So, you’ve got a 650 credit score, and you’re probably wondering—is that good or bad?
Well, the answer isn’t exactly black and white.
A FICO score of 650 sits right in that middle ground, where it’s not terrible, but it’s not amazing either.
It’s like getting a ‘C’ on a test—you passed, but there’s definitely room for improvement!
In this article, we’ll break down what a 650 credit score really means for you, how it impacts your financial options, and what steps you can take to boost it.
| FICO Credit Score Ranges | Rating |
| Below 580 | Poor |
| 580 to 699 | Fair |
| 670 to 739 | Good |
| 740 to 799 | Very Good |
| 800 and up | Exceptional |
How Good is a 650 Credit Score?
The U.S. average credit score in 2023 hit 718, so if your score is around 650, you’re a little below that mark.
But don’t worry—it’s not a dealbreaker. A score like this often reflects a mix of both positive and not-so-great financial choices. There’s definitely room to improve, but it’s not a sign of financial trouble.
Some lenders might see a 650 as a “proceed with caution,” while others might see it as a chance for growth.
You might not snag the best interest rates, but you’re still in the game for credit and loans, just with a few extra conditions.
So, what does a 650 credit score really mean for your wallet? Let’s break it down and see how it might impact your financial options.
Car Loan Rates
Dreaming of a new car? While there’s no hard-and-fast rule for the minimum credit score needed for a car loan, having a score around 650 can make things a bit trickier. You might run into higher interest rates and less favorable terms, so it’s important to weigh your options before committing to a loan. Here are some tips for securing a car loan with a fair credit score:
- Make a bigger down payment: If you’re dealing with a high-interest loan, making a larger down payment on your car could be a smart move. The bigger the upfront payment, the less you’ll need to borrow, which can mean lower monthly payments and maybe even a better interest rate overall.
- Have a cosigner: If possible, have a trusted friend or family member co-sign the loan. While there are pros and cons, this can improve your elligibility for getting a better deal.
- Review and compare your options: When looking for a car loan, don’t settle for the first offer that comes your way. Check out rates and terms from banks, credit unions, and even online lenders—they might have better deals than what the dealership offers. Comparing options won’t necessarily harm your credit score. According to FICO, Insurance Scores count multiple hard inquiries from lenders in any 30-day period as just one inquiry. Therefore, you can shop around for rates within 30 days without worrying about it affecting your credit score.
Mortgage Rates
Securing a mortgage with a 650 credit score is definitely possible but may present more challenges. You might not get the best interest rates or terms compared to someone with a higher score. But don’t worry—there are still plenty of options out there, especially for those who may not qualify for a conventional loan.
Some government-backed loans are designed to help people in your situation, even letting you put down a smaller down payment than a regular mortgage. Some examples of these are:
- Federal Housing Administration (FHA)
- The Department of Veterans Affairs (VA)
- The U.S. Department of Agriculture loans (USDA)
While these options can be more accessible, they might not always be the perfect fit for everyone.
If you’re leaning toward a conventional loan with fair credit, you might face higher interest rates and fees.
That’s why it’s a good idea to really dig into all your loan options—and working on boosting your credit score a bit before diving in could save you some serious cash in the long run!
Credit Cards
If you’ve got a 650 credit score, you can still get approved for unsecured credit cards without a security deposit! But you’ll likely face an annual fee and a modest credit limit. Plus, these cards usually come with a high variable APR, meaning if you don’t pay off your balance each month, those interest charges can stack up quickly.
With fair credit, your starting credit limit might be on the lower side. But if you keep making on-time payments, some card issuers may bump up your limit after a few months. That’s important because your credit limit affects your credit utilization rate, which plays a big role in your overall credit score.
Cash back and travel rewards cards might be out of reach with a 650 credit score, as these perks are typically reserved for higher scores. But don’t worry–even if your current card isn’t the best, it’s still helping you build your credit. Credit cards report your account activity to credit bureaus, impacting your credit history and scores. So, stick with it and soon enough, you’ll be in a better position to qualify for those more rewarding cards!
