Having a credit score of 599 puts you below the national average score of 715 and categorizes you within the fair category. However, this doesn't completely close the doors to borrowing money. There are a variety of loans and credit cards you can qualify for with a 599 credit score - albeit with a higher interest rate and less favorable terms.
Any score from 580 to 669 falls in the fair category. Lenders view borrowers in this bracket as higher risk, so they charge more for borrowing. Being in the fair category indicates some previous credit challenges or perhaps a minimal credit history, yet it is a marked improvement from having poor or bad credit.
We will delve into the implications of a 599 credit score and discuss strategies for building credit to unlock access to more advantageous financial opportunities in the future.
What kind of credit score is 599?
A score of 599 is categorized as fair credit, a status shared by 18% of the U.S. population. Lenders use your score to measure your borrowing risk—how likely you are to repay borrowed money. Those with fair credit are considered to be at a higher risk of defaulting than those with good or excellent credit but are less risky than individuals with poor scores.
A fair credit score conveys to creditors that you've previously had challenges managing credit effectively, but these challenges or mistakes are further in the past. This could include a history of late payments, excessive debt, or collections accounts. It could also mean that you lack a credit history. A short or limited credit history is also a problem as it does not give lenders much data to assess you by.
As a result, securing loans or credit cards with favorable terms can be a daunting task. Those with fair credit scores often face obstacles in obtaining credit under the most beneficial terms. To qualify for credit, you will need a decent income, stable employment, and low debt levels. Loans and credit cards may be approved but typically come with higher interest rates, additional fees, and less favorable repayment terms reflecting the lender's increased risk. This makes borrowing more expensive over time and can limit your ability to access large amounts of credit.
Therefore, it's crucial for individuals with fair credit to work on improving their credit scores. Once you raise your rating, you'll be able to unlock better financial opportunities and more favorable borrowing conditions in the future. Improving your score is relatively simple. Regularly monitoring your credit report, making timely payments, and reducing outstanding debt are key steps toward achieving this goal. Follow these basic rules and your score will improve.
Can I get a credit card with a 599 credit score?
Getting a credit card with a 599 credit score is feasible, although your choices will be somewhat restricted.
These cards are considered subprime credit cards and provide access to credit regardless of your score. With a fair credit score, you will have a wider range of these cards available to choose from. Usually, they are basic credit-builder cards with few perks or rewards. However, it is possible to find rewards cards in this bracket if you do a little research. The problem with most subprime credit cards is they come with substantial fees and an elevated APR. Before you apply, make sure that you can afford them. Once you have your card, use it responsibly and make timely payments to build credit. As your score improves and moves into the good range, you will qualify for cards with better perks and fewer fees.
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Apply NowA wiser choice might be to go for a secured credit card. Secured cards have lower fees and APRs than their unsecured subprime counterparts, making them a more cost-effective option. They operate the same as regular credit cards but require a refundable security deposit. The deposit not only sets your spending limit but also lessens the issuer's risk by serving as collateral. If you fail to pay a bill, the issuer can take the money from your deposit. When you close your account with all the bills paid, you get the entire deposit back.
Secured credit cards are ideal for those looking to build or rebuild credit. They are easily accessible due to the security deposit lessening the risk to the issuer. As you build a history of responsible credit use, you may become eligible for a traditional, unsecured credit card with more favorable terms and perks, such as lower interest rates and rewards programs. Using a secured card can be a strategic step towards improving your credit score and gaining access to better financial opportunities in the future.
Another option to consider is becoming an authorized user on someone else’s credit card. This arrangement allows you to benefit from their timely payments and solid credit history without needing to apply for a card yourself. As an authorized user, the primary account holder’s good credit habits can positively impact your credit score. However, it's essential to ensure that the primary account holder consistently maintains a good payment record, as any negative activity on their part could also affect your credit rating.
Prequalifying for a credit card is a step worth considering for those with fair credit. Prequalification involves a soft credit inquiry, which does not affect your credit score, to determine your likelihood of being approved for a particular credit card. Many issuers offer online prequalification tools that provide an initial assessment of your eligibility. By prequalifying, you can get an idea of which cards you might be approved for, allowing you to apply strategically and avoid multiple hard inquiries that can further lower your score. Prequalification can thus streamline the application process and increase your chances of obtaining a card that fits your financial situation.
Can I get a personal loan with a 599 credit score?
Obtaining a personal loan with a credit score of 599 is possible, though you may not get the most favorable terms. Expect to encounter loans with high interest rates, extra charges, and strict repayment schedules. However, several options are available to you, and exploring them can help you find the best fit for your financial needs.
Secured Loans: Secured loans require collateral, such as a car, home, or savings account, to back the loan. This collateral reduces the lender's risk, making it easier for borrowers with fair credit to get approved. While you risk losing the collateral if you default on the loan, secured loans typically offer lower interest rates and more favorable terms compared to unsecured loans. They can be a good option if you have valuable assets and are confident in your ability to repay the loan.
