According to Experian, one of the world’s most respected credit score reporting bureaus, a credit score of 580 officially ranks as “Fair,” though it’s only a single point from ranking as poor.
While this ranking does eclipse the minimal qualifications for a “Very Poor” score, it nevertheless means you must improve your credit usage habits to reach a “Good,” “Very Good,” or “Exceptional/Excellent” score. By so doing, you could see financial benefits and low interest rates.
Your credit score is more than just a single number. Rather, it’s the result of an equation that together represents your creditworthiness. Creditworthiness is the measure of how suitable you are to receive and repay loans, according to potential lenders.
Factors like credit age, payment history, and credit type all affect your overall credit score, making it either easier or more difficult to obtain new lines of credit depending on the score itself.
Borrowers receive credit reports via a variety of different sources. Some consumers prefer to receive regular credit reports, either directly from their credit card company or financial institution, or a free, third-party credit reporting agency like AnnualCreditReport.com. Other individuals may only see updated credit scores when they view the results of a credit agency’s hard inquiry.
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Why Your Credit Score Is 580
It’s not possible to determine exactly which factors are contributing to your credit score of 580, though common influences on Fair credit scores often include total debt, payment history, and credit age. And as always, full payments made toward your balances can help further improve your credit score toward a Good ranking.
Total Remaining Debt
One of the biggest reasons for a lower-ranking credit score is simply the remaining overall balance yet to be paid off. Especially if you find yourself struggling to repay debts from several concurrent credit lines, your outstanding loans could be heavily weighing down your credit score.
When repaying loans, look to prioritize loans that have defaulted, as well as loans due to any collections agencies. Once these debts have been eliminated, address balances with especially high interest rates before systematically paying off credit across the board.
Existing Payment History
An individual with a history of complete, on-time payments is benefiting his or her overall credit score. Conversely, you can expect a lower credit score if you’ve made only incomplete or partial payments, or if you’ve missed payments entirely. Successive months with missed payments mean further credit score demotions.
With a credit score of 580, you’ve likely missed one or more payments toward your overall balance. Here’s what you need to know: payment history is the number one ranking factor in determining your overall credit score.
Your credit score can single-handedly qualify or disqualify you for a mortgage, personal loan, or credit card. Accounting for 35% of your total credit score, payment history should remain a priority if you’re dedicated to improving upon your existing 580 credit score.
Age of Your Credit
The overall age of your credit can also influence your overall credit score. With a credit score of 580, there’s a good chance that your accounts have not been active for a sufficient amount of time to positively impact your ranking.
Even though it takes different individuals different amounts of time to achieve favorable credit scores, the age of your credit can help bolster your credit score, especially after months of account activity when accounts themselves begin to mature.
What Can You Do With a 580 Credit Score?
A credit score of 580 means you’re likely facing challenges when it comes to securing loans, new lines of credit, apartment and mortgage loans, even low car insurance premiums.
Until you improve your credit score, it’s likely that you will only qualify for loans with especially high interest rates, and additional annual fees to protect lenders against potentially risky borrowers.
You cannot do much with a credit score of 580. Instead, let’s take a more detailed look at some of the financial benefits you’ll earn, once you achieve an increased credit score through regular on-time payments, reduced overall debt, and consolidated lines of credit.
- Rewards-based credit cards are available to individuals with higher overall credit scores.
- Applying for a new line of credit with an improved credit score means you can unlock one of the best rewards-based credit cards available today, with various airline, hotel, and restaurant perks, as well as impressive cash-back options on nearly all purchases.
- Personal loans allow borrowers to do a variety of projects, everything from wedding planning and home renovations to medical bills and necessary emergency funding.
- If you’re looking to secure a personal loan with a 580 credit score, consider loan options specifically for those with bad credit.
- Low auto insurance premiums are another added perk of improving your credit score.
- Not only can you land auto insurance from a reputable insurance provider; with a better credit score, you’ll also have a chance to secure the lowest available auto insurance premiums industry-wide, thanks to your reputed borrowing history.
- Mortgage loans represent another step forward toward owning your property. With a high credit score, obtaining a mortgage loan is more of an opportunity and less of a pain. Especially high credit scores even help you unlock mortgage loans with bottom-barrel insurance rates.
How to Repair a 580 Credit Score
With a credit score of 580, there are several concrete steps you can take to ensure that your credit score sees concrete improvements in the months to come.
First, address immediate credit issues that could be seriously hampering your credit score, and your ability to pay back loans. If you have any loans in default or any due payments to collections agencies, prioritize those repayments.
Adhering to healthy credit repayment habits can help repair your credit. Resolve from this point forward to pay back debts promptly, and to make complete, on-time payments that begin to reflect positively on your payment history.
In addition, you’ll want to avoid hard inquiries while working to repair your overall credit score. Every time you are considered for a new loan, they perform a hard inquiry: a routine check into your credit past.
Hard inquiries remain on your record for a year, and anything more than one or two hard inquiries serves as a serious red flag to future potential lenders.
If you’re serious about repairing your credit score, know that the best professional credit repair companies can expedite the process and make it as painless as possible.
When repairing credit means overcoming collection agency demands, repaying defaulted loans, or even navigating bankruptcy or civil judgments, leaving the future of your credit score in the hands of the professionals is often the best step forward.
Rather than attempting to take shortcuts to artificially repair your credit, allow a renowned credit repair bureau to implement proven, long-term solutions for lasting credit improvements.
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