It’s A Fair-Weather World for Those with a 640 Credit Score.
A FICO score in the 640–679 range is nothing to sneeze at. You have what is generally considered “fair” credit. If you’re at the lower end of that range, up to 650 or so, it could be considered “poor.” But neither designation should keep you from obtaining some amount of credit, and by spending wisely and paying down any outstanding debts, you may soon find yourself on the “good” side of the credit spectrum.
Opening New Accounts With Fair Credit
Your 640 credit score will lead to some uncertainty in your pursuit of new credit, which could include a credit card, home, auto or business loan. The success of your application depends on a combination of each prospective creditor’s standards and the other factors that comprise your credit profile, such as your payment history, ratio of balances to available credit, and derogatory events, including any bankruptcies, foreclosures or evictions.
Because your score is so close to (or within) the “poor” credit tier, any of those factors can easily work against you — or tip the scales in your favor. That said, if a premium credit card provider or a selective bank or finance company draws a hard line at 680, even with an otherwise spotless credit report, you might be out of luck.
If you are shopping for a home or a new or used car loan, a 640 credit score should allow you to find more than one finance source willing to work with you. However, because you represent a moderate level of risk, you will almost certainly be asked to pay a higher interest rate than someone who has a better score, even if their income and debt levels are comparable.
Credit card providers offer cards to a wide range of creditors, but the same rules apply. You may find that some types of cards, including no-limit credit cards and cards that reward you for using them, are simply not available to you. You will probably be able to secure a standard, no-frills credit card — absent any of the derogatory factors listed above — but it may come with a high interest rate. If you run up more charges than you can afford to pay back in full at the close of each billing cycle, the cost of owning a high-interest credit card will soon become clear.
If you are able to secure a new card with a high spending limit and use it wisely, your amount of available credit will increase. That should, at some point, improve your score. Every bit of good credit helps, so don’t be discouraged if all you can secure is a credit card with a $500 limit. Start small and pay back what you owe. As your payment history and score improve, your provider may decide to start raising your limit, and better offers from other creditors may materialize.
Finding a Place to Live and Work with Fair Credit
Finding an apartment or house to rent is no easy task, and a 640 credit score can complicate your search. Prospective landlords may or may not have a hard cutoff above or below your score. They may or may not have had a bad experience with “fair”-credit tenants and fear getting burned again. It’s impossible to know.
What you can count on is the good old-fashioned rule of supply and demand. If they own a nice property in a popular neighborhood, a landlord may have the luxury of picking their next tenant from a stack of applications. If that is the case, a 640 credit score will put you at a disadvantage. Absent a high level of demand, a prospective landlord may be more willing to look beyond your score when they assess your creditworthiness. They may choose to make their decision based on your income, your payment history or references from previous landlords.
Some states allow prospective employers to check your credit. They can only do so with your permission, they will only see a truncated version of the reports available to creditors, and they won’t see your credit score — and that’s if they “see” it at all. Many employers use third-party companies to screen applicants, and they are mostly looking for red flags.
But prospective employers do get a good look at the factors that contribute to your score, and that could be enough to limit your opportunities, particularly if you are in competition with other candidates who pass the credit screening without issue. If you live in a state that allows prospective employers to check your credit, that is one more good reason to work on improving it.
A 640 credit score isn’t terrible, but it can make life harder. If you believe refinancing your auto loan can improve your credit profile, contact Innovative Funding Services today. We can talk about how the process works and whether it may be right for you. Or if you are ready, apply to refinance your auto loan now.