Joint Loan: Applying for a joint loan with a co-borrower or co-signer who has a higher credit score can improve your chances of approval and result in better loan terms. The co-applicant shares responsibility for the loan, which reassures the lender. If you stop making payments, the lender can come after them for the money. However, it's crucial to have a mutual understanding and agreement with your co-applicant about repayment responsibilities to avoid any financial or personal complications.
Online Lenders: Online lenders and loan marketplaces cater to borrowers with credit scores ranging from fair to poor. These lenders often have more flexible requirements and faster approval processes compared to traditional banks. Online lenders consider your income, job stability, and existing debt obligations in addition to your credit rating. The catch is many will offer loans with higher interest rates and additional fees to compensate for your low score and the risk they're taking. One trick is to compare offers from at least three online lenders. Take a look at the loan amounts, repayment terms, interest rates, and fees to find the most affordable loan available.
Credit Unions: Credit unions are member-owned financial institutions that often provide more personalized service and lower rates than traditional banks. They are more willing to work with members who have lower credit scores, offering personal loans with more reasonable terms. Many federal credit unions offer Payday Alternative Loans (PALs) as a response to payday loans. These personal loans have longer repayment terms and interest rates capped at 28%, making them more affordable. Typically, you have to join a credit union in order to apply for their loans. Becoming a member usually isn't too hard and can be a good option if you have a fair credit score, as they may be more understanding of your financial situation.
Cash Advance Apps: Cash advance or paycheck advance apps provide small, short-term loans based on your income and employment history. These apps don't check your credit score, making them accessible to individuals with lower credit ratings. Instead, you link your bank account and set up direct deposit. The app will review your income and possibly your timesheet (each app has slightly different criteria) to determine how much to advance you. Most advances are due with your next paycheck, but many apps let you reschedule payment at least once for free. There are no interest charges but the fees vary. Some apps ask for a flat fee, others a subscription fee or optional tip. Most will charge a fast funding fee if you need the cash instantly. While the fees are minimal, they can add up, especially if you become reliant on the apps or tip too much.
Before you borrow, make sure that you have a payment plan in place. Not paying on time can hurt your credit score, lead to a cycle of debt, and may result in the loss of an asset if you go with a secured loan. On the other hand, paying your dues on time can help improve your score so that you can access even better financial products in the future.
While a credit score of 599 can present challenges in obtaining a personal loan, exploring various options like secured loans, joint loans, online lenders, credit unions, and cash advance apps can improve your chances of finding a suitable loan. It's essential to compare offers, understand the terms, and choose the option that best aligns with your financial situation and ability to repay. Try to prequalify with multiple lenders and compare offers so that you get the best one for you. By carefully considering your choices, you can secure the funds you need while working towards improving your credit score for future financial opportunities.
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Take your 599 credit score with a grain of salt
No solitary measure perfectly predicts if someone will repay borrowed money. Consequently, lending institutions have diverse criteria for minimal credit scores. Many leave some ambiguity regarding what scores they will accept and how much emphasis they place on scores. Some financiers prioritize factors such as a candidate's job stability or living conditions (if you rent or own).
Your score is not the be-all and end-all for lenders, nor is it fixed. It is a numerical summary based on your credit report data, and you can change what’s in your report. You are not permanently bound to a fair credit rating. With effort and strategic financial decisions, you can elevate your score. Making timely payments and reducing your debt are the biggest things you can do to improve your credit rating.
Raising your score from fair to good or even excellent can unlock access to better financial products, lower interest rates, and more favorable terms. Although fair credit might limit your options now, taking proactive steps can lead to significant improvements and increased financial opportunities in the future. Keep in mind that your credit score is a dynamic reflection of your financial behavior and can be enhanced with consistent, positive financial habits.
How can I grow my 599 credit score?
Improving your credit score is always a good idea. A higher score means easier, more cost-effective borrowing, smoother apartment hunting, and increased eligibility for certain employment opportunities. Having a 599 credit score means there's substantial work ahead, but it's important to approach this task one step at a time.
The five factors that determine your credit score are:
- Payment history: This is the most significant factor, making up about 35% of your score. Consistently making on-time payments is crucial.
- Credit utilization: This measures the amount of credit you're using compared to your total available credit. Keeping your utilization below 30% is recommended.
- Age of credit: The length of your credit history accounts for 15% of your score. Older accounts contribute positively to your score, so keeping long-standing accounts open is beneficial.
- Credit account mix: Having a variety of credit types, such as credit cards, mortgages, and auto loans, makes up 10% of your score. A diverse credit portfolio is viewed positively.
- Recent credit inquiries: Frequent applications for new credit can negatively impact your score, accounting for 10%. Limiting new credit applications is advisable.
While these five factors are essential to know, it’s important to identify the specific issues dragging your score down. For example, if late payments are a problem, set up reminders or automatic payments. If high credit utilization is an issue, work on paying down balances and increasing your credit limits. Tailoring your strategy to address your unique credit challenges can lead to more effective improvements in your score.