To help you get started, the best credit card you can get with a 650 credit score is the Citi Double Cash Card. It’s got no annual fee and lets you earn 2% cash back on your purchases. On top of that, it reports to the major credit bureaus every month, making it a solid choice for boosting your credit while enjoying some nice rewards. Cushion.ai can also help you build your credit profile while managing expenses to avoid overspending and late payments. Sign up and stay on top of your finances today.
Personal Loans
Like mortgage and car loans, personal loans are accessible with a 650 credit score but may come with increased interest rates and extra fees. These elevated rates and fees could make the loan less appealing, especially if they are not low enough to save you money in the long run.
It’s also crucial to weigh how badly you need the money right now against what you’ll end up paying long term. If you can wait and work on boosting your credit score, you could qualify for a loan with a much better interest rate. A little patience now could save you a lot down the road.
Alternative: “Buy Now, Pay Later”
With a 650 credit score, your biggest hindrance in securing a loan is the high-interest rates. Zero-interest loans are available but often require a credit score of at least 740.
Fortunately, “Buy Now, Pay Later” (BNPL) loans are available to just about anyone, no matter your credit score. However, using these loans responsibly is essential to avoid overextending yourself financially.
The Consumer Financial Protection Bureau noted that BNPL lenders may charge late fees, often around $7 to $8 per missed payment. With the right knowledge, avoiding impulse purchases, and careful management of payments, BNPL can be a valuable tool for increasing your investments and potentially escaping debt.
To help you keep track of your BNPL payments, consider using Cushion.ai. Our app allows you to manage and pay your BNPL payments in one place and can even help you build your credit history with the payments you make.
How to Improve Your 650 Credit Score.
Though you’ve landed a 650 credit score, the journey doesn’t end there. There are plenty of things you can do to boost that score even higher. Here are a few friendly tips to help you improve your credit over time:
- Pay on time, every time: The backbone of a solid credit score lies in your payment history. Late or missed payments can really hurt, so make sure you’re staying on top of your bills.
- Reduce credit card balances: Aim to pay down your balance on your credit card to improve your credit usage rate (how much credit you’re using compared to your limit). Financial experts recommend keeping your credit usage rate below 30%.
- Diversify your credit mix: Lenders appreciate a mix of credit types–credit cards, retail accounts, installment loans, etc. While opening new credit accounts unnecessarily is not advisable, having a balanced mix can benefit your score.
- Review your credit report: Mistakes happen, so it’s good to check your credit report regularly for any errors. If something doesn’t look right, dispute it. You want your report to be a true reflection of your financial history.
- Negotiate with creditors: If money’s tight, don’t be afraid to reach out to your creditors. Sometimes, they’re open to adjusting payment plans or settlements to help you out.
- Avoid opening multiple accounts at once: While diversifying your credit mix is beneficial, opening multiple accounts within a short time frame can be risky. Space out new credit applications to avoid potential negative impacts.
- Use credit responsibly: Demonstrate responsible credit behavior by using credit judiciously. Don’t max out your cards, and only apply for new credit when you really need it.
- Be patient: Building or improving credit takes time. Stick to good habits, and you’ll see gradual progress over time.
You can boost your credit score by incorporating these strategies into your financial habits. Building good credit is a journey, not a quick fix, so stay committed. As you work towards this goal, consider trying out Cushion – a useful tool enabling you to manage your credit and build it up through BNPL payments.
Frequently Asked Questions (FAQs)
Is 650 a good credit score to buy a car?
A 650 credit score is fair, but whether it good enough to buy a car depends on the lender. Some might approve you for a car loan with that score, but you might not score the best interest rates or terms. Shop around and compare offers from different lenders—you might be surprised at the deals you can find!
How much of a home loan can I get with a 650 credit score?
While a 650 credit score is not terrible, it may limit your options regarding home loans. How much you can actually borrow with that score depends on a few things, like your income, debt-to-income ratio, and down payment. The best way to get a clear picture is to chat with a lender—they’ll be able to give you a solid estimate based on your situation.
Summary
According to FICO standards, a credit score of 650 falls under the “Fair” category. While it is not outstanding, it isn’t entirely bad either. Whether you’re considering loans, mortgages, or credit cards, having a 650 credit score means you may encounter less favorable terms or increased interest rates than individuals with higher credit scores. We recommend carefully evaluating your options before committing to a loan and improving your credit score to secure more advantageous terms in the future.
