what can i do with 600 credit score

How a 600 Credit Score will Ruin Your Life and How to Change It

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What is a Credit Score and Why is it so Important?

In the simplest terms possible, a credit score is essentially just a 3-digit number ranging from 300 to 900 that is calculated to show how ‘credit worthy’ you are. The higher the score, the better. This score becomes increasingly more important as you get older and start thinking about making large purchases such as homes, cars, renovations etc. To acquire a large mortgage, the bank or lender must have a valid reason to trust that you plan on paying the money back especially if it’s a large amount. 

The logic behind this is that in general, people who handled their credit poorly in the past, will continue to handle it poorly in the future. Whereas someone who has been diligent with paying down their debt, will continue to be diligent in the future. Banks and lenders would much prefer to lend money to these kinds of people, which is why they want proof of your credit score. 

How is my Credit Score Calculated?

A credit score is generally calculated through using 5 key criteria:

  • 35% of your credit score (the largest chunk) is made up of your payment history. Your payment history takes into consideration how good you have been with paying off any debt or credit on time. 
  • 30% of your credit score is made up of credit utilization and the amount you owe. This criterion takes into consideration how much current debt you have and whether or not you would be able to pay it off that instant if you had to. This criterion also takes into consideration your credit limits and whether or not you are maximizing them. 
  • 15% of your credit score is made up of the length of your credit history. The longer you have maintained credit, the more data there is to track which can lead to an increased credit score. 
  • 10% of your credit score is based on inquiries or (new credit). Anytime you apply for new credit, it reflects poorly on your credit score, because there is an assumption made that you are in a poor financial position and need the extra cash on hand. 
  • 5% being the final piece of your credit score, reflects public records. This chunk of your score considers any previous bankruptcies or other issues. Any of these issues would decrease your score. 

Don’t have a great credit score, but need cash quickly?

If you don’t necessarily have the best credit score in the world and you want a quick loan without going through the process of improving it (which you can do – and we will further discuss in this article) you can checkout PersonalLoans.com

Most borrowers can get approved in less than a day and can see money in their bank account within a week. You can take out a loan for nearly any reason but the most popular loan type is for debt consolidation, paying off high interest credit card loans.

Click to check your rate on a personal loan up to $35,000 – Won’t affect your credit score.

A 600 credit score isn’t going to lock you out of the money you need but it will affect your life in ways you don’t realize

If you’re checking your credit score, it’s probably because you’re thinking about applying for a loan or wondering why your credit card rates are so high.

But that FICO score affects a lot more than just the rates you get or whether you get approved for a loan at all.

If you have a 600 credit score or below, you might be losing out on more than just loans. Your credit score could be affecting your insurance premiums, your job and even where you live. It’s unfair because it’s too easy to ruin your credit score. A missed payment or even avoiding debt altogether could mean bad credit at no fault of your own.

Fortunately, it can be just as easy to fix your credit and I’ve got one tool that will help you get the money you need and increase your score at the same time. First, we’ll look at how a 600 FICO affects your life and what you can do about it.

How Many Americans Have a 600 Credit Score?

The credit scoring agencies don’t release the actual number of people with a certain credit score but they do offer ranges occasionally. Credit scores have been increasing since the 2008 recession but many Americans are still unfairly locked out of the financial system.

One-in-four Americans (23%) have a credit score below 600 FICO while about 10% of the population have a score within the 600 to 649 range.

how many people have 600 FICO
How Many People Have a 600 Credit Score?

We usually think about credit scores when we need money or are looking at our credit card statements. Your credit score affects the interest rate you get on loans and whether a lender approves you for a new loan but it also means a lot more.

One of the most unfair ways a credit score can affect your life is through your car insurance. Insurance companies are actually allowed to charge bad credit drivers more for insurance, something called credit-based insurance. Drivers with bad credit may pay as much as 20% more in premiums for insurance than good credit borrowers.

You may not be able to get a home mortgage with a 600 credit score and you might even have a hard time renting. Landlords can pull your credit report and FICO score before accepting your application and may deny bad credit borrowers as too risky.

As if all that weren’t bad enough, potential employers look at your credit as well. That sub-prime credit score may keep you from getting a job in finance or management.

With your credit score affecting so many parts of your life, is a 600 FICO considered bad credit or is it bad enough to affect your opportunities?

Is a 600 FICO Bad Credit?

When we talk about credit scores, it’s usually in terms of ranges or whether something is ‘good’ or ‘bad’ credit. The truth is, there’s really one number that matters and it’s around 660 or 680.

Right around that number is the cutoff for what’s called ‘prime’ credit. This is the point where banks are able to approve loans and you start seeing lower rates. Anything below a prime credit score is considered bad credit and your options will be limited.

is 600 credit score bad credit
What is a Good Credit Score?

So the short answer is that a 600 FICO is not good credit but there’s a lot more than the short answer. There are a lot of factors that go into getting approved for a loan and your credit score is only one of them.

But that doesn’t really mean a 600 credit score is bad credit. It’s very easy to get a score below prime. Just one missed payment or a loan default will get you there. Maxing out your credit cards will also hurt your score.

You might also have a low credit score just because you don’t have much of a credit history. A lot of students have sub-prime credit because they have never used a loan or credit card. A lot of people that have just always avoided credit cards or debt may have a 600 credit score or lower.

It’s good that you want to avoid debt and credit cards but not building up your credit score can cause huge problems down the road. It’s probably not going to keep you from getting a job but will certainly keep you from getting an emergency loan or a mortgage. You will probably also be forced to pay higher premiums on your insurance.

