When you apply for new products, lenders use your credit score as a key indicator of your creditworthiness. You probably already know that the higher your credit score, the more likely it is that your application will be accepted, but how does your credit score of 650 compare, and what options are available to you with this rating?
According to Borrowell, the average Canadian credit score is 672, meaning a 650 score is slightly below average. Credit scores are measured from 300 to 900 and fall into five ranges from Poor to Excellent. A 650 score falls within the âBelow Averageâ range. You need a score between 713 and 750 to fall within the âGoodâ range.
Despite the fact that a credit score of 650 is regarded as “below average,” you can still be approved for a number of credit products, and with responsible use, you should be able to raise your score over time. Â.
In the Canadian financial landscape your credit score reigns supreme as a crucial indicator of your creditworthiness. Lenders use this three-digit number ranging from 300 to 900, to assess your ability to repay borrowed funds. A higher score signifies a lower risk of default, unlocking doors to favorable loan terms, credit card rewards, and other financial opportunities.
But what if your credit score falls within the “fair” range, specifically at 650? Is it a cause for concern, or is it a stepping stone towards a brighter financial future? Let’s delve deeper into the intricacies of the 650 credit score in Canada and explore strategies to elevate your financial standing.
Understanding the 650 Credit Score Landscape
According to Equifax Canada, a 650 credit score falls within the “fair” range, indicating a moderate level of creditworthiness. While not considered exceptional, it’s not a reason to despair. It signifies that you have established a credit history and have demonstrated some responsible borrowing behavior.
Decoding the Credit Score Factors
Several factors contribute to your credit score, each with varying weightage:
- Payment History (35%): This is the most crucial factor, accounting for 35% of your score. Timely payments on loans, credit cards, and utility bills demonstrate your reliability and commitment to financial obligations.
- Credit Utilization Ratio (30%): This refers to the percentage of your available credit that you’re currently using. Aiming for a utilization ratio below 30% indicates responsible credit management.
- Credit History Length (15%): A longer credit history with a proven track record of responsible borrowing positively impacts your score.
- Credit Mix (10%): Having a diverse mix of credit products, such as credit cards, loans, and mortgages, demonstrates your ability to manage different types of credit.
- New Credit Inquiries (10%): Frequent applications for new credit can negatively impact your score.
Navigating the Financial Landscape with a 650 Credit Score
If your credit score is 650, you might have trouble getting approved for some financial products. However, don’t let this discourage you. Here are some options you might consider:
- Secured Credit Cards: These cards require a security deposit, which acts as collateral, making them a viable option for building credit.
- Personal Loans: While interest rates might be higher, personal loans can help you establish a positive payment history and improve your score.
- Mortgages: Qualifying for a mortgage with a 650 credit score might be challenging, but some lenders may offer options with higher interest rates.
Strategies to Elevate Your Credit Score
The journey to a higher credit score requires dedication and consistent effort. Here are some proven strategies to boost your score:
- Pay Bills on Time: Make timely payments on all your bills, including credit cards, loans, and utilities. Even a single late payment can significantly impact your score.
- Reduce Credit Card Balances: Aim to keep your credit utilization ratio below 30%. Paying down existing balances and avoiding maxing out your cards can significantly improve your score.
- Establish a Mix of Credit: Having a diverse mix of credit products, such as credit cards, loans, and mortgages, demonstrates your ability to manage different types of credit responsibly.
- Limit New Credit Inquiries: Avoid applying for multiple new credit products within a short period, as each inquiry can temporarily lower your score.
- Monitor Your Credit Report: Regularly check your credit report for errors and dispute any inaccuracies promptly.
A 650 credit score in Canada might not be the pinnacle of financial achievement, but it’s a solid foundation to build upon. By adopting responsible credit management practices and implementing the strategies outlined above, you can steadily elevate your credit score and unlock a world of financial opportunities. Remember, a higher credit score translates to lower interest rates, better loan terms, and a brighter financial future.
Getting a Car Loan with a 650 Credit Score
Even with a credit score of 650, you can still be able to obtain a car loan, but the amount you can finance may be restricted. Additionally, you ought to budget for greater interest rates and a bigger down payment than you would have if your score had been in the Good or Excellent range.
Depending on the lender, a car loan in Canada may have a minimum score requirement, and there are numerous programs available for borrowers with poor credit. These programs usually have high interest rates, so you will have to pay more for your car, but they can be a good choice if you are in a rush to buy a new car. Â.
Even if your credit score is below average, lenders are less likely to take a chance on you because the car itself can be used as collateral for a car loan. Â.
Getting a Line of Credit with a 650 Credit Score
You can get a line of credit with a credit score of 650, but you won’t be able to use cards with great rewards or cashback rates. Additionally, the interest rates for the cards you qualify for will likely be higher than average.
The amount of credit you qualify for with a 650 credit score may also be lower than usual. Your annual income and your payment history influence credit limits. By responsibly managing any credit you have access to, you will soon improve your score. If you are able to raise your score to the â¨Fair⧠range (660 to 712) you will have a lot more options. Â.
What credit card can I get with a 650 credit score Canada?
FAQ
What can I get approved for with a 650 credit score?
How common is 650 credit score?
What’s the average Canadian credit score?
What is a 650 credit score in Canada?
A 650 credit Score in Canada is considered below average, but it’s easy to move up the ranks! A credit score is an important financial tool that measures how likely you are to repay your loans as agreed. In Canada, credit scores range from 300 which is very poor, to 900 which is the best.
What is a good credit score in Canada?
A credit score is an important financial tool that measures how likely you are to repay your loans as agreed. In Canada, credit scores range from 300 which is very poor, to 900 which is the best. According to Equifax, one of the major credit bureaus in Canada, a 650 credit score is classified as “fair,” on a scale from “poor” to “excellent.”
What does a 650 credit score mean?
Having a 650 credit score basically means you are within the acceptable boundaries of risk for lenders. As a result, you will qualify for some financial products like mortgages, but likely at a higher interest rate than someone with better credit. According to Equifax, the range of credit scores from 300 to 900 is divided into five categories:
Can you get credit with a 650 credit score?
If your accounts are in good standing, you can still secure credit with a 650 credit score. The products available will be more limited than if your score was higher, and you may be stuck paying higher interest rates. Still, if you’re strategic with how you use credit, you should be able to improve your score relatively quickly.