What Does a 637 Credit Score Mean?

What Does a 637 Credit Score Mean?

What Does a 637 Credit Score Mean? A credit score of 637 falls within the “fair” range, a category that spans scores from 580 to 669. While a 637 score is below average, it’s not considered a “bad” credit score. A score in this range might not prevent you from getting credit cards or loans, but it can limit your options and likely result in higher interest rates. Many people are curious about how the credit scoring system works, especially when their score falls into categories like that of 637. Understanding what a 637 credit score implies and how it affects your financial options can help you make smarter decisions. However, Here we will point out overviews of how lenders view a score like 637 and some strategies to improve it.

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What does 637 credit score mean?

Understanding Credit Score Ranges

The credit score range most commonly used by lenders is the FICO score, which ranges from 300 to 850. Here’s a quick breakdown of typical credit ratings and how they impact your ability to access credit:

Credit Score Credit Ratings % of Population
300-597 Poor 16%
580-669 Fair 17%
670-739 Good 21%
740-799 Very Good 25%
800-850 Exceptional 21%

With a 637 score, you fall into the “fair” category, meaning you may qualify for credit, but likely with stricter terms and higher interest rates.

637 Credit Score Credit Card and Loan Options

When applying for loans or credit cards, those with a fair credit score often face some challenges. Here’s what a 637 score might mean for different types of credit:

Credit Card Options for a 637 Credit Score

With a 637 credit score, credit card issuers may ask for a security deposit, especially if you’re applying for a new credit card. This deposit typically ranges from $1,000 to $2000, depending on the card issuer. Another option is to look for starter credit cards through credit unions, they may offer you unsecured cards with low limits and higher interest rates. Keep in mind that making timely payments and keeping your balance below 30% of your credit limit can gradually improve your score.

Personal Loan Options with a 637 Credit Score

While it’s possible to get a personal loan with a 637 score, only a few lenders might approve it, and interest rates could be significantly higher. Instead of opting for high-interest loans that can create long-term debt issues for you, you can give a try and consider credit-builder loans. These loans work by placing the loan amount into a savings account, which you can access after repaying the loan. However, Not only does this help you avoid debt but also positively impacts your credit score.

Home Loan Options with a 637 Credit Score

Most conventional mortgage lenders require a minimum credit score of 620, so a 637 score is technically above this threshold. FHA loans, backed by the Federal Housing Administration, are another option. FHA borrowers with a minimum FICO score of 500 may qualify with a 10% down payment. However, those with scores of 580 or above may be eligible for as low as a 3.5% down payment.

Auto Loan Options with a 637 Credit Score

While you may qualify for an auto loan with a 637 score, the interest rates will likely be higher. Many auto lenders offer loans to those with fair credit. However, the additional cost of high interest can make these loans more expensive in the long run. Improving your score before seeking an auto loan can help you avoid unnecessary costs.

High Utilization Ratio As A Common Factor with a 637 Score

A high credit utilization ratio often close to the limit of available credit can be common for those with fair scores like 637. High utilization negatively impacts your credit score, as it signals to lenders that you’re relying heavily on credit. However, by reducing your credit card balances can help improve this ratio and boost your score.

How to Improve a 637 Credit Score

Improving a fair credit score like 637 is possible with the right strategies. Here are some steps to help you raise your score:

1. Dispute Errors on Your Credit Report

Regularly check your credit report for errors from major bureaus: Equifax, Experian, and TransUnion. Any negative, incorrect accounts can be disputed, potentially improving your score.

2. Consider a Credit Builder Loan

Credit-builder loans are specifically designed to help those with low credit build a better score. The loan amount is placed in a savings account, which you can access after making on-time payments over a set period.

3. Get a Secured Credit Card

A secured credit card requires a deposit as collateral. While it works similarly to a traditional credit card, it reduces risk for the lender and gives you an opportunity to rebuild credit with on-time payments.

4. Become an Authorized User

Being added as an authorized user on a trusted person’s credit card can boost your score. The account holder’s positive payment history can reflect on your report, helping to increase your score over time.

5. Report Rent Payments

Though rent payments aren’t typically reported to credit bureaus, you can sign up with rent-reporting services to have your rent payments included in your credit history. This can be especially useful if you don’t have other loans or credit cards to help build credit.

Therefore, while a 637 credit score is in the fair range, it doesn’t prevent you from obtaining credit or achieving loans for your self. However, it may come with higher costs, such as increased interest rates and stricter loan terms. By understanding your options and focusing on improving your credit through strategic actions, you can raise your score and open doors to better financial opportunities in the future.