638 Credit Score: Is it Good or Bad?
Understand the practical meaning of a 638 credit score and how it shapes your financial options.
A credit score is a numerical summary of an individual’s creditworthiness, helping lenders assess the risk of extending credit like loans or credit cards. This three-digit number, generated from a credit report, indicates how likely a person is to repay financial obligations. A higher score generally indicates lower risk to lenders, potentially leading to more favorable terms. The score reflects past borrowing and repayment behaviors.
Understanding Credit Score Ranges
Credit scores are calculated using models like FICO and VantageScore, typically ranging from 300 to 850. While exact numerical boundaries vary, a 638 credit score falls within the “Fair” or “Average” range (580-669 for FICO). This score suggests some positive credit history, but also indicates higher risk compared to “Good” or “Excellent” scores. For instance, the average U.S. FICO score was 717 in October 2024, placing 638 below the national average. Borrowers in the “Fair” category can still qualify for financial products, though terms may be less advantageous than for those with higher scores.
Access to Financial Products
For credit cards, a 638 score may lead to options for building credit, such as secured cards requiring a cash deposit, or unsecured cards for “Fair” credit. These often come with higher annual fees or interest rates. Some may offer rewards, but typically with higher variable Annual Percentage Rates (APRs) than for applicants with better credit.
For personal loans, a 638 FICO score may allow qualification, but generally with higher interest rates. Average rates for scores between 630 and 689 were around 17.93% in 2024, higher than for better scores. Lenders may also require stronger income or debt qualifications for approval. Personal loan rates range from approximately 5% to 36%, with lower scores typically nearing the higher end.
For auto loans, a 638 credit score, often in the “Nonprime” category (601-660), means higher interest rates compared to prime borrowers. In Q1 2025, average new car APRs for this range were around 9.83%, and used car APRs were 13.74%. This is considerably higher than the 5.18% for new cars or 6.82% for used cars for those with excellent credit.
Obtaining a mortgage with a 638 credit score is possible, though it often directs borrowers toward specific loan types. Conventional loans typically require a minimum score of 620, but a 638 score may result in less favorable terms, such as higher interest rates or larger down payment requirements (e.g., 25%). Federal Housing Administration (FHA) loans are a common option, with more lenient credit requirements, allowing scores as low as 580 with a 3.5% down payment. However, FHA loans include mandatory mortgage insurance premiums, adding to the overall cost.
Factors Shaping a Credit Score
A credit score is determined by several key components, each weighted differently in scoring models:
Payment History (35%): The most significant factor. On-time payments demonstrate reliability; late or missed payments negatively impact the score, with severity and recency influencing their effect.
Credit Utilization (30%): Considers the proportion of available credit used, especially on revolving accounts. A high utilization ratio suggests increased financial risk. Maintaining low balances is viewed favorably.
Length of Credit History (15%): Includes the age of the oldest account, newest account, and average age of all accounts. A longer history of responsible credit management demonstrates stability.
New Credit (10%): Recent applications and newly opened accounts. Opening several new accounts quickly can be seen as higher risk, and each hard inquiry can temporarily lower the score.
Credit Mix (10%): Assesses the variety of credit types managed, such as revolving credit and installment loans. Responsible management of different credit types can positively influence the score.