankruptcy can stay on your credit report for 7 to 10 years. But if you keep your finances in order and make on-time payments following a bankruptcy, you could potentially qualify for a mortgage in as little as two years.

Recommended Reading: How Long Do Items Stay On Your Credit Report

Conventional Loan With 625 Credit Score

The minimum credit score requirement to get a conventional loan is 625. In order to qualify for a conventional loan, you will need to meet all other loan requirements. This includes having at least 2 years of steady employment, a down payment of at least 3-5%, and no recent major credit events .

Would you like to find out if you qualify for a conventional loan? We can help match you with a mortgage lender that offers conventional loans in your location.

Getting A Car Loan With A Low Credit Score

Minimum VA credit score requirements

To be clear, you can get a car loan with a low credit score. Although the subprime mortgage market has virtually disappeared since the financial crisis about a decade ago, the subprime auto loan market has exploded in recent years. Roughly 1 of every 4 car loans made in the U.S. is made to a subprime or deep-subprime borrower.

While the exact definitions of these terms vary depending on who you ask, the Consumer Financial Protection Bureau, or CFPB, defines subprime as borrowers with credit scores of below 620 and deep subprime as borrowers with scores below 580.

Also Check: Does A Background Check Show Up On Your Credit Report

What Does A 625 Credit Score Mean And How It Affects Your Life

A credit score of 625 is considered poor, however, it will still get you an auto-loan, some types of credit cards, a home loan and even a personal loan, especially from online lenders. The score, however, will impact your finances negatively as your credit report will indicate to the lenders that you have a high risk of defaulting your debt. Therefore, creditors and lenders will often approve the above but with very high interest rates as compared to those with fair, good and excellent scores. Basically, a 625 FICO credit score is likely to cost you highly in the long run.

Improving your 625 credit score by 50 or 100 points

The journey towards achieving a positive rise in your credit score is usually a long one and may take quite some time to complete. It is therefore quite important that you brace yourself for a long way ahead and stay focused on this goal. However, this isnt to alarm you as youll soon be able to reap the fruits of it. As your 625 credit score rises, you will progressively be able to get your loan requests approved and even qualify for credits on much better terms. Any negative information on your credit report will also be cleared by your local credit bureau with time and youll then be able to get that job you wanted or get that mortgage or even get an auto loan at lower interest rates.

How Credit Scores Affect The Cost Of A Car Loan

Just because you can get an auto loan with a low credit score doesn’t mean that it’s always a good financial move to do so. Whether or not it’s a good decision depends on your unique situation.

For starters, lenders tend to offer significantly higher interest rates to subprime and deep-subprime borrowers. This can make a car far more expensive than its sticker price might lead you to believe. Here’s a look at the national average auto loan APRs as of Dec. 11, 2018:

FICO® Score Range
  • If you have a FICO® Score of 720 or higher: You will likely pay a $560 monthly payment. That’s $3,574 in interest over a 60-month car loan.
  • If you have a 675 FICO® Score: Your payment would likely be closer to $610. That’s $6,611 in interest alone over the life of the loan — you’d pay $3,000 more in interest than a top-tier borrower.
  • If your FICO® Score is 600: You’d probably pay $728 per month. That’s $13,673 in total interest — for the exact same car.

In this case, the difference between fair and good credit scores could literally mean more than $10,000 in additional interest.

Read Also: Is 648 A Good Credit Score

Use Your Understanding Of Credit To Build Your Credit Score

The first step in your credit journey is understanding what a credit score is and how it is calculated. Once you know the basics about credit score, you can begin to improve your credit score. Doing so doesn’t simply improve your standing in the eyes of lenders, but it can also save you thousands of dollars in interest payments over the course of your lifetime.

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A 635 Credit Score Can Be A Sign Of Past Credit Difficulties Or A Lack Of Credit History Whether Youre Looking For A Personal Loan A Mortgage Or A Credit Card Credit Scores In This Range Can Make It Challenging To Get Approved For Unsecured Credit Which Doesnt Require Collateral Or A Security Deposit

625 Credit Score: Good or Bad, Auto Loan, Credit Card Options
Percentage of generation with 300639 credit scores
Generation
27.3%

Poor score range identified based on 2021 Credit Karma data.

Your credit scores are numbers calculated by credit bureaus, like FICO and VantageScore. Lenders use scores as at-a-glance information to help decide how risky they think you might be to lend to.

If your credit history includes signs of past credit challenges, such as late or discharged payments or accounts in collections, or little to no credit at all, you may find it more difficult to be approved for new credit. And if you are approved, you may find that approval comes with high rates and fees.