While a 600 credit score is considered low, it’s far from the worst score I’ve seen and your options are good for increasing your score and getting the money you need.

How to Get a Loan with a 600 Credit Score?

So what can you do with a 600 credit score? That depends on what you want to do…

what can i do with 600 credit score
Is 600 a Good Credit Score?

If you’re looking for a mortgage or a loan over $40,000 then your options are going to be limited. You’ll need a 650 credit score or higher to even get in the door at a traditional bank for a loan.

Banks can’t loan to borrowers with very low scores because the loans don’t qualify to be resold to investors, something the bank does to get cash needed to make more loans.

There is a solution though, one that will get you the money you need and help increase your credit score.

It’s called a debt consolidation loan. You might have heard about consolidation loans as a way to pay off your high-interest loans but there are a couple of other benefits that will help you as well.

  • Take out one loan to pay off all your credit card and other high-rate debt. Since personal loans can be used for anything, you can also get a little extra cash to make sure you don’t need any more loans.
  • The lower rate consolidation loan lowers your payments and saves money on interest. You can use that extra money to pay off the loan faster, helping you to lower your total debt owed and boost your credit score.
  • One loan payment makes it easier to remember those monthly payments and you’re less likely to forget a payment that can destroy your score and cost you late fees.
  • Since personal loans are non-revolving debt, they have a fixed payment and payoff date, they don’t hurt your credit score as bad as revolving (credit card) debt. The type of debt you have affects up to 15% of your score so this can increase your FICO immediately.

I’ve used PersonalLoans.com for a consolidation loan and a home improvement loan. They specialize in bad credit loans and offer interest rates you can afford. I like the online lender for two reasons. First, they offer different types of loans from peer-to-peer loans to personal loans and bank lending depending on your credit. The website also shops your loan around to different lenders to make sure you get the best rate possible.

Consolidation loans are available for between six and 72 months. I recommend a 36- or 60-month payoff. You want to spread your loan out enough that your payments are manageable but you want to pay it off as soon as possible.

Borrowers with no credit history might want to try Upstart as well. It’s a newer online lender and uses a special lending model designed to look at more than just your credit history. It’s specifically designed for students and graduates because it looks at your school record in the decision.

Applying for a personal loan is free and doesn’t affect your credit score. Lenders do a soft-pull of your credit first to estimate a rate and the application will only go on your credit report after you accept the loan. That’s why I recommend applying on a couple of different sites to make sure you get the best rate possible.

Check your rate on a consolidation loan now – instant approval

A consolidation loan is just one of the tools I used to boost my credit score by over 100 points after destroying my credit in 2008. My FICO was way below 600 at its lowest but is now over 730 and I have no trouble getting loans.

How to Get a 600 Credit Score Car Loan

Car loans are going to be dangerous with a 600 credit score. It’s not that car loans are bad but the fact that you’ll be denied a loan from new car dealers or legit used car lots because of bad credit, that leaves you exposed to the scams from buy-here, pay-here salesmen.

You see, these used car fraudsters prey on bad credit borrowers that have nowhere else to turn for a loan. There are two different ways these people rob you blind.

  • Charging thousands more on a car than what it’s worth. This makes interest rates on car loans pointless because the car is so overpriced anyway, the dealer doesn’t have to worry about the loan.
  • Charging interest rates of 18% and higher. Some dealers will lure you in with lower prices for cars but then charge an arm and a leg on the interest.

Your best option is to get your own personal loan and taking that to find the lowest price car. This way, you can still get the car you want and a price you can afford but don’t have to fall victim to the buy-here, pay-here scams.

Can I Get a Mortgage or Credit Card with a 600 Credit Score

This is another one of the most common questions I get around credit scores, whether someone can get a mortgage or credit card.

Most likely you won’t be able to get a mortgage with a 600 credit score. Banks and credit unions have been known to make exceptions on credit requirements for people with credit scores as low as 660 FICO if you have a long credit history with the bank but they’ll never go as low as 600.

What you can do is try using a personal loan for your down payment on a house and ask the seller to provide financing for two years while you increase your credit score. Within two years, your score will have improved up past that prime credit cutoff and you’ll get better rates on a mortgage.

Getting a credit card on a 600 credit score is a dangerous situation though. You’ll get offers in the mail for new cards but the rate is going to be at 28% and higher in most cases. That’s a lot of money paid to interest and it will be really easy to get behind again.

Like most credit or loans, if you can wait a few months while you increase your score, it will work out so much better. It’s here in the 600s that you really start noticing better offers and rates on credit. As you approach that prime credit cutoff, you’ll start getting traditional loans and even advertised rates.

How to Increase a 600 Credit Score

The upside to having a 600 FICO is that you’ll start noticing fast changes in your score in surprisingly little time. For example, I increased my credit score from a low of 560 FICO to 700 in less than a year and now have an 819 FICO. There are a few credit score tricks that work fast to boost your score and will put you on that path to improving your credit. I recently shared the best hacks I used to increase my score on my YouTube channel.

Having a 600 credit score doesn’t mean you did anything wrong or destroyed your credit. It’s easy to miss a payment and doesn’t take much to drive your FICO lower. While a 600 FICO is not a good credit score, there are other factors that can help you get a loan or the money you need. It does mean you’ll need to work on increasing your credit score or it could affect your life in more ways than you realize. Protect your credit and a whole new world will open to you.

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