Is 613 a Good Credit Score & How Can You Improve It?

A credit score is a numerical representation of an individual’s creditworthiness. This three-digit number, typically ranging from 300 to 850, helps lenders assess a borrower’s ability to repay debts. It reflects a person’s financial behavior and credit management.

Understanding Credit Score Ranges

Credit scores are categorized into ranges by major scoring models like FICO and VantageScore. For FICO Scores, a score between 580 and 669 is considered “Fair.” VantageScore models categorize scores from 601 to 660 as “Fair.” A credit score of 613 falls within this “Fair” category for both systems.

Scores below 580 are considered “Poor.” Scores in the “Good” range for FICO are 670 to 739, and for VantageScore, 661 to 780 are considered “Good.” Higher scores, such as “Very Good” (740-799 FICO) or “Exceptional” (800-850 FICO), indicate lower credit risk. Each tier signifies a different level of risk to creditors, influencing product availability and terms.

Impact of a 613 Credit Score

A credit score of 613, categorized as “Fair,” has consequences for a borrower’s finances. While approval for some credit products is possible, terms are less favorable than for individuals with higher scores. Lenders often view scores in this range as indicating a subprime borrower, leading to higher interest rates on loans.

For example, a 613 score can lead to higher mortgage interest rates. Auto and personal loans may also have elevated annual percentage rates (APRs). Approval for credit cards might be limited to those designed for rebuilding credit, which have lower limits. A 613 score could also affect rental applications.

Insurance providers consider credit-based scores when determining premiums, so a lower score can result in higher auto or home insurance costs. Some employment opportunities may involve a credit check. A 613 score does not prevent access to credit, but it often means facing more stringent requirements and increased costs.

Key Factors Influencing Credit Scores

Credit scores are based on several components within an individual’s credit report, each weighted differently.

Payment History (35%)

This is the most significant factor. It reflects whether payments are made on time. Late or missed payments have a substantial negative impact. Even a single payment that is 30 days or more overdue can significantly lower a score, and these negative marks can remain on a credit report for up to seven years.

Credit Utilization (30%)

The amount of debt owed, credit utilization, is another major factor, representing 30% of a FICO Score. This is the ratio of revolving credit used to total available credit. Maintaining a low utilization ratio, below 30% of available credit, is seen favorably, with lower percentages correlating with higher scores. High balances, especially on credit cards, can negatively affect this ratio.

Length of Credit History (15%)

This factor considers the age of the oldest account, the age of the newest account, and the average age of all accounts. A longer history of responsible credit management indicates less risk to lenders.

New Credit (10%)

This includes recent applications and newly opened accounts. Numerous credit inquiries within a short period can suggest a higher risk and may slightly reduce the score.

Credit Mix (10%)

The variety of credit accounts makes up 10% of a FICO Score. This assesses whether an individual has successfully managed different types of credit, such as revolving accounts (like credit cards) and installment loans (like mortgages or auto loans). A diverse and well-managed credit portfolio can demonstrate an ability to handle financial obligations.

Steps to Improve Your Credit Score

Improving a credit score involves strategic financial management.
Make On-Time Payments: Ensure all payments are made on time. Setting up automatic payments for bills can help prevent missed due dates. Even if a full payment is not possible, paying at least the minimum amount by the due date is crucial.
Reduce Credit Utilization: Keep balances on revolving accounts, like credit cards, as low as possible. Experts suggest maintaining a credit utilization ratio below 30% of the total available credit. Paying down existing debt directly improves this ratio.
Review Credit Reports: Regularly check credit reports for inaccuracies. Errors like incorrect late payments or accounts not belonging to you can negatively affect your score and should be disputed with credit bureaus immediately.
Limit New Credit Applications: Avoid opening too many new credit accounts in a short period, as each new application generates a hard inquiry that can temporarily lower your score.
Consider Secured Cards or Credit-Builder Loans: For those with limited or damaged credit history, these can be effective tools. Secured cards require a cash deposit, and consistent on-time payments are reported to credit bureaus. Credit-builder loans also report payments to bureaus.
Maintain Older Accounts: Keeping older credit accounts open contributes positively by extending the length of your credit history.