What Is a Fair Credit Score?
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Written by
Paige Cerulli
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Edited by
Emily Gadd
If you have a fair credit score, you may have some difficulty getting approved for credit. The FICO score ranges from 300 to 850, and a fair credit score falls between 580 to 669 on that range.
A fair credit score signals that you’re a medium-high risk borrower and that you have a medium-high risk of being late on payments or not repaying your debt. As a result, your application for credit might be declined, or a lender might require you to pay a higher interest rate.
Is Fair Credit Considered Good?
Lenders can use your FICO or VantageScore credit to gauge the risk of lending you money. Regardless of which system a lender uses, a fair score is below average. According to the latest FICO data, the average credit score in the United States is 717, which is considered good credit.
How Fair Credit Stacks Up
While a fair credit score gives you more opportunities than a poor score does, it’s not great in the overall credit range. Fair credit suggests that you’re a medium-high risk borrower, so your credit options will be more limited than if you have a good credit score.
A lender might decline your application entirely, especially if you’re applying for a credit card that’s intended for borrowers with very good or exceptional credit. For example, many rewards credit cards require borrowers to have at least good or very good credit.
Higher Interest Rates
If a lender approves you for credit, they might charge you a higher interest rate to make up for the increased risk of lending you money. Some lenders might also require you to pay an upfront fee to help offset the risk.
There are still plenty of opportunities if you have fair credit, though. You may qualify for a credit card designed for borrowers with fair credit. If you need a loan, like a car loan, you may still be able to get one if you have a cosigner. By making all of your payments on time and repaying your debt, you can improve your credit score.
What Is Considered a Fair Credit Score?
The majority of lenders use your FICO score when evaluating a credit application. The FICO score ranges from 300 to 850, and credit may be poor to exceptional:
- Exceptional: 800 – 850
- Very good: 740 – 799
- Good: 670 – 739
- Fair: 580 – 669
- Poor: 579 and under
Lenders also have the option of using the VantageScore scale, which also ranges from 300 to 850. The VantageScore uses four credit ranges:
- Superprime: 781- 850
- Prime: 661 – 780
- Near prime: 601 – 660
- Subprime: 300 – 600
The “near prime” range is considered a fair credit score. While a score of 580 would be considered fair using the FICO score, with VantageScore, you’ll need a score of at least 601 to have fair credit. So, whether or not you have fair credit partially depends on which score type a lender reviews.
Many factors contribute to your credit score.
- Your credit payment history. Your credit payment history often has the most impact on your credit score. A history of on-time payments will contribute to a higher score. Missed payments or any accounts that have been sent to collections will lower your score.
- Credit usage. How you use credit also has a significant impact on your score. Ideally, you want to keep your credit utilization ratio down. Your credit utilization ratio refers to the percentage of your available credit that you’re using.
- Credit age. Your credit score is partially based on the average age of all of your accounts. The greater your credit age, the higher your score will be.
- Mix of credit types. A variety of credit types, such as a credit card and a vehicle loan, can help boost your credit score. In contrast, if you have just one type of credit, like a single credit card, your score will be a bit lower.
How to Improve a Fair Credit Score
Your credit score changes over time and is based on your financial activity. That means there are many ways you can improve your credit.
- Pay bills on time. Focus on reliably paying all of your bills on time. Consider signing up for automatic bill payment to ensure you don’t miss any payments.
- Reduce your credit utilization. Work to use only part of the credit that you have available. It’s best to keep your credit utilization on credit cards below 30%. For example, if your credit card has a $4,000 limit, keep your balance to $1,200 or less.
- Monitor your credit report. Use a free credit monitoring service to regularly check your credit report. Look for any unauthorized or incorrect charges and have them corrected to ensure your score is accurate.
- Use credit cards responsibly. Opening one of the best credit cards for bad credit and using it responsibly — that is, paying your bill in full and on time each month — can boost your score over the long term.
Products for Fair Credit Borrowers
You can also strategically apply for credit that will help you build up your credit score.
Secured Credit Cards
A secured credit card requires a deposit, but then you can use and pay down the card repeatedly to build your credit. Some secured cards even offer rewards, so you’ll earn extra perks on your spending.
Credit-Builder Loans
Alternatively, you might apply for a credit-builder loan. This small loan is designed for individuals with poor or low credit. The lender will put the loan amount into a savings account or certificate of deposit.
