Is a 646 Credit Score Good? What It Means for You

Credit scores are numerical summaries of an individual’s creditworthiness, indicating the likelihood of repaying borrowed money. These scores are a significant factor lenders consider when evaluating applications for various financial products. A higher score generally suggests a lower risk to lenders, which can influence the terms and availability of credit. Understanding your credit score is therefore an important aspect of personal financial management.

What Credit Score Ranges Mean

Credit scores typically range from 300 to 850, with different numerical bands signifying varying levels of credit risk. FICO Scores, used by a majority of top lenders, categorize scores as Poor (300-579), Fair (580-669), Good (670-739), Very Good (740-799), and Exceptional (800-850). VantageScore, another widely used model, also uses a 300-850 range, with a good score generally considered 661 or higher. A 646 credit score falls within the “Fair” category for both FICO and VantageScore models, placing it below the national average FICO score (717 as of April 2024) and the average VantageScore (702 as of March 2024).

What a 646 Score Indicates

A 646 credit score indicates that lenders may view you as a moderate risk borrower, which can affect your access to credit products and the terms offered. While not considered a “poor” score, it suggests you may not qualify for the most favorable interest rates or loan terms.

Securing a mortgage with a 646 FICO score is possible, as conventional loans often require a minimum score around 620. However, interest rates will likely be higher compared to those with “good” or “excellent” credit, potentially adding thousands of dollars to the total cost of the loan. Auto loans are also generally accessible, but a 646 score can lead to significantly higher interest rates, potentially in the range of 4.68% to 11.92% for a new car.

Credit cards may be available, though you might be approved for cards with higher annual fees, lower credit limits, and higher Annual Percentage Rates (APRs). Personal loans can also be obtained, but these may come with less attractive interest rates and fees. In some cases, lenders might require a co-signer or a larger down payment to mitigate the perceived risk. While a 646 score does not prevent you from obtaining credit, it typically means higher borrowing costs and fewer options.

How Credit Scores are Determined

Credit scores are calculated using information from your credit reports, which are maintained by the three major credit bureaus: Experian, TransUnion, and Equifax. The FICO scoring model, widely used by lenders, weighs five main categories to determine your score:
Payment history: Approximately 35% of your score, reflecting consistency in making on-time payments.
Amounts owed (credit utilization): About 30% of the score, assessing how much of your available credit you are using.
Length of credit history: Around 15%, including the age of your oldest and newest accounts.
New credit: About 10%, reflecting recent applications and newly opened accounts.
Credit mix: The remaining 10%, representing the variety of credit types you manage.

Actions to Improve Your Score

Improving a 646 credit score involves consistent financial habits that address the factors influencing your score. Making all payments on time is the most impactful step, as payment history carries the most weight in credit score calculations. Setting up automatic payments can help ensure bills are never missed.

Keep your credit utilization low, ideally below 30% of your available credit limit. Reducing existing credit card balances can significantly help lower this ratio. Avoid opening too many new credit accounts in a short period, as each new application can result in a hard inquiry that temporarily lowers your score. Regularly reviewing your credit reports for errors and disputing any inaccuracies can also help ensure your score accurately reflects your credit behavior.