Credit Score Ranges to Avoid

The credit score ranges you fall into when seeking a loan will determine your ability to get financing and the rates you achieve on your debts. A mid-level score of around 650 will typically place you in a situation where you can secure a loan, but you may face challenges in terms and rates. An individual with a score over 700 will have a greater degree of flexibility. A score below 650 can present problems.

Causes of a Low Score

A low score is caused by several factors. Generally, a score below 650 is the result of missed or late payments on a previous debt. Defaults, foreclosures and bankruptcy can cause a debt to dip even further. If your score is low because of an insufficient credit history, you may end up in the same difficult place when it comes time to get a loan.

Overcoming a Low Score

There are two options to overcome a low credit score: you can wait until your score improves through good financial behavior, or you can seek high risk loans. Some lenders will make loans to low credit borrowers. In exchange for taking on extra risk, these lenders will require extra collateral, high interest and higher payments from you.

Did you find this article helpful?