How Good Is a Credit Score of 585?

FT Contributor
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According to Experian’s official classification, a 585 credit score falls in the “Fair” range. This means you’ll encounter limited loan options, and the available ones will often come with higher interest rates than those available to individuals with better scores.

After running your annual credit report, the best bets to increase your score are to start making on-time payments, keep your debt-to-income ratio low, and take out a secured credit card, which restricts your spending to the deposit amount.

With these high-level details in mind, let’s dive in and take a closer look at some of the core reasons your credit score is 585.

Why Your Credit Score Is 585

If you have a 585 credit score, it’s likely due to one or more of the following reasons:

New Credit Inquiries

When you choose to open a new line of credit, lenders run authorized hard inquiries (aka, “hard pulls” or “hard credit checks”) to help them make lending decisions, such as for a credit card or mortgage application. These inquiries will temporarily lower your credit score by five points or less.

In contrast, a soft credit pull (e.g., running a background check before starting a new job) does not impact your credit score. Soft credit inquiries might not appear on your report at all.

If a lender approves your loan and you open an account, it’s essential to keep in mind that opening additional lines of credit — even within a few months — can also negatively affect your score.

High Debt-to-Income Ratio

Let’s say you make $50,000 per year but have a total of $30,000 in high-interest credit card debt against a $35,000 available balance. Although you make good money, because you carry such a sizable revolving balance compared to your total credit limit, it can cause your credit score to drop.

Making Late Payments or Defaulting

Whether it’s a home loan or a credit card, a delinquent payment here and there typically won’t cause severe damage to your credit score. However, if you consistently pay late or have fallen 90 days or more behind on your account, you could negatively impact your score in a big way.

Also, keep in mind that once you fall 90 days or longer behind on your payments, the bank could close your account and mark a default on your credit report. Once this becomes the case, you could see your score drop by 100 points or more.

If your debt is eventually sold to a collections agency and you continue to avoid repayment, you could see your credit score drop further.

Repossession or Foreclosure

Imagine that you can no longer afford to continue mortgage payments and stop paying for several months. Eventually, the bank will foreclose on your home, causing you to seek a new place to live, along with a 150-point (or more) drop to appear on your credit report.

Bankruptcy

Of all the reasons listed here, a bankruptcy on your report will damage your credit score most significantly. For example, it’s not uncommon for a good credit score to drop down to Fair or “Very Poor,” with bankruptcy as the only negative mark in the report.

What Can You Do With a 585 Credit Score?

While a Fair 585 credit score won’t preclude you from opening new lines of credit, you will usually pay higher interest rates and will be subjected to other less-favorable terms than individuals with better scores.

Here are a few examples of what you can do with your 585 score:

  • Open a no-annual-fee or no-foreign-fee credit card;
  • Open a 0% introductory annual percentage rate (APR) credit card;
  • Open a credit card with your favorite store.

Depending on why you have a 585 credit score, a handful of lenders might also approve you for a personal loan. Some property management companies will let you lease an apartment in your name, as well.

If you improved your credit score even a little bit, you could also be approved for:

  • Credit cards with large bonuses for new customers;
  • Airline or hotel credit cards;
  • Better mortgage rates;
  • 0% interest auto loans;
  • The lowest-possible home and auto insurance rates.

How can you improve your score enough to qualify for these lines of credit?

How to Improve a 585 Credit Score

Although your 585 credit score puts it in the “Fair” category, the good news is that you can increase it into the “Good” or even “Very Good” by developing a few core financial habits.

Obtain a Secured Credit Card

The good news is that you can start repairing your credit by taking out a secured credit card, which only allows you to spend up to the amount you deposited.

Therefore, if your deposit is $500, then $500 is also your credit limit. This way, even if you default, the company retains enough money to repay your balance.

But you don’t necessarily need to spend anything. Just having the account is a positive mark on your report, so you can either lock the card away in a drawer or make small purchases and pay your bills in full each month.

If you take out a secured credit card, you can only spend up to the amount you deposited. Therefore, if your deposit is $500, then $500 is also your credit limit. This way, even if you default, the company retains enough money to repay your balance.

Catch Up on Your Payment Schedule

Regardless of your account’s state, the best thing you can do to increase your credit score is to start making payments on time. While the situation won’t change overnight, each on-time payment brings you one step closer to getting your score where it needs to be.

Once the late payments or delinquency fall off your report, you could see your credit score improve by 50 points or more.

Keep Your Credit Utilization in Check

Maintaining a low credit utilization rate shows creditors you can be trusted to pay down your balances.

Again, if you take out a secured credit card, you can only spend up to the amount you deposited, meaning your credit utilization rate will automatically remain low.

Eventually, once you qualify for additional lines of credit, make sure that you don’t fall back into old financial habits and rack up balances that you can’t repay monthly.

Proactively Wait Out Your Repossession, Foreclosure, or Bankruptcy

Repossessions, foreclosures, and bankruptcies will continue to impact your credit score for seven to 10 years. And unfortunately, there’s little