04/06
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Is 655 A Good Credit Score To Buy A Car



We think it's important for you to understand how we make money. It's pretty simple, actually. The offers for financial products you see on our platform come from companies who pay us. The money we make helps us give you access to free credit scores and reports and helps us create our other great tools and educational materials.




is 655 a good credit score to buy a car



In the second quarter of 2020, people who got a new-car loan had average credit scores of 718 and those who got a used-car loan had average scores of 657, according to the Q2 2020 Experian State of the Automotive Finance Market report.


Working on your credit scores could unlock lower interest rates and preapprovals by more lenders. Your scores are largely dictated by whether you pay your bills on time and how much debt you have. Focusing on these two important factors could be a huge help in improving your credit.


No matter the scoring model, there are some keys to having higher credit scores. The charts below show what factors make up two popular credit-scoring models, the FICO 8 credit score and VantageScore 3.0 models.


Below, you can learn all about what you can and cannot do with a 655 credit score, the types of people who have 655 credit scores and the steps you can take to put more points on the board. Step one, of course, should be to check your latest credit score and get your personalized credit analysis from WalletHub.


The best type of credit card for a 655 credit score is a card with high approval odds and low fees, like a starter credit card, a store credit card, or a secured credit card. Each type of card is available to people with fair credit, and some offers have extra perks like rewards.


Student loans are some of the easiest loans to get with a 655 credit score, seeing as more than 60% of them are given to applicants with a credit score below 700. A new degree may also make it easier to repay the loan if it leads to more income.


As you can see, most people who are at least 35 years old have a credit score of 650 or higher. And even younger folks nearly have a majority. This just goes to show that people with 650 credit scores come in all shapes and sizes, with diverse backgrounds and differing financial obligations.


As a result, the grades for each component of your credit score, which you can find on the Credit Analysis page of your free WalletHub account, might not exactly match those of another individual with a 650 score. But the sample scorecard below will give you a pretty good idea of what a 650 score is made of.


These are by no means the only credit-score grades capable of producing a score of 650, nor will they necessarily result in that exact rating. However, this is representative of the type of scorecard someone with a 655 credit score can expect: plenty As and Bs, but no failing grades to be found.


A FICO Score of 655 places you within a population of consumers whose credit may be seen as Fair. Your 655 FICO Score is lower than the average U.S. credit score.


Some lenders dislike those odds and choose not to work with individuals whose FICO Scores fall within this range. Lenders focused on "subprime" borrowers, on the other hand, may seek out consumers with scores in the Fair range, but they typically charge high fees and steep interest rates. Consumers with FICO Scores in the good range (670-739) or higher are generally offered significantly better borrowing terms.


What's more, your score of 655 is very close to the Good credit score range of 670-739. With some work, you may be able to reach (and even exceed) that score range, which could mean access to a greater range of credit and loans, at better interest rates.


The best approach to improving your credit score starts with a check of your FICO Score. The report that's delivered with the score will use details from your unique credit report to suggest ways you can increase your score. If you focus on the issues spelled out in the report and adopt habits that promote good credit scores, you may see steady score improvements, and the broader access to credit that often comes with them.


Studying the report that accompanies your FICO Score can help you identify the events that lowered your score. If you correct the behaviors that led to those events, work steadily to improve your credit, you can lay the groundwork to build up a better credit score.


Credit scores such as the FICO Score are based on your debt-management history, as recorded in your credit file. The scores are basically a summation of the way you've handled credit and bill payment. Good credit habits tend to promote higher credit scores, while poor or erratic habits tend to bring lower scores.


Payment history. Delinquent accounts and late or missed payments can harm your credit score. A history of paying your bills on time will help your credit score. It's pretty straightforward, and it's the single biggest influence on your credit score, accounting for as much as 35% of your FICO Score.


Credit usage rate. To determine your credit utilization ratio, add up the balances on your revolving credit accounts (such as credit cards) and divide the result by your total credit limit. If you owe $4,000 on your credit cards and have a total credit limit of $10,000, for instance, your credit utilization rate is 40%. You probably know your credit score will suffer if you "max out" your credit limit by pushing utilization toward 100%, but you may not know that most experts recommend keeping your utilization ratio below 30% to avoid lowering your credit scores. Credit usage is responsible for about 30% of your FICO Score.


Length of credit history. Credit scores generally benefit from longer credit histories. There's not much new credit users can do about that, except avoid bad habits and work to establish a track record of timely payments and good credit decisions. Length of credit history can constitute up to 15% of your FICO Score.


Total debt and credit. Credit scores reflect your total amount of outstanding debt you have, and the types of credit you use. The FICO Score tends to favor a variety of credit, including both installment loans (i.e., loans with fixed payments and a set repayment schedule, such as mortgages and car loans) and revolving credit (i.e., accounts such as credit cards that let you borrow within a specific credit limit and repay using variable payments). Credit mix can influence up to 10% of your FICO Score.


Recent applications. When you apply for a loan or credit card, you trigger a process known as a hard inquiry, in which the lender requests your credit score (and often your credit report as well). A hard inquiry typically has a short-term negative effect on your credit score. As long as you continue to make timely payments, your credit score typically rebounds quickly from the effects of hard inquiries. (Checking your own credit is a soft inquiry and does not impact your credit score.) Recent credit applications can account for up to 10% of your FICO Score.


Fair credit scores can't be turned into exceptional ones overnight, and only the passage of time can repair some negative issues that contribute to Fair credit scores, such as bankruptcy and foreclosure. No matter the reason for your Fair score, you can start immediately to improve the ways you handle credit, which can lead in turn to credit-score improvements.


Consider a credit-builder loan. Available from many credit unions, these loans take can several forms, but all are designed to help improve personal credit histories. In one popular version, the credit union places the money you borrow in a savings account, where it earns interest but is inaccessible to you until the loan is paid off. Once you've paid the loan in full, you get access to the funds and the accumulated interest. It's a clever savings tool, but the credit union also reports your payments to national credit bureaus, so regular, on-time payments can lead to credit-score improvements. (Check before taking out a loan to make sure the lender reports to all three national credit bureaus.)


Consider a debt-management plan. For families with finances stretched too thin to keep up with debt payments, a debt-management plan (DMP) can bring much-needed relief. Getting one requires you to work with a qualified credit counseling agency, who negotiates with your creditors to set up a workable repayment plan. It's a serious step that significantly lowers your credit score and effectively closes all your credit accounts, but it's less severe than bankruptcy, and it can help families in dires straits get back on their feet. Even if you decide a DMP isn't for you, meeting with a credit counselor (not a credit-repair company) may give you some new tools for building up your credit. 041b061a72


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