What Is a 637 Credit Score & How to Improve It?

A credit score is a three-digit number that summarizes an individual’s creditworthiness, providing lenders with a quick assessment of their financial reliability. Derived from a credit report, it reflects a consumer’s history of managing debt and making payments. This score influences access to various financial products and services. A higher score generally indicates lower risk to lenders, often leading to more favorable terms for loans and credit lines.

Understanding Your 637 Credit Score

A credit score is calculated by models like FICO and VantageScore, typically ranging from 300 to 850. A 637 credit score falls within the “fair” or “average” credit range. This suggests that while an individual has demonstrated some responsible credit management, there may also be areas indicating a higher level of risk to potential lenders.

Lenders view a fair credit score as indicating moderate risk. This means a consumer may have a history of on-time payments, but also instances of late payments, high credit utilization, or a limited credit history. While obtaining credit might be possible, the terms offered may not be as advantageous as those available to individuals with higher scores. This score suggests a borrower may need to improve their credit profile to access better financial products.

Implications of a 637 Credit Score

A 637 credit score carries specific financial implications across various lending categories. While credit access is generally not denied, terms and conditions are often less favorable than for those with higher scores. For example, a mortgage with a 637 score may come with higher interest rates, potentially increasing the total loan cost by tens of thousands of dollars over its lifetime. This can mean hundreds of dollars more in monthly payments compared to someone with excellent credit.

Similarly, an auto loan for a borrower with a 637 score typically has a higher annual percentage rate (APR), often several percentage points above what a prime borrower receives. This difference impacts the overall cost of the vehicle and monthly installments. Personal loans and credit cards also reflect this trend; credit card offers may feature lower credit limits, higher interest rates, and fewer rewards programs. Some lenders might even require a co-signer or collateral for approval on certain loan types.

Beyond traditional loans, a 637 credit score can affect other aspects of daily life. Landlords often check credit scores, and a fair score might lead to requests for a larger security deposit or even denial in competitive housing markets. Insurance companies may use credit-based insurance scores to determine premiums; a lower score could result in higher rates for auto or home insurance. Utility providers might require a deposit to initiate service if a credit score indicates potential risk.

Key Factors Determining Your Credit Score

Several factors contribute to a credit score, each carrying a different weight. Payment history is the most significant factor, typically accounting for about 35% of a FICO score. This evaluates whether payments have been made on time, as late payments substantially negatively impact the score.

Credit utilization, or the amount owed, is another major component, making up around 30% of the score. This factor assesses the percentage of available credit currently being used; maintaining low utilization, ideally below 30% of total available credit, is beneficial. The length of credit history, accounting for about 15%, considers how long accounts have been open and active.

New credit, representing approximately 10% of the score, includes recent inquiries and newly opened accounts. Opening multiple new accounts in a short period can lower a score by signaling higher risk. Finally, the credit mix, also about 10% of the score, reflects the variety of credit accounts held, such as revolving credit and installment loans.

Strategies for Improving Your Credit Score

Improving a 637 credit score requires consistent effort and strategic financial management, focusing directly on the factors that influence the score. The most impactful step is to ensure all payments are made on time, every time, as payment history is the largest component of a credit score. Setting up automatic payments for all accounts can help prevent missed due dates, which significantly harm a score. Paying at least the minimum amount due by the deadline is essential, but paying the full statement balance is even better.

Another effective strategy involves reducing credit utilization, aiming to keep balances below 30% of the available credit limit on revolving accounts. For example, if a credit card has a $1,000 limit, the balance should ideally remain under $300. Paying down existing credit card balances can quickly improve this ratio, which can positively impact the score. Individuals can also consider requesting a credit limit increase on existing cards, but only if they can resist the temptation to spend more and maintain low utilization.

Avoiding the opening of too many new credit accounts in a short period is also beneficial, as each new application generates a hard inquiry that can temporarily lower the score. Instead, focus on managing existing accounts responsibly to build a solid credit history. Regularly reviewing credit reports from all three major bureaus—Equifax, Experian, and TransUnion—is a prudent step. Disputing any inaccuracies or errors found on these reports can help ensure the score accurately reflects credit behavior.