Fair Credit Score – 5 Best Ways To Improve Your Score

Fair Credit Score – 5 Best Ways To Improve Your Score

A fair credit score is a score that belongs to the second lowest range of credit scores. Though you can get approved for credits, it can cost you higher interest rates and unfavorable loan terms. However, you would have hundreds of questions about fair credit scores in your mind. 

I am Damon DeCrescenzo, an experienced credit professional. With my decades of experience in the Finance niche, I will answer all your burning questions on fair credit scores in this article.

Fair Credit Scores

The scores between 580 and 669 are generally considered fair credit scores. This range is just a notch higher than the poor credit score that still has to be improved for better credit benefits. Most Americans age between 23 and 29 belong to the fair credit score range. A survey of upgrade points says that their average credit score is 660.

Fair credit score ranges

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What Is a Credit Score and How Does It Work?

Before discussing deeper on fair credit scores and their characteristics, we shall quickly brush up on the credit score concepts.

A credit score is a three-digit numerical value that represents your creditworthiness. This credit score is estimated by three major credit bureaus by taking a user’s previous credit history into account. These bureaus collect your credit information, like your payment history, credit utilization ratio, and credit type, and present them in a credit report.

Loan vendors might approach any credit bureau and ask for your credit report to see if they can approve your credit application.

Fair Credit Score Eligibilities

One buzzing question in people’s minds would be if they are eligible for a loan or credit card as a fair credit score holder. The simplest answer is yes. Though you belong to a fair credit score range, which isn’t something great in the credit world, you can still get approved for applications. But, the challenges would be bigger. Your chances may be fewer. You would have to pay higher interest rates or get a secured credit.

If you have a fear of getting rejected for the loans and credit cards you apply for, you don’t have to be. There is a widely spread myth among people that says it is impossible for a fair credit scorer to have credit. That is not true. The fact is, even a poor credit score holder can have the privilege of owning a credit. The only difference is that these people may not get to enjoy all the same credit benefits as good or excellent credit score ranges.

Say like, if a good credit score holder is subjected to pay a 5% interest rate for a personal loan, you will have to pay around 8% or more than that.

Reasons for Fair Credit Scores

A fair credit score is not an impressive score in a loan lender’s eyes. Their perspective would say this category is less reliable in terms of timely loan repayment. But, what are the reasons for these low credit scores? 

#1 – Missed Payments

The most common reason for low credit scores is missed payments. The payment history without any delay due is the foremost criterion in calculating a credit score. Though you are capable of paying off your loans, you might miss due dates carelessly. This also severely affects your credit score.

#2 – Irresponsible Financial Activities

Getting a credit card can actually regularize your credit behaviors and improve your financial responsibilities. Opening credit accounts and putting in all your efforts to attain good credit scores can make you even more responsible for your activities. Otherwise, you would be at risk of failing to have a poor credit score.

#3 – Lack of Credit Awareness

Many may not possess firsthand knowledge of credit scores. Without proper exposure to these terminologies and practices, you might overlook the importance of maintaining a good credit score from the beginning.

#4 – Errors in Your Credit Report

This is a unique case where you can still fall into the low credit score category due to none of your blunder mistakes. Though you made sure all your credit efforts and results fall in place, your score might reduce due to errors in your credit report. These errors can stop you from reaching higher credit scores.

How To Improve Your Credit Score?

Though there are a few alternate options for low credit scores to get approved for credit, it is always better to improve your credit because credit scores are not just loan approval criteria. They are the key factor that determines your creditworthiness. This is a metric that proves how responsible you are in terms of financial activities.

Here are a few tips for people with fair credit scores to increase their credit scores.

5 best ways to improve fair credit scores

#1 – Make Your Payments on Time

The simplest way to build a solid credit score is to make payments on time. This criterion holds a major part in the credit score evaluation. Making timely payments from the start would help you gain a good credit score. Though you missed a few payments, you can focus on your further payments, and ensure your score doesn’t get worse.

#2 – Prioritize Your Credits

You might have a good credit score. Still, if you are careless with your credits, you can easily fall behind in your credit score. So, it is better to think twice before getting credit. Always make sure that you are capable of handling the loan you are about to take out. 

#3 – Maintain a Good Credit Balance

Being cautious about running up your credit balance is also necessary. Using up all your available credit is not a good practice. Credit bureaus consider this factor to evaluate the credit scores of an individual. This is calculated by dividing your utilized credit by the total credit.

#4 – Keep Track of Credit Reports

Your credit performance might be extraordinary. But, if it is not reflected properly in your credit accounts, it may bring down your credit scores. Keeping track of the reports at regular intervals, and removing the errors, can save you from falling behind in the credit score ranges.

#5 – Seek Help From Credit Experts

Staying cautious of all these possible threats can be challenging. To simplify your efforts, you can rely on a credit repair agency that takes the responsibility of improving your credit scores seriously.

Frequently Asked Questions

1. What category does a 580 credit score belong to?
According to FICO scoring ranges, this credit score belongs to the fair credit score range. This range is definitely better than a poor credit score but is still not so good.

2. Can I get a home loan with a fair credit score?
The primary eligibility of a home loan borrower is that the person must possess a minimum credit score of 620. Anything less than that is enough for a home loan.

3. What are the major credit bureaus, and what are their roles?
Experian, TransUnion, and Equifax are the three major credit bureaus. Their primary goal is to assess the worthiness of an individual and provide a brief report.

Related Reads

700 Credit Score – Good or Bad

An Exclusive Review of FICO Score 8

How Long Does it Take To Build a Credit

Final Thoughts

This article has drawn a clear picture of the characteristics and qualities of a fair credit score. In short, the fair credit score is the second lowest credit score range of the credit scale. Belonging to this category is riskier, as people might easily fall into a poor credit score as the marginal difference is very small. The simplest remedy to get out of this critical stage is to repair your credit reports by fixing the errors. You can rely on a cheap credit repair service that would constantly monitor your credit performance and take necessary steps to improve your scores.