What Can I Get With a 620 Credit Score?
Discover what financial products and opportunities are realistically available with a 620 credit score, and what terms to expect.
A credit score numerically represents an individual’s creditworthiness, helping lenders assess risk. The FICO score, a widely used model, ranges from 300 to 850. A higher score indicates lower risk and more favorable borrowing terms. A 620 credit score falls into the “fair” category, suggesting areas for improvement and signifying moderate risk to potential creditors.
The 620 Credit Score Landscape
A 620 credit score signals some credit responsibility, yet also presents a degree of risk. While credit may be accessible, it often comes with less advantageous terms than those offered to borrowers with higher scores. Lenders perceive a 620 score as an indication of past challenges, such as late payments or high credit utilization. A significant percentage of consumers with scores in the fair range have reported late payments.
Individuals with a 620 score can anticipate higher interest rates across various financial products, reflecting the increased risk lenders undertake. Approval criteria may also be more stringent, potentially requiring additional documentation or a more thorough review. The selection of lenders willing to offer credit might be more limited. Borrowing is possible, but typically involves a higher overall cost.
Credit Cards and Personal Loans
Obtaining credit cards with a 620 credit score is feasible, often catering to individuals building or rebuilding credit. Secured credit cards are a common choice, requiring a cash deposit that acts as the credit limit. These cards help consumers demonstrate responsible credit behavior. Subprime credit cards are another option, characterized by higher annual fees and elevated Annual Percentage Rates (APRs). Some starter credit cards are also designed for those with fair credit, aiming to help them establish a positive payment history.
Personal loans are accessible with a 620 credit score, but borrowers should expect less favorable terms. Interest rates for individuals with fair credit can range significantly, often falling between 18% and 36% or higher. Loan amounts might also be smaller. Some lenders specialize in providing loans to individuals with fair credit.
Auto Loans and Home Mortgages
Securing an auto loan with a 620 credit score is possible, but borrowers should prepare for higher interest rates. For new cars, average interest rates for individuals with fair credit can be around 9.83%, while those with excellent credit might see rates closer to 6.70%. For used cars, interest rates can be significantly higher, potentially reaching around 13.74%. These elevated rates can substantially increase the total cost of the vehicle.
For home mortgages, a 620 credit score is at the lower end for conventional loans, which usually require this minimum. Borrowers may face higher interest rates and stricter requirements, such as a larger down payment. Government-backed FHA loans are often more accessible, generally requiring a minimum score of 580 for a 3.5% down payment. Many FHA-approved lenders prefer at least 620. Even with FHA approval, borrowers may incur additional costs, such as mortgage insurance premiums.
Other Financial Opportunities
A 620 credit score can influence other financial aspects beyond traditional loans and credit cards. When renting an apartment, landlords often review credit scores to assess a prospective tenant’s financial responsibility. Many landlords prefer a score of at least 620 to 650. Individuals with a 620 score might be required to pay a larger security deposit or secure a co-signer.
Utility service hook-ups, such as electricity, gas, and water, can also be affected by a credit score. Utility companies may conduct a credit check to determine if a deposit is required. If a consumer has a low credit score or a history of delinquent utility payments, a deposit ranging from $100 to $250 might be requested. A letter of guarantee from another individual may be an alternative to a deposit.
Federal student loans generally do not rely on a borrower’s credit score for eligibility. Private student loans, offered by banks and credit unions, do consider creditworthiness. A 620 credit score could lead to higher interest rates for private student loans, and a co-signer might be necessary for approval.