Is a 590 Credit Score Bad? What It Means and How to Improve It

A credit score represents an individual’s creditworthiness, indicating the likelihood of repaying borrowed funds. Lenders use these scores to assess risk when evaluating applications for loans, credit cards, or other forms of credit. Models like FICO and VantageScore generate these scores, which typically range from 300 to 850. This article clarifies what a 590 credit score signifies and outlines steps to improve it.

Understanding Credit Score Ranges

Credit scoring models categorize scores into ranges to help lenders gauge a borrower’s risk. While exact thresholds vary slightly between FICO and VantageScore, general categories are consistent. Scores typically fall between 300 and 850, classified as Excellent, Very Good, Good, Fair, or Poor.

A 590 credit score generally falls into the “Poor” or “Very Poor” category across both major credit scoring models. FICO scores categorize anything below 580 as “Poor,” while VantageScore often places scores below 600 in a similar lower tier. This signals to lenders that a 590 score may represent a higher lending risk due to past credit behaviors.

Practical Implications of a 590 Credit Score

A 590 credit score presents significant challenges when securing financing, often leading to limited options and unfavorable terms. Individuals seeking an auto loan may find it difficult to qualify for traditional financing and, if approved, will likely face higher interest rates, potentially 15% to 25% or more annually. Personal loans are also difficult to obtain, often requiring co-signers or offering high annual percentage rates (APRs) exceeding 30%. For mortgages, a 590 score typically prevents qualification for conventional loans, often requiring government-backed options like FHA loans. These loans necessitate a larger down payment, usually at least 3.5% of the home’s value, and may involve higher mortgage insurance premiums.

Access to credit cards is severely restricted with a 590 credit score. Most unsecured credit card applications are denied, pushing individuals towards secured credit cards. These cards require a cash deposit, typically $200 to $2,500, which acts as the credit limit. Even with secured cards, APRs can be high, often above 20%, and annual fees may apply. Beyond traditional credit, a low score can influence housing applications, as landlords may require a higher security deposit, such as two or three months’ rent, or deny the application. Utility companies might also demand a security deposit before establishing service, and insurance providers could charge higher premiums for auto or home insurance.

Common Factors Influencing a Low Credit Score

Several factors contribute to a low credit score, with payment history being the most significant. Missing or late payments can severely damage a credit score. Account delinquencies that go to collections, charge-offs by creditors, or bankruptcy filings remain on credit reports for several years and exert a substantial negative impact. These events signal to lenders a pattern of financial instability or an inability to meet financial obligations.

Credit utilization, the amount of revolving credit used compared to total available credit, plays a substantial role. Maintaining high balances on credit cards, especially when they approach or exceed 30% of the available credit limit, can negatively affect a score. A short credit history, meaning the average age of all credit accounts, can limit a score’s potential, as lenders prefer to see a longer track record of responsible credit use. A mix of credit types, such as installment loans and revolving credit, can positively influence a score, while numerous recent credit inquiries or opening many new accounts in a short period can temporarily lower it.

Steps to Improve a 590 Credit Score

Improving a 590 credit score requires consistent effort and disciplined financial habits. The primary action is to make all payments on time, as payment history accounts for a large portion of a credit score. Setting up automatic payments for bills and loans can help ensure punctuality and avoid late fees. Gradually reducing credit card balances is an important step, aiming to keep credit utilization below 30% of the available credit limit. For example, if an individual has a $1,000 credit limit, keeping the balance below $300 would be beneficial.

Regularly reviewing credit reports from all three major bureaus—Equifax, Experian, and TransUnion—is important. Consumers are entitled to a free report annually, and checking for and disputing any inaccuracies or fraudulent activity can help remove negative entries. For those with limited credit history or past issues, considering a secured credit card or a credit-builder loan can be effective. A secured card helps build positive payment history, while a credit-builder loan involves making regular payments into a savings account, which are then reported to credit bureaus. Avoid opening too many new credit accounts simultaneously, as each new inquiry can temporarily lower a score, and maintaining older, positive accounts can help preserve the length of credit history.