Building your credit scores can help. That said, theres no specific credit score that will guarantee approval or better terms or offers. Not only do you have multiple credit scores that are calculated using data from several possible , but its not always clear which score a lender might choose to check or what its criteria might be for approval.

We recommend thinking of your credit scores as a gauge to help you understand what lenders see when they check your credit. Understanding the factors that go into your scores can help you learn which ones to focus on to improve your overall credit picture in lenders eyes.

Heres what you need to know about building your credit and how to navigate credit applications in the meantime.

Recommended Reading: What Is The Starting Credit Score

How Your Credit Score Is Determined

All the leading credit rating agencies rely on similar criteria for deciding your credit score. Mostly, it comes down to your financial history how youve managed money and debt in the past. So if you take steps to improve your score with one agency, youre likely to see improvements right across the board.

Just remember that it may take some time for your credit report to be updated and those improvements to show up with a higher credit score. So the sooner you start, the sooner youll see a change. And the first step to improving your score is understanding how its determined.

Here are some of the factors that can harm your credit score:

  • a history of late or missed payments
  • going over your credit limit
  • defaulting on credit agreements
  • bankruptcies, insolvencies and County Court Judgements on your credit history
  • making too many credit applications in a short space of time
  • joint accounts with someone with a bad credit record
  • frequently withdrawing cash from your credit card
  • errors or fraudulent activity on your credit report thats not been detected
  • not being on the electoral roll
  • moving house too often.

Does Buying A House Make Your Credit Score Go Up

While buying a house can help your credit improve over time, it may initially have a negative impact on your score. … If your mortgage lender pulls your credit history a second time before closing on the loan and more than 30 days have passed since its last inquiry, your credit score may drop by up to 14 points.

Also Check: Can Your Credit Score Be 0

Rebuilding Your 625 Credit Score

A Credit Repair company like Credit Glory can:

  • Evaluate Your Credit Report – Pull your credit report and identify all negative, harmful items that’s keeping your 625 score suppressed.
  • Dispute Negative Items – Customize and send dispute letters to Bureaus to request getting those negative items off your report .
  • Get Harmful Items Removed – A repair service like Credit Glory will continue disputing items on your behalf until theyâre no longer harming your credit worthiness.
  • Improve Your Score – Once negative items begin falling off your report, you’ll see a big boost to your score. This means better loan terms on a car, house, or personal loan.
  • An industry leader like Credit Glory can guide you through this process. Give them a call @ , or chat with them, today â

    How Mortgage Lenders Pull Credit

    Understanding Your Credit Score

    When you apply for a mortgage, lenders pull your credit report from all three major credit bureaus: Transunion, Equifax, and Experian.

    Whether you get approved for the loan and the terms of your loan will depend on the result of those reports.

    Lenders qualify you based on your middle credit score.

    For example, if your scores are 720, 740, and 750, the lender will use 740 as your FICO. If your scores are 630, 690, and 690, the lender will use 690 as your FICO.

    When you apply with a spouse or co-borrower, the lender will use the lower of the two applicants middle credit scores.

    Expect each bureau to show a different FICO for you, since each will have slightly different information about you. And, expect your mortgage FICO score to be lower than the VantageScore youll see in most free credit reporting apps.

    In all cases, you will need to show at least one account which has been reporting a payment history for at least six months in order for the bureaus to have enough data to calculate a score.

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    A 625 Credit Score Can Be A Sign Of Past Credit Difficulties Or A Lack Of Credit History Whether Youre Looking For A Personal Loan A Mortgage Or A Credit Card Credit Scores In This Range Can Make It Challenging To Get Approved For Unsecured Credit Which Doesnt Require Collateral Or A Security Deposit

    Percentage of generation with 300639 credit scores
    Generation
    27.3%

    Poor score range identified based on 2021 Credit Karma data.

    Your credit scores are numbers calculated by credit bureaus, like FICO and VantageScore. Lenders use scores as at-a-glance information to help decide how risky they think you might be to lend to.

    If your credit history includes signs of past credit challenges, such as late or discharged payments or accounts in collections, or little to no credit at all, you may find it more difficult to be approved for new credit. And if you are approved, you may find that approval comes with high rates and fees.

    Building your credit scores can help. That said, theres no specific credit score that will guarantee approval or better terms or offers. Not only do you have multiple credit scores that are calculated using data from several possible , but its not always clear which score a lender might choose to check or what its criteria might be for approval.

    We recommend thinking of your credit scores as a gauge to help you understand what lenders see when they check your credit. Understanding the factors that go into your scores can help you learn which ones to focus on to improve your overall credit picture in lenders eyes.

    Heres what you need to know about building your credit and how to navigate credit applications in the meantime.

    101%

    Ranges identified based on 2021 Credit Karma data.

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