A credit score of 653 is not a good credit score. It officially ranks as “Fair” on the FICO credit score model, which consists of the following five tiers:
- Very Poor: 300 to 579.
- Fair: 580 to 669.
- Good: 670 to 739.
- Very Good: 740 to 799.
- Exceptional: 800 to 850.
While a score of 653 is close to the “Good” credit range, that gap of 17 points makes a huge difference in the quality of your credit. If you want to experience the numerous benefits that come with having good credit (anything from 670 to 850), it’s important that you make an effort to repair your score.
Fortunately, since you’re on the higher end of the Fair credit score range, this shouldn’t be too difficult. Below is information, resources, and recommendations to help you crack into the Good credit range.
Table of Contents
Why Your Credit Score Is 653
The first step in improving a Fair credit score is reviewing how your score got to 653 in the first place. It doesn’t matter if your score used to be lower and you’ve already raised it somewhat or it used to be higher and it recently fell.
Regardless, you must try to discover what factors are currently keeping your score at 653. This information is instrumental in helping you figure out what you should do to fix your credit as you move forward.
Here are several of the biggest factors that impact your credit score. Review each one and consider how it has positively or negatively impacted your score.
Your ability or inability to make payments on time makes up over a third of your credit score. How has your past payment history impacted your credit? Even an occasional missed payment can hurt your score.
If you have a consistent struggle with making payments on time, it can lead to things like delinquent accounts, claims from collection agencies, or repossessions. When these take place, they can create a derogatory mark on your credit report.
Get a free copy of your annual credit report and review it for derogatory marks. If you find them, look for ways to fix the situation. Then send a goodwill adjustment letter to the lender asking them to remove the mark.
While you’re reviewing your report, you may also see a hard inquiry or even more than one. These can also lower your score for up to 12 months at a time.
Fortunately, these aren’t due to bad financial behavior. They simply appear when a lender checks your report before giving you a loan. As long as you don’t have too many hard inquiries in a short period of time, you don’t have to worry about them — and once they’re gone, your score should even go up a bit.
Credit Utilization and Total Debt
The state of your revolving and non-revolving credit is also important. The former can be measured by your credit utilization ratio. This is the percentage of your available revolving credit that you’re currently using. If this gets above 30% on your accounts, it may lower your score.
Your total debt considers your non-revolving debt. These are lump-sum loans that you pay back over time. If your total debt is too high, it can damage your score.
Credit Age and Mix
Finally, the average age and variety of your credit are also worth consideration. The older your credit, the better. This is an average calculation that considers all of your credit, which means opening new lines of credit will lower your score.
Additionally, the greater the mix of credit options that you use (e.g. credit cards, auto loans, mortgages, student loans), the higher your score can go.
As you review these areas of concern, make notes. Point out areas where you’re already doing the right thing so that you can reinforce those behaviors. Also, highlight where you could make improvements.
What Can You Do With a 653 Credit Score?
It’s tempting to think that your proximity to the Good credit range means you’re fine. However, as long as you officially have Fair credit, it will haunt your financial activities. For instance, Fair credit may lead to:
- Failing credit checks for an apartment or a job;
- Paying higher security deposits or downpayments for housing;
- Being denied a personal loan;
- Accepting higher interest rates and lower borrowing limits when you are approved for a loan or line of credit;
- Missing out on rewards and bonuses that many credit cards offer to those with good credit.
If you want to avoid the rigmarole and limitations of Fair credit, it’s important to take steps to improve your financial health.
How to Improve a 653 Credit Score
If you’ve read this far, it should be abundantly clear by now that a score of 653 is not good. As long as you have Fair credit, it’s going to hold you back from a variety of financial activities and benefits.
The silver lining is that you’re in much better shape than many others who are working with “Very Poor” or even lower Fair credit scores. With some targeted financial efforts, you can quickly turn your situation around and begin to work into the Good range and beyond. Here are a few suggestions for ways to get started:
- Set up a good budget: Always start with your budget. Use it to live within your means and make all of your payments responsibly, in full, and on time.
- Conquer your credit: Managing credit is key. Pay down non-revolving debt. Stop taking out new loans, as well. Also, continue to use your revolving credit, such as your credit cards, but always pay them off in full.
- Review your credit report: Get a copy of your credit report and review it for errors and derogatory marks.
- Bring in the professionals: You can also tap into a good credit repair company to help you identify your weak spots and take steps to address them.
Repairing your credit takes time, so don’t be discouraged if you fail to see results right away. It’s still well worth the effort. Your credit score is the foundation of future financial freedom. It’s important to do your utmost to keep it in good standing at all times.
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