How Good Is a Credit Score of 635?

Jaron Pak

If you have a credit score of 635, you have Fair credit. According to the FICO credit score model, the five credit score ranges are:

  • Poor: 300 to 579.
  • Fair: 580 to 669.
  • Good: 670 to 739.
  • Very Good: 740 to 799.
  • Exceptional: 800 to 850.

A score of 635 puts you solidly below the Good credit score range, which is the minimum threshold for a variety of different credit-related benefits.

At this level, it’s wise to make a concerted effort to improve your score. There are many simple-yet-effective ways that you can do this. However, before you start creating an action plan, it’s wise to consider what factors are already impacting your lower score.

Table of Contents

Why Your Credit Score Is 635

There are countless aspects of your financial behavior that can influence your credit score. Everything from payments to longevity, quantity of debt, and many other elements have likely played a prime role in bringing your score to the 635 level.

Below are several of the most common items considered when calculating a credit score. Review each one and then compare it to your own financial habits. Where are you doing things right? How are you doing things wrong? Make notes so that you can start to build a better picture of how to improve your credit score moving forward.

Payment History

Your payment history makes up 35% of your credit score. As such, it’s the most important item to consider.

Do you make your payments consistently, on time, and in full? If not, it can quickly drag down your score.

Credit Utilization Ratio

If your credit utilization ratio gets to be over 30%, it can also adversely influence your score.

This ratio is derived by dividing the total amount of money that you’ve borrowed against the total amount of credit that you have available. It shows your ability or inability to avoid over-borrowing funds.

Total Debt

The more non-revolving credit you accrue, the more likely it is for your score to go down.

Too much debt shows an inability to pay back borrowed money in a timely manner. This can deter potential lenders from wanting to loan you even more cash that would still have to be paid back.

Credit Age and Mix

If the average age of your credit is low, it can reduce your score. This can be either because you are young and haven’t had a chance to establish a lengthy credit history or because you opened up several new lines of credit recently.

In addition, the variety of your lines of credit can also hurt your score. If you only utilize one or two different forms of credit, it is less impressive to the credit bureaus than if you can responsibly manage car loans, a mortgage, credit cards, and student loans all at the same time.

Derogatory Marks

If you have a derogatory mark on your credit report, it can lower your score. These can come from things like:

  • A bankruptcy;
  • A foreclosure;
  • A repossession;
  • A claim made by a collection agency;
  • Defaulting on a loan.

If a derogatory mark is on your report, it can damage your score for seven years or more.

Hard Inquiries

If you see a hard inquiry on your report, don’t panic. While a credit check of this nature can lower your score, it only does so for a year or less.

A hard inquiry takes place when a lender officially checks your credit before giving you a loan. As long as you don’t have too many hard inquiries in a limited amount of time, it shouldn’t overly impact your score.

What Can You Do With a 635 Credit Score?

While you can do some things with a fair credit score, your options will often be limited. For instance, here are three common borrowing activities that you can technically still partake in, but which may not be easy with a 635 score:

  • Getting housing: If you apply for a mortgage with a score of 635, you may be denied or approved at a very high interest rate. If you try to rent an apartment as an alternative, you may still have to pass a credit check with your landlord. This can lead to stricter rules, such as paying a higher security deposit, as well.
  • Getting a loan: If you apply for a personal loan, such as a home equity line of credit or a car loan, you may face a steep interest rate in order to get approval.
  • Getting a credit card: You may be able to find some credit card lenders that will allow you to open a line of credit.
    • Your score likely means you’ll have to jump through additional hoops, such as paying an annual fee, agreeing to higher interest rates, or accepting a lower borrowing limit.
    • You probably will not qualify for many of the perks and rewards that are reserved for those with good credit, either.

While you aren’t destitute, a score of 635 means you’ll often face an uphill battle as you attempt to go about what are often run-of-the-mill financial activities.

How to Repair a 635 Credit Score

If you have a Fair credit score of 635, you’re still quite a ways away from good credit. In order to improve your score, it’s important that you do more than just one or two things to adjust your financial behavior.

Here are a few suggestions for different activities that can help to boost your credit score. Consider each one and then build your own financial plan to help take your credit north of that all-important 670 point where Good credit begins.

  • Start with a budget: A budget is the foundation of any sound financial plan. It helps you track your behavior and catch issues before they snowball out of control.
  • Utilize your credit wisely: It’s important that you pay down your non-revolving credit as aggressively as possible. At the same time, continue to properly use your revolving credit lines — including perfecting your payment history — to demonstrate your fiscal responsibility.
  • Review your credit report: Request your free annual credit report from the three credit bureaus. Then review each one for errors and derogatory marks.
    • If you find an error, send a dispute letter to the bureau.
    • If you find a mark, resolve the issue, and then send a goodwill letter to the original lender asking to have it removed.
  • Bring in a professional: If you find that you can’t get your score to improve, you may want to consider hiring a professional credit repair company. If you do so, make sure to get a qualified and reputable organization so that you can benefit from genuine professional help.

There are many ways to improve your credit score. The important thing is that you make an effort to do so. You can’t improve your situation through inaction. Instead, consider what activities are hurting your score and then take steps to fix the problem as soon as possible.

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