When you’re borrowing money, your credit score is one of the most important factors in determining your eligibility for loans and the loans’ interest rates. Unfortunately, if you have a credit score of 600, that score is not considered good.

A 600 credit score is below average by a fair margin. If you look at some credit score statistics, you’ll see that even young people with short credit histories typically have better scores.

Lenders use your credit score range to get a quick idea of how trustworthy you are as a borrower. Your credit score is calculated using the information contained in your credit report.

The credit score ranges lenders use are:

• 300 – 579: Poor
• 580 – 669: Fair
• 670 – 739: Good
• 740 – 799: Very Good
• 800 – 850: Exceptional

That means that a 600 credit score is considered fair. It isn’t a poor score, but you won’t qualify for many of the loans or credit cards that you want. You definitely won’t qualify for the best interest rateon loans without taking some steps to improve your credit score. 

Is 600 a Good Credit Score for a Mortgage?

No, a 600 credit score is not good for a mortgage. Typically, you need a credit score of at least 620 to qualify for a loan from a conventional mortgage lender. That means that a 600 score isn’t good enough if you want to get a traditional home loan.

Different types of loans generally require different credit scores to qualify. The more you’re borrowing, the higher lenders will want your credit score to be. 

But, there are other options that will let you get a mortgage even with a 600 credit score. For example, an FHA loan, insured by the Federal Housing Administration, has a minimum credit score of just 500. 

However, the terms of these loans won’t be as good as the terms offered to people with better credit.

You can also qualify for other loan programs, such as the USDA loan program, which helps borrowers buy homes in approved rural areas. USDA loans have no minimum credit score requirement.

Even if you can find a lender willing to give you a loan, you might want to wait until you’ve improved your credit score. Having less than good credit significantly increases the cost of a mortgage.

For example, a borrower with excellent credit might be able to get a mortgage with a 30-year loan term at 2.825% for an interest rate. On the other hand, someone with a 620 credit score might have to pay 4.414% in interest.

On a $300,000 loan, the borrower with excellent credit would pay $1,237 per month or $445,320 over the life of the loan. The borrower with poor credit would pay $1,505 per month or $541,800.

Having poor credit increases the cost of the loan by more than $250 per month and almost $100,000 overall.

Is 600 a Good Credit Score for an Auto Loan?

Ultimately, car lenders view people with 600 credit scores as having subprime, or bad credit. Before you get a car loan, you should look into options for building credit and turning your bad credit score into a good one.

The good news for borrowers is that there’s no real industry standard when it comes to minimum credit score requirements to get an auto loan. It’s not like getting a mortgage where there are often hard requirements that you can’t bypass.

In 2020, a borrower with good credit paid an average interest rate of 4.21% and borrowed $37,866 to buy a car, resulting in a monthly payment of $574. 

Borrowers with a 600 credit score paid an average interest rate of 11.33%, nearly three times higher. This forced them to choose cheaper cars to be able to have a similar monthly payment as those with good credit.

The credit requirements to get an auto loan will depend on the lender you work with and numerous other factors, including the type of car you’re buying, the size of your down payment, and your income.

However, just because you can qualify for an auto loan doesn’t mean that you’ll get a good deal. Borrowers with a 600 FICO credit score will have to pay a much higher interest rate than those with good credit.

Is 600 a Good Credit Score for a Credit Card?

600 is not a very good score for a credit card. If you find yourself in that credit score range, you won’t be able to qualify for the best credit card offers.

Instead, you’ll have to choose credit cards with a lower credit limit or that charge annual fees and high-interest rates.

Lenders use your credit score to quickly gauge your trustworthiness. The higher your credit score, the more likely you are to repay your debt. If you have a low credit score, that means a higher risk of not paying back the money you borrow.

Lenders who give you a mortgage or auto loan have some protection in that they can foreclose on your home or repossess your car to recoup losses if you miss payments. A credit card issuer doesn’t have those protections because it is an unsecured debt, much like personal loans.

Some borrowers choose to open a secured credit card. A secured credit card involves putting down a deposit when you open the account. This reduces the lender’s risk, making them more willing to give you a new credit card.

The credit limit of your secured credit card will be equal to the deposit you provide. 

As you make payments, you can build your credit history with the credit bureau or bureaus the card issuer reports to. That will improve your credit score. Once you have good credit, you can start applying for better cards.

How to Improve a 600 Credit Score

Get a Credit Strong Credit Builder Loan

The number one factor when it comes to calculating your credit score is your payment history. Consistent, on-time payments improve your score while missing payments will hurt your score.

A credit builder loan is a special type of personal loan designed to help you turn a bad credit score into fair credit or even better.

When you apply for a credit builder loan from Credit Strong, Credit Strong will put the loan amount into a savings account on your behalf. You won’t be able to access that money until later. Credit Strong then sends you a bill each month.

With each monthly payment you make on the installment loan, Credit Strong will report that payment to the credit bureaus and it will show up on your credit report. This improves your credit score.

It’s important to always make your loan payments on time because if you make a late payment, Credit Strong will also report that, damaging your score.

Once you finish paying off the loan, you’ll get access to the money in the savings account Credit Strong opened for you. This makes Credit Strong both a credit product and savings plan that can build your credit.

Maintain a Good Payment History

The most important thing you can do to maintain or improve your credit is to make the monthly required payment on each credit account that you have. 

Your payment history is the most important aspect of your credit score and missing even one payment can have a major impact on your overall credit.

If you want to turn a fair credit score into an excellent one, one of the easiest ways is to sign up for automatic payments. Even if you only sign up to pay the minimum on each credit card and loan, this can all but ensure you never miss a payment.

As you build your payment history, over time a poor credit score will turn into a fair credit score and eventually excellent credit.

Decrease Your Credit Utilization

Your credit utilization ratio is the sum of the balance on each of your credit cards divided by the sum of the credit limit on each card. In short, the higher the credit line and the lower the balance of each card, the better your credit utilization will be.

The lower your credit utilization, the better it is for your credit score. Someone who is maxing out their credit cards will likely have a bad credit score while someone who isn’t carrying large amounts of credit card debt will have a better one.

To improve your credit utilization, you can pay down your credit card debt or ask for a credit limit increase on your cards.

Start Now to Improve Your Credit History

Building credit takes time. It can take months or years of timely payments and efforts to pay off debt to build a good credit history and increase your score. The most important thing you can do if you’re planning to apply for an important loan in the future is to start building credit now.

One thing you should do is take a look at a copy of your credit score. You can get a free credit report once per year from each major credit bureau. You can also use a service like Credit Karma to get more frequent updates.

Looking at your credit history will give you an idea of what aspects of your credit you need to improve.

FAQs

Can I Get Approved With a 600 Credit Score?

A 600 credit score falls into the “Fair” credit score range. You’ll be able to find loans you can qualify for, but they are unlikely to have the best terms. You’ll also have to be ready to find a backup lender in case one denies you.

Often, a local credit union or small bank will be more able to work with you to approve you for a loan even with less than ideal credit.

Is 600 a Good Credit Score for a Mortgage?

600 isn’t a good credit score for a mortgage. You need a credit score of at least 620 to be able to get a conventional mortgage. With a 600 score, you’ll be forced to use special loan programs like the FHA loan program.

Is 600 a Good Credit Score to Rent an Apartment?

Some landlords will take a look at your credit score when you apply to rent an apartment. The better your credit score, the more likely the landlord will want to rent to you.

Most landlords expect a minimum credit score of 600 from renters. Any steps you can take to boost your score will make it easier to find a place to rent.

CreditStrong helps improve your credit and can positively impact the factors that determine 90% of your FICO score.

Start Building credit today