Is a 635 Credit Score Good? And How to Improve It

A credit score is a numerical representation of an individual’s creditworthiness, influencing financial opportunities from securing loans to renting an apartment. Understanding your credit score is essential for making informed financial decisions.

Understanding Credit Score Ranges

Credit scores are calculated by major credit bureaus like Experian, Equifax, and TransUnion, using models such as FICO and VantageScore. These scores range from 300 to 850, with higher scores indicating lower risk to lenders. A 635 credit score generally falls within the “Fair” or “Near Prime” range.

FICO scores categorize “Fair” credit from 580 to 669, and VantageScore places “Fair” credit between 601 and 660. Lenders view individuals with scores in this range as posing a higher risk compared to those with higher scores, but they are often eligible for various financial products.

Impact of a 635 Credit Score

A 635 credit score impacts access to financial products and their terms. For mortgages, a score around 635 may make it challenging to qualify for conventional loans, often requiring options like FHA loans. Interest rates for mortgages with a 635 score are higher than for borrowers with good or excellent credit, resulting in increased monthly payments and total interest paid. For example, a 30-year fixed mortgage could see higher annual percentage rates (APRs) compared to someone with a score above 740.

For auto loans, a 635 credit score falls into the “Near Prime” category for VantageScore users. In the first quarter of 2025, borrowers in the “Near Prime” range (601-660) faced average new car loan APRs around 9.83% and used car loan APRs around 13.74%. This contrasts with “Super Prime” borrowers (781 or above) who might secure new car loan APRs around 5.18% and used car loan APRs around 6.82%. The difference in interest rates can lead to thousands of dollars more paid over the loan’s life.

For credit cards, approval is possible, but individuals with this score are more likely to be approved for secured credit cards or cards designed for building credit. These may come with higher interest rates and annual fees. Mainstream rewards credit cards typically require a score of 670 or higher for better approval odds. A credit score can also influence other areas, such as renting an apartment or insurance premiums, as landlords and insurers often review credit history.

Factors Influencing Your Credit Score

Several key components contribute to the calculation of a credit score. Payment history is the most significant factor, typically accounting for 35% to 40% of a FICO or VantageScore. Consistent on-time payments demonstrate reliability, while even a single late payment, especially if 30 days or more past due, can negatively impact the score and remain on the credit report for up to seven years.

Credit utilization, which is the amount of revolving credit used compared to the total available credit, is another substantial factor, making up about 30% to 34% of the score. Keeping credit card balances low, ideally below 30% of the credit limit, signals responsible credit management. A high utilization rate suggests a greater reliance on credit, which can lower a score.

The length of credit history, representing how long accounts have been open and actively used, accounts for approximately 15% of the score. Longer credit histories generally indicate more experience managing credit. New credit inquiries, which occur when applying for new loans or credit cards, typically make up about 10% of the score. Multiple hard inquiries in a short period can suggest higher risk and may slightly lower the score. The mix of credit types, such as having both installment loans (like mortgages or auto loans) and revolving credit (like credit cards), contributes around 10% to the score.

Steps to Improve Your Credit Score

Improving a 635 credit score involves consistent effort. Prioritizing on-time payments is important, as payment history is the most influential factor in credit scoring. Setting up automatic payments or reminders for all bills can help prevent missed due dates and build a positive payment record.

Reducing credit utilization is another effective step. Paying down existing credit card balances and keeping them below 30% of the available credit limit, or even lower, can boost a score. Paying the full statement balance each month is ideal to avoid interest charges and maintain low utilization.

Regularly reviewing credit reports for errors is important. Individuals are entitled to a free copy of their credit report from each of the three major bureaus annually through annualcreditreport.com. Disputing any inaccuracies can help improve the score. Avoiding opening too many new credit accounts in a short period is advisable, as each application results in a hard inquiry that can temporarily lower the score. Maintaining older accounts, even if inactive, can also benefit the length of credit history.