You will make regular payments on the loan, with interest. Once you’ve paid off the loan, you’ll have access to the loan balance. A credit-builder loan can demonstrate your ability to make regular, on-time payments, boosting your score.
Common Myths About Fair Credit Scores
Let’s dispel some common myths:
Myth 1: Fair Credit Means Bad Credit
Fair credit isn’t bad, and it’s a level above poor credit. With fair credit, you can still qualify for some credit cards and loans, but you’ll have limited options and will pay a higher interest rate.
To maximize your credit opportunities and save on interest, it’s best to work toward a good credit score.
Myth 2: You Can’t Qualify for Loans With Fair Credit
You can qualify for loans with fair credit, but your loan options may be more limited than if you had a good or very good credit score.
With fair credit, you may need a cosigner for certain loans, and you may pay a higher loan origination fee and interest rate. You may be able to qualify for credit-builder loans, which can help you increase your credit score.
Myth 3: Checking Your Score Will Hurt It
When you check your score, you’re performing a soft inquiry, which doesn’t lower your score. You can check your score every month or more without harming it.
When lenders check your score to open a new account, such as when you apply to open a credit card, they perform a hard inquiry. A hard inquiry can lower your score by a few points, but it will recover in time.
How Lenders View Fair Credit
When lenders approve a credit application, they’re assuming the risk that you might not make your payments or could even default on a loan. Your credit score indicates how you’ve handled past credit, and it helps lenders estimate whether you’re likely to repay the credit they give you. While fair credit isn’t a bad score, it’s lower than average.
A lender is taking on more risk when they give credit to an individual with fair credit than when lending to an individual with good or very good credit.
Home and Auto Loans
Credit scores are particularly critical in certain industries, such as auto loans and mortgages. Since lenders are loaning you large amounts of money that you’ll need to repay over many years, the lenders need to be extra certain that you will repay the loan.
In addition to reviewing your credit score, lenders will also look at your credit history and income to determine if they should approve your application. Still, working to improve your credit score can increase your chances of being approved and may help you get a lower interest rate.
The Importance of Monitoring Your Credit Score
Free credit monitoring tools can help you monitor your credit score and credit report. These tools can alert you to changes that could affect your score, like the opening or closing of an account, or payments that you missed or made late. Many of these tools break down the elements that contribute to your score so you identify what you need to do to boost your score.
Carefully monitoring your credit score and credit report can also help you catch fraud early. If you see a charge or account that you didn’t open, you can quickly file a dispute with the credit reporting agency to have the error corrected. If your identity has been stolen, regularly monitoring your credit report can help you to discover the issue and quickly take steps to protect yourself.
Fair Credit Is a Stepping Stone
A fair credit score indicates to lenders that you’re a medium-high risk borrower, so your credit options may be limited. You will also likely pay a higher interest rate than you would if you had a good or higher credit score. There are still plenty of credit options available if you have fair credit, including secured credit cards and credit-builder loans. You can use these options to improve our credit score.
With fair credit, you have an opportunity to improve your financial future. Take control of your credit score today and unlock better financial opportunities.
Frequently Asked Questions
A fair credit score has drawbacks and limitations, but there are still many credit opportunities available to you. These answers to some frequently asked questions will help you better understand your credit score and how it impacts your finances.
What is considered a fair credit score?
A fair credit score is a FICO score from 580 to 669 or a VantageScore from 601 to 660.
Is fair credit good enough to get a loan?
You can get a loan with fair credit, but your options will be more limited than if you had good or higher credit. Having someone with better credit co-sign a loan can increase your chances of being approved and may help you get a lower interest rate.
Credit-building loans can also help you to boost your credit score, but you’ll only have access to the money after you’ve paid off the loan’s balance with interest.
Can I qualify for a credit card with fair credit?
Lenders offer credit cards for individuals with fair credit, but you’ll usually pay a higher interest rate.
You can apply for a secured credit card. You’ll need to pay a deposit before you use the card, but a secured card can help you build up a regular payment history to improve your credit score.
How long does it take to improve a fair credit score?
Improving a fair credit score takes time. Credit scores update about once a month, so it’s possible that you may see small improvements to your score soon.
Think of improving your credit score as a long game and focus on developing and maintaining good financial management habits.
Does having fair credit hurt my chances of renting a home?
Some landlords check potential renters’ credit scores. Since the housing market is so competitive, it’s possible that a landlord would choose renters with a higher credit score.
Improving your credit can help make your rental application as strong as possible.
