A 600 credit score, unless it’s in the high 600s is nothing to be proud of. On the other hand, it could be worse. Read on to learn what a 600 credit score might mean for you and what you can do about it.
You won’t have the same kind of trouble getting a loan as someone with a 540 score might have, but that doesn’t mean it will be easy. You may have to approach a few different lenders to get the amount you need. More importantly, a 600 score will put you in a higher risk category than someone with a 700 score, meaning you’ll be paying much higher interest rates.
Actually, a 600 credit score is below average. The real average is around 680. But what is or is not an average credit score is immaterial. All that matters is the risk category you will be assigned based on your score. If you’re high risk, you’ll be paying higher interest rates and premiums, so average or not, you want to get that score as high as it can be, preferably out of the 600s and into the 700s or beyond.
Virtually every score can be improved upon. In fact, people with credit scores in the 600 range are in a good position to raise their score. People with 500 credit scores often find their problems insurmountable, and people with 700 credit scores have trouble finding places to improve. The 600 range is perfectly situated, with more flaws than the 700 rated people without being overwhelmed like the 500 range people.
No. The reality is that lending money is a business, and interest rates are set through cold statistical analysis. Interest rates for those with 600 credit scores are higher because the default percentage is higher, meaning more people don’t end up paying back their loan. The lender needs to charge higher rates to make up for the money he will lose when people default. He’s not making significantly more or less money off the 600s than off the 700s or 800s. He just has more expenses. In fact, while it may seem otherwise, many lenders may prefer not to charge very high interest rates to those with subpar credit, because they know it will make it more difficult for them to pay. However, short of declining the loan, they have no choice in the matter. This is the only way they can safely offer a loan to someone in this category.