What Can You Do With a 640 Credit Score?

A 640 credit score falls within the “Fair” category on common scoring models like FICO and VantageScore. This score reflects a moderate degree of creditworthiness, indicating how individuals have managed debt and bills over time. While not considered excellent, it avoids the “Poor” classification and is below the national average credit score. A 640 score allows access to various financial products and services, though terms may be less favorable than for consumers with higher scores.

Credit Card Access

A 640 credit score allows access to a range of credit card options. Secured credit cards are a common choice, requiring a cash deposit that determines the credit limit. These cards help build credit as payment activity is reported to credit bureaus.

Unsecured credit cards for fair credit are also available without a security deposit. These cards may come with higher annual fees and variable Annual Percentage Rates (APRs). APRs can range from approximately 23.40% to 29.99%. Responsible use, including consistent on-time payments and low credit utilization, can lead to opportunities for upgrading to an unsecured card with better terms.

Retail store credit cards are another option, but approval criteria vary by retailer. Review terms carefully, as these cards can carry high interest rates. Prioritize cards that report to all three major credit bureaus to facilitate credit improvement. Cards with no annual fees or lower APRs can help manage costs while working to elevate the credit score.

Loan Opportunities

A 640 credit score opens various loan opportunities, each with distinct requirements. While not a top-tier score, it permits access to financing, though sometimes with less favorable conditions.

Mortgage Loans

A 640 credit score makes several mortgage options viable. Federal Housing Administration (FHA) loans are accessible, requiring a minimum credit score of 580 for a 3.5% down payment.

Conventional loans, which are not government-backed, require a minimum credit score of 620, though borrowers with scores of 740 or higher receive more attractive interest rates and can make lower down payments. With a 640 score, conventional loan interest rates may be about 0.50% higher compared to those with a 740 score. If the down payment on a conventional loan is less than 20%, private mortgage insurance (PMI) will be required.

Loans backed by the U.S. Department of Agriculture (USDA) are an option for homes in designated rural areas, requiring a credit score of at least 640 and typically no down payment. VA loans offer no down payment for eligible service members and veterans, with lenders looking for a credit score of at least 620.

Auto Loans

Securing an auto loan with a 640 credit score is possible, though it falls into the “near prime” or “subprime” lending category. Lenders specializing in subprime auto loans cater to borrowers with scores below 660 or 670. These loans come with higher interest rates compared to those for excellent credit, sometimes exceeding 30% APR.

Subprime auto loans may feature shorter repayment periods, commonly ranging from 36 to 72 months, and often require larger down payments. Lenders assess factors beyond the credit score, including consistent monthly income. Compare offers and understand all terms, including potential fees and the total cost of the loan.

Personal Loans

Personal loans are accessible with a 640 credit score. Many lenders have a minimum credit score requirement between 610 and 640 for approval. Interest rates and terms will likely be less favorable than for borrowers with higher scores.

The Annual Percentage Rate (APR) could be higher, as lenders mitigate the perceived risk associated with a fair credit profile. The best rates and most flexible terms are reserved for individuals with good or excellent credit. Exploring options from local banks, credit unions, and online lenders, and considering a co-applicant, may improve approval chances or lead to better rates.

Essential Services and Housing

Beyond traditional loans and credit cards, a 640 credit score influences access and cost for essential services and housing. This score reflects financial reliability, providers consider when extending services or approving applications.

When seeking housing, landlords and property managers review an applicant’s credit score to assess financial responsibility. A 640 credit score falls into a borderline category for many landlords, who often prefer scores of 620 to 670 or higher. Approval with a 640 score might lead to requirements such as a higher security deposit. A landlord may also require a co-signer or guarantor.

For utility services like electricity, gas, or water, a fair credit score may result in a security deposit. Utility companies use credit reports to gauge the likelihood of on-time payments. If an applicant’s credit history suggests a higher risk, a deposit helps protect the company against non-payment.

Insurance premiums, including those for auto and home insurance, are influenced by credit-based insurance scores. These scores are derived from credit report information and are used by most insurers in states where legally permitted. A 640 credit score can lead to higher insurance rates compared to those with higher credit scores. Insurers use these scores to predict the likelihood of an individual filing a claim.