Is a 628 Credit Score Bad? What It Means & How to Improve

A credit score is a three-digit number that helps lenders assess an individual’s creditworthiness and their likelihood of repaying debt on time. It is generated from information within a person’s credit report, reflecting their financial behaviors and history. Companies use these scores to make decisions regarding loans, credit cards, and even rental applications. A 628 credit score falls within the “Fair” category, indicating a moderate level of credit risk to potential creditors.

Understanding Credit Score Ranges

Credit scores are numerical representations of credit risk, calculated by models such as FICO and VantageScore. Both models range from 300 to 850, with higher scores indicating lower risk. For FICO Scores, the ranges are categorized as Poor (300-579), Fair (580-669), Good (670-739), Very Good (740-799), and Exceptional (800-850). A 628 credit score falls within the “Fair” category for FICO, meaning approval for credit may be possible, but terms offered might not be the most favorable.

VantageScore also uses a 300-850 scale, though its categories have slightly different cutoffs. For VantageScore 3.0, ranges include Very Poor (300-499), Poor (500-600), Fair (601-660), Good (661-780), and Excellent (781-850). A 628 score resides in the “Fair” range under the VantageScore model. This implies an individual demonstrates some credit responsibility, but there may be areas for improvement.

Impact of a 628 Credit Score

A 628 credit score can significantly influence the terms and availability of various financial products. When seeking an auto loan, a score in the “Fair” range often results in higher interest rates compared to those with better credit. For new car loans, individuals with scores in the 601-660 “Near Prime” range might face average Annual Percentage Rates (APRs) around 9.83%, while those with “Prime” scores (661-780) could receive rates closer to 6.70%. This difference in interest can add hundreds or even thousands of dollars to the total cost of the vehicle over the loan term.

Securing a mortgage with a 628 score can be more challenging, and if approved, the interest rates will likely be higher. Lenders assess credit scores to gauge the risk of default. A “Fair” score suggests a moderate risk, leading to less attractive loan terms. This means higher monthly payments and a greater overall cost for borrowing a substantial amount like a mortgage.

Credit card approvals are also affected by a 628 score. Individuals may find themselves approved for cards with lower credit limits, higher interest rates, or those designed for rebuilding credit. Some lenders might decline applications altogether, particularly for cards requiring “Good” or “Excellent” credit. The types of credit available will be more restricted, and favorable terms such as low APRs or attractive sign-up bonuses may be out of reach.

Beyond loans and credit cards, a 628 credit score can impact other aspects of financial life. Insurance providers sometimes use credit-based insurance scores, which correlate with credit scores, to determine premiums. A lower score can lead to higher insurance costs, as it may be perceived as an indicator of increased risk. Landlords frequently check credit scores as part of rental applications to assess a prospective tenant’s financial reliability. A 628 score might lead to requests for larger security deposits, or in some competitive markets, could result in an application being denied.

Improving a 628 Credit Score

Improving a 628 credit score involves consistent financial discipline and strategic actions. Paying bills on time is the single most impactful factor in credit scoring, accounting for approximately 35% of a FICO Score. Establishing a history of timely payments for all financial obligations, including credit cards, loans, and utility bills, demonstrates reliability to lenders. Setting up automatic payments or reminders can help ensure that due dates are never missed.

Reducing credit utilization is another significant step, as it makes up about 30% of a FICO Score. Credit utilization refers to the amount of revolving credit currently being used compared to the total available credit. Financial experts suggest keeping this ratio below 30%, with lower percentages, ideally under 10%, indicating more responsible credit management. This can be achieved by paying down existing balances, making multiple smaller payments throughout the month, or requesting a credit limit increase without increasing spending.

Regularly reviewing credit reports for errors is also important, as inaccuracies can negatively affect a score. Consumers are entitled to a free copy of their credit report annually from each of the three major credit bureaus: Equifax, Experian, and TransUnion. If errors are found, such as incorrect personal information, accounts that are not yours, or inaccurate payment statuses, they should be disputed with both the credit reporting company and the information provider. The credit bureau has 30 days to investigate the dispute.

Limiting new credit applications can help prevent temporary score dips. Each time a person applies for new credit, a “hard inquiry” is placed on their credit report, which can slightly lower the score by a few points for up to 12 months. While the impact is minor and temporary, multiple inquiries in a short period can signal higher risk. It is advisable to only apply for new credit when genuinely needed.

Managing existing debt effectively is also part of the improvement process. While debt consolidation can simplify payments and potentially lead to long-term credit improvement, it may cause a temporary dip in score due to new credit inquiries and account openings. The primary focus should be on creating a structured debt repayment plan to systematically reduce outstanding balances. Consistently paying more than the minimum due on high-interest debts can accelerate repayment and positively impact the credit score over time.