What Can I Get With a 606 Credit Score?

A credit score is a three-digit number that helps lenders assess an individual’s financial reliability and their likelihood of repaying borrowed money. Lenders utilize these scores to evaluate the risk involved in extending credit and to determine the terms, such as interest rates, they might offer. FICO scores, widely used, range from 300 to 850. A score of 606 generally falls within the “fair” credit range, considered to be between 580 and 669. This score indicates to lenders that there may be some risk associated with lending.

Understanding Credit Products

Individuals with a 606 credit score can access various credit products, though the specific terms and availability will reflect this fair credit standing. Credit cards are available, with secured credit cards being a common and accessible option. These cards require an upfront security deposit, which becomes the credit limit, and are designed to help individuals build or rebuild their credit history through responsible use. Issuers of secured cards report account activity to the three major credit bureaus, aiding in credit improvement.

Unsecured credit cards, which do not require a deposit, are also obtainable for those with a 606 score, but these come with specific conditions. Such cards have higher annual fees and elevated annual percentage rates (APRs). While approval is possible, the range of available unsecured cards is limited compared to what is offered to applicants with higher credit scores.

For automotive financing, a 606 credit score allows for loan approval, especially for used vehicles. Auto lenders work with borrowers in the fair credit range, accepting scores as low as 580 or 600. While options exist for both new and used cars, individuals with fair credit find more favorable terms when financing a used vehicle due to the lower overall loan amount.

Personal loans are another financial product accessible with a 606 credit score. Lenders that specialize in working with consumers who have less-than-perfect credit histories provide these loans. While eligibility is possible, the terms offered are less advantageous than those extended to borrowers with higher scores. Some lenders also offer secured personal loans, which require collateral, leading to more favorable terms or easier approval.

When considering homeownership, a 606 credit score presents more significant challenges for conventional mortgages. These loans require a minimum credit score of 620. However, government-backed mortgage programs offer more flexibility for borrowers with fair credit.

Federal Housing Administration (FHA) loans are a notable option, as they accept credit scores as low as 580 for a down payment of 3.5%. Some FHA-approved lenders, however, prefer a credit score closer to 620. For eligible veterans, service members, and their surviving spouses, VA loans do not have a minimum credit score requirement set by the Department of Veterans Affairs; rather, individual lenders set their own criteria, which may accommodate a 606 score. Additionally, USDA loans, designed for properties in eligible rural areas, also allow lenders to set their own credit score requirements, making them accessible with a 606 score.

Lenders conduct a comprehensive review of an applicant’s financial profile, which includes income, employment history, and debt-to-income ratio, alongside the credit score.

Expected Terms and Conditions

When securing credit with a 606 credit score, individuals encounter less favorable terms compared to those with higher scores. Interest rates across various credit products are elevated, reflecting the increased risk perceived by lenders.

For credit cards, particularly unsecured options, annual percentage rates (APRs) exceed 28% or even 30%. This means that carrying a balance can become quite costly over time due to substantial interest accrual.

Auto loans for someone with a 606 score generally come with higher average APRs. For new cars, average rates are around 9.83%, while used cars are closer to 13.74%. These rates are considerably higher than those offered to borrowers with prime credit, leading to higher monthly payments and a greater total cost of the vehicle over the loan term.

Personal loans also reflect the higher risk associated with a 606 score, with interest rates that reach up to 36%. Borrowers in this credit range are offered rates at the higher end of this scale. The specific rate depends on the lender, the loan amount, and the repayment term, but it is less competitive than rates available to individuals with stronger credit profiles.

For mortgages, a 606 score means higher interest rates on any approved loan. While government-backed options like FHA loans are more accessible, they come with mandated mortgage insurance premiums (MIP). This includes an upfront premium of 1.75% of the loan amount, and annual premiums ranging from 0.40% to 0.75% of the loan balance. If the initial down payment is less than 10%, these annual premiums are required for the entire life of the loan, adding significantly to the overall cost of homeownership.

Down payment requirements can also be impacted. For FHA loans, a 3.5% down payment is standard for scores of 580 and above. A higher down payment could strengthen an application with a slightly lower score, though this is not a guarantee of approval.

Beyond interest and down payments, other fees and charges are common. Loan origination fees, which cover the lender’s administrative costs for processing a loan, range from 0.5% to 1% or more of the loan amount. These are applied to personal loans and mortgages. Credit cards for fair credit carry annual fees, and all credit products include late payment penalties or other service charges.

Loan amounts offered are also lower for individuals with a 606 score. Lenders mitigate risk by limiting the amount of credit extended. In scenarios where a borrower’s credit score makes approval difficult or terms unfavorable, a co-signer or collateral is beneficial. A co-signer, who shares responsibility for the debt, improves approval odds and leads to better interest rates or higher loan amounts. Similarly, offering collateral, such as a vehicle for a secured personal loan, reduces lender risk and results in more accessible credit or improved terms.

Broader Financial Implications

A 606 credit score extends its influence beyond loan and credit card approvals, affecting other aspects of an individual’s financial life. When applying for rental housing, landlords assess credit scores to gauge an applicant’s financial responsibility. While there is no universal minimum, landlords and property managers prefer scores of 620 to 650 or higher. With a 606 score, which is below this preferred range, a prospective tenant may face requests for a higher security deposit, equivalent to two or three months’ rent, or require a co-signer to mitigate the landlord’s perceived risk.

Utility service providers, including electricity, gas, water, and internet companies, consider credit scores when establishing new accounts. A 606 score signals a moderate risk to these companies, leading them to require a security deposit before initiating service. The amount of this deposit varies, ranging from $100 to $400 or more, depending on the service type and estimated usage.

Insurance premiums for auto and homeowners policies are also influenced by a credit score in the fair range. Insurers utilize credit-based insurance scores, which are derived from elements of an individual’s credit history. Actuarial data correlates lower credit scores with a higher likelihood of filing insurance claims. Consequently, a 606 credit score could result in higher premiums for both car and home insurance, as insurers price policies based on perceived risk.

In some employment contexts, particularly for positions involving financial oversight or access to sensitive information, employers conduct credit checks. These checks are regulated by the Fair Credit Reporting Act, requiring the employer to obtain written consent from the applicant. Employers receive a modified version of the credit report, which does not include the actual credit score, and this inquiry is considered a “soft inquiry” that does not negatively impact the credit score. While some states have restrictions on the use of credit checks for employment purposes, a challenging credit history is a factor in hiring decisions for certain roles.