Monitor your credit
Begin by reviewing your credit report from the three major credit bureaus: Equifax, Experian, and TransUnion. Since each bureau might have slightly different information, it's crucial to check all three. You can obtain a free copy of your report from each bureau annually at annualcreditreport.com. Thoroughly examine your report for any errors or inaccuracies. If you identify incorrect or outdated information, dispute it with the respective bureau. Correcting these negative marks can give your score an immediate boost.
Next, scrutinize your credit report to determine why your score is low. Look for any late or missed payments, accounts in collections, or high credit utilization. Additionally, check if you have recently applied for numerous credit cards or loans, as these actions can also negatively impact your score.
Additionally, be vigilant for signs of identity theft. Unauthorized accounts or unfamiliar activities on your credit report could indicate that someone has stolen your identity and is harming your credit. If you suspect identity theft, report it immediately to the credit bureaus and take steps to protect your personal information.
By pinpointing the reasons for your low score, whether they stem from personal financial habits or potential fraud, you can implement targeted measures to improve it.
Do damage control
Now that you know what's adversely affecting your credit score, it's time to take steps toward amending those issues. Negative entries can linger on your credit report for a maximum of seven years, but their impact diminishes over time. Given that your score isn't in the poor range, it's likely that there aren't many recent derogatory marks to address.
Contact your creditors or the collections agencies involved to explore negotiation possibilities. They might agree to remove a negative entry following the full settlement of a past-due account or cease reporting missed payments once you've updated your account status. Creditors are often open to cooperation in exchange for payment. Successfully removing any negative marks will boost your score and can be worth the effort.
Additionally, consider setting up a payment plan if you're unable to pay off the entire debt at once. Demonstrating your commitment to repaying what you owe can make creditors more willing to work with you. In some cases, they may even agree to a "pay for delete" arrangement, where the negative entry is removed from your report upon payment.
Get credit and use it
Building credit requires using credit. Lenders need to see that you can repay what you borrow as agreed. The easiest way to demonstrate this is to use a credit card modestly and then repay what you owe on time.
If you don’t already have a credit card, apply for one. It does not matter if you choose a secured or unsecured credit card as long as the issuer reports your usage and payment history to all three credit bureaus. Use it for one or two minor purchases throughout the month. Do not buy anything on credit that you can’t pay for with cash. Then, settle the bill in full and on time every month. Activate autopay or set up payment reminders so you never miss a due date. A consistent history of timely payments is the best thing you can do for your score.
The second biggest factor is credit utilization. Only use 30% of your available limit—less is even better. This demonstrates that you don’t need credit. Make multiple payments throughout the month to help keep your utilization low. Establishing responsible credit habits demonstrates to lenders that they can trust you with their money and will gradually improve your score. As your score improves, you’ll be eligible for more favorable financial products.
If a credit card isn't an option, there are other ways to build credit. You can take out a credit builder loan for one. With a credit builder loan, you don't get the money right away, instead, it is held in a secured account. You make monthly payments on the loan and the issuer reports your payments to the credit bureaus, helping you establish a positive payment history. Once the loan is paid off you receive the money.
Another option is to take out a modest personal loan and repay that on time. The caution here is it's not a good idea to take on debt you don't need.
You can also use a service to report monthly payments you're already making. Certain companies report rent, utilities, subscriptions, and other monthly bills. This lets you get credit for bills you're already paying on time. Your score will benefit, and you don't have to borrow money.
No matter which route or routes you choose, building credit takes time and patience. By using these methods and ensuring you pay all your bills on time, you can steadily improve your score.
Next steps for your 599 credit score
A credit score of 599 isn't optimal. It makes the process of securing loans or credit cards challenging, though still feasible. Any offers that come your way are likely to bear higher interest rates and extra charges as a safeguard for the lender. However, there's a silver lining: a fair credit rating isn't set in stone. Consistently paying your bills on time is crucial. Set up automatic payments or reminders to ensure you never miss a due date, as timely payments significantly boost your credit score.
Decreasing your overall debt is another vital step. Focus on paying down high-interest debts first and consider consolidating debts to manage payments more effectively. This reduces your credit utilization ratio, which is the amount of credit you're using relative to your credit limit. Aim to keep this ratio below 30%, as lower utilization signals to lenders that you’re not overly reliant on credit.
Maintaining minimal credit usage also plays a significant role. Avoid maxing out your credit cards and try to spread your expenses across multiple cards if necessary. Regularly check your credit report for inaccuracies and dispute any errors to ensure your credit profile is accurate.
By adhering to these strategies, your credit score will gradually improve. Over time, this will enable you to access better financial products with more favorable terms, such as lower interest rates and fewer fees, ultimately enhancing your financial health and opportunities.
This content is general in nature and is provided for informational purposes only. MoneyFor is not a financial advisor and does not offer financial planning services. This content may contain references to products and services offered through MoneyFor marketplace.