CreditCard Apply - My Credit Score is Only 650, What Does This Mean?

By Brian G Chadra

CreditCard Apply - The credit score (FICO) ranges from 300 to 850. The cutoff for most lenders is 620. Anything lower than this is considered high risk or subprime. If your score is at this range or below, then you are considered a bad risk and will most likely be denied a loan. On the other hand, the higher that your score is, the more likely you are to be considered a good risk by lenders. A report by the Consumer Federation of American estimated that by raising their credit scores by an average of only 30 points, consumers could save approximately $16 billions dollars per year. That sounds very plausible indeed.

Now to raise a credit score from 620 to 650 would be considered good, but getting into the 700's will take some work. That is not to say it can't be done, but more effort is needed to make that kind of a leap. Here is the breakdown of how a credit score is tallied:

1. Payment History - 35%
2. Amounts Owed - 30%
3. Length of Credit History - 15%
4. New Credit - 10%
5. Types of Credit Used - 10%

There are several simple things to be done here to get that credit score on an upward trend. First, pay the bill on time. Use online bill pay if possible, but make sure that you pay 4 - 5 days ahead. This will ensure a timely payment. Next, try to keep the amount owed less than 50% of the credit cards allowance. Also, get rid of any inactive cards or use them to make small purchases and pay them off on time. Each little thing that you do affects your credit score, but by making small adjustments in how you purchase items and pay bills, it adds up quickly.

Remember, you don't need a perfect score to get the best interest rate. Typically a score between 720 and 850 will qualify you for the best rate. So if you are at the 620 mark, only 100 additional score points will achieve this goal. That is certainly attainable if you get on a program and stick to it. Your future is what you make of it.

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