Credit Score of 640: Good or Bad?

640 credit score

A credit score is a number with three digits (created by looking at a wide range of elements) that allow lenders to gauge a person’s credit worthiness. This post focuses on the credit score of 640. We’ll look at several things, for instance what you can do with that score, and if it’s good or bad.

What is a Good Credit Score in the US?

The most widely-used credit scoring model that helps lenders determine your creditworthiness is the FICO® Score. This model has scores ranging from 300 to 850.
• 800 or above is considered to have “exceptional” credit score.
• 740-799 are considered “very good” credit scores.
• 670-739 are considered “good” credit scores.
• 580-669 are considered “fair” credit scores.
• 579 is considered a “poor” credit score.

Most lenders consider a FICO® score of 703 “good”. In the second quarter of 2019, around 21% of Americans registered a score that was over 670 and only around 58% and had a FICO® score of 703 or higher.

Can a 640 Credit Score Get a Mortgage?

A significant number of Americans normally have credit problems when faced with life’s issues such as employment loss, health problems, a lack of credit, or even a global pandemic. In many cases it takes a while to recover, and unfortunately, this can mean postponing the buying of a home.  However, all hope is not lost with a low credit score and it may still be possible to acquire a mortgage.  There are mortgage options with a 640 score but your interest rate will be affected.

How to Increase a Credit Score of 640?

Dispute Negative Accounts: If you have evidence that your credit report’s negative information is false (or that there’s a lack of the necessary documentation for the source of information), you can challenge the record and get it removed or corrected.

Pay Off Collections Accounts: This can possibly improve your scores but always try to have the creditor provide a Deletion Letter that will allow the account to be completely removed if the account is paid off.

Reduce Utilization: Each month, strive to utilize no more than 30% of the credit available on your credit card accounts. This is a significant factor in determining your score.  Some things you can do to decrease credit utilization include paying several times per month, making bigger payments and spending less.

Pay On Time: The most vital credit score element is payment history. Not delaying monthly payments provides the borrower with a good track record and shows responsibility on their part. Late payments (even a single one) will negatively affect your credit score in a substantial way.

640 Credit Score Mortgage Loan

Keep in mind that only a few lenders give loans to borrowers with “fair” credit. This is because many lenders see it as a greater risk. Nonetheless, there are numerous lenders who will accept scores in the low 600’s. Note that the interest rates charged will probably be higher. Before you apply, identify lenders that will work with fair credit scores. There is no point in applying for a mortgage if you know your score is below the Lender’s credit threshold. 

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