Is a 585 Credit Score Bad? What It Means for You

A credit score is a numerical summary of an individual’s creditworthiness, used by lenders to assess the risk of extending credit. These three-digit numbers, generated by models like FICO and VantageScore, provide a snapshot of how reliably a person has managed financial obligations. While methodologies differ, both models predict a borrower’s likelihood of repaying debts. A score of 585 generally indicates a higher perceived risk to potential creditors.

Understanding Credit Score Ranges

Credit scores are categorized into ranges, each signifying a different level of credit risk to lenders. While exact thresholds vary slightly between FICO and VantageScore models, general classifications remain consistent. For FICO scores (300-850), a 585 falls into the “Fair” category, though it is very close to the “Poor” range (300-579). VantageScore models also operate on a 300-850 scale, where a 585 score is usually considered in the “Poor” or “Very Poor” range. A score in this lower tier signals a history of missed payments or high debt, increasing the perceived risk of default. Conversely, scores in the “Good” range (670-739 for FICO) and “Excellent” range (800-850 for FICO) suggest responsible credit management, leading to more favorable lending terms.

The Implications of a 585 Credit Score

A 585 credit score carries significant consequences, often leading to less favorable terms or outright denials for credit and services. Individuals with this score are likely to encounter challenges when seeking traditional loans, such as mortgages, auto loans, or personal loans. Lenders perceive a 585 score as indicative of elevated risk, which results in higher interest rates on any approved credit. For instance, a mortgage interest rate could be several percentage points higher, translating to tens of thousands of dollars in additional costs over the life of the loan.

Access to credit cards is also affected, with approvals often limited to secured cards or those with high annual fees and low credit limits. Even if approved for a loan, individuals might face demands for larger down payments or collateral.

A 585 score can complicate housing prospects, as landlords frequently check credit reports during the application process. A low score can lead to rejections, requirements for larger security deposits, or the need for a co-signer.

Insurance premiums for auto and home policies can be substantially higher. Insurance companies use credit-based insurance scores to assess risk, and a 585 score may indicate a greater likelihood of filing claims, leading to increased costs. Utility providers may also require a security deposit before initiating service due to the perceived risk of late or non-payment.

Key Factors Affecting Your Credit Score

Several components determine a credit score, with each factor carrying a different weight in the calculation. Payment history holds the most weight, accounting for approximately 35% of a FICO score. Consistently making payments on time for credit cards, loans, and other financial obligations demonstrates reliability; even a single payment delayed by 30 days or more can significantly reduce a score and remain on a credit report for up to seven years.

The amount owed, also known as credit utilization, is another substantial factor, making up about 30% of a FICO score. This refers to the percentage of available credit being used on revolving accounts, such as credit cards. Keeping credit card balances low, ideally below 30% of the total credit limit, indicates responsible credit management. A high utilization rate suggests a greater reliance on borrowed funds and can negatively impact a score.

The length of credit history contributes approximately 15% to a FICO score. This factor considers the age of the oldest account, the age of the newest account, and the average age of all accounts. A longer credit history with established, well-managed accounts generally benefits a score. New credit, including recent applications and newly opened accounts, accounts for about 10% of the score. Numerous credit inquiries or opening multiple new accounts in a short period can signal higher risk and temporarily lower a score.

Finally, the credit mix, representing about 10% of a score, evaluates the diversity of credit accounts an individual manages. This includes both revolving credit (like credit cards) and installment loans (such as mortgages or auto loans). Demonstrating responsible management of different types of credit can positively influence a score.

Strategies for Credit Score Improvement

Improving a 585 credit score involves consistent financial habits focused on the key factors that influence scoring models. The most impactful action is to make all payments on time, every time, as payment history is the largest component of a credit score. Setting up automatic payments or reminders can help ensure that credit card bills, loan installments, and other financial obligations are never missed. Even a single late payment can have a lasting negative effect.

Reducing credit utilization is another crucial step. Individuals should aim to keep their credit card balances well below 30% of their total available credit limits. Paying down existing debt, especially on credit cards with high balances, can quickly lower utilization and positively impact the score. If possible, paying off balances in full each month is the most effective strategy.

Regularly checking credit reports from all three major bureaus—Experian, Equifax, and TransUnion—is also important. Consumers are entitled to a free report annually from each bureau. Reviewing these reports for errors or inaccuracies and promptly disputing any incorrect information can help remove negative marks that may be lowering the score. Removing such inaccuracies can lead to a score increase.

Avoiding opening too many new credit accounts in a short timeframe is advisable, as each application typically results in a hard inquiry that can temporarily decrease the score. While seeking new credit might be necessary, strategic timing can minimize the impact. Maintaining a healthy mix of credit types over time, such as a combination of installment loans and revolving credit, can also contribute to a stronger score. This demonstrates an ability to manage different forms of debt responsibly. Progress in improving a credit score takes time and sustained effort, often requiring several months to a year for significant positive changes to become evident.