Is 617 a Good Credit Score & How Can You Improve It?

A credit score is a three-digit number that serves as a snapshot of an individual’s credit risk, indicating their likelihood of repaying borrowed money. Lenders and creditors use this score to help determine whether to approve applications for various credit products, such as mortgages, credit cards, or auto loans. Beyond approvals, the score also influences the interest rates and other terms offered on these credit products. A higher credit score generally translates to more favorable lending terms, saving borrowers money over time.

Understanding Credit Score Ranges

Credit scores typically range from 300 to 850, with higher scores representing lower risk to lenders. Two prominent credit scoring models, FICO and VantageScore, categorize these ranges, though their exact thresholds vary. For FICO Scores, a range of 580 to 669 is generally considered “Fair,” while “Good” credit typically falls between 670 and 739.

VantageScore models classify a score between 500 and 600 as “Fair” and 601 to 660 as “Good”. A 617 credit score therefore generally places an individual in the “Fair” category for FICO and at the lower end of “Good” for VantageScore. While models differ, a 617 score suggests a need for improvement to access competitive financial products.

Implications of a 617 Credit Score

A 617 credit score, falling into the “Fair” range for many lenders, can present certain limitations when seeking credit. While approval for loans and credit cards remains possible, the terms offered are often less favorable than those for individuals with higher scores. This typically means higher interest rates, which increases the overall cost of borrowing significantly over the life of a loan.

For mortgages, a 617 score may restrict options to government-backed loans like FHA loans, which have more lenient credit requirements. Conventional loans often require a minimum score of around 620. Borrowers with a 617 score typically face higher interest rates on mortgages, leading to higher overall costs. Auto and personal loans will also likely have elevated interest rates.

Credit cards with a 617 score often feature higher annual fees, lower credit limits, and higher interest rates. A lower credit score can also influence rental applications or insurance premiums. Landlords might require a higher security deposit or deny an application, and insurance providers could charge higher rates for auto or homeowners policies.

Key Factors Affecting Your Credit Score

Credit scores are based on several categories of information in an individual’s credit report. Payment history holds the most weight, typically accounting for 35% of a FICO Score, reflecting whether past credit obligations have been paid on time. Late or missed payments can significantly reduce a score and remain on a credit report for up to seven years.

Credit utilization, the amount owed, is another substantial factor, making up about 30% of a FICO Score. This refers to the percentage of available credit used on revolving accounts like credit cards. Maintaining a low credit utilization ratio, ideally below 30% of total available credit, is advised to positively impact this component. The length of credit history, how long accounts have been open, contributes around 15% to the score.

New credit, including recent applications and opened accounts, accounts for approximately 10% of the score. Multiple credit inquiries in a short period can signal higher risk to lenders and may temporarily lower a score. Finally, the credit mix, or diversity of credit accounts (e.g., credit cards, installment loans), makes up the remaining 10%.

Strategies to Improve Your Credit Score

Improving a 617 credit score involves consistent effort focused on key influencing factors. Paying all bills on time is the most impactful action, as payment history carries the heaviest weight. Setting up automatic payments can ensure timely remittances and prevent missed due dates.

Reducing credit utilization is another effective strategy, aiming to keep balances on revolving credit accounts below 30% of the available limit. Paying down credit card balances before the statement closing date can lower the reported utilization ratio quickly. Individuals can also request a credit limit increase on existing accounts, provided spending does not increase, which lowers utilization.

Managing new credit applications is important, as each results in a hard inquiry that can temporarily lower a score. Opening too many new accounts quickly can be viewed negatively by lenders. Regularly reviewing credit reports from Experian, Equifax, and TransUnion for errors is advised, as disputing inaccuracies can lead to score improvements.

For those with limited credit history, secured credit cards or credit-builder loans can be beneficial. A secured credit card requires a cash deposit, which typically becomes the credit limit, and consistent on-time payments are reported to credit bureaus, establishing a positive payment history. Credit-builder loans involve making regular payments into a savings account or CD, and these payments are reported to credit bureaus, helping to build a positive payment history without receiving funds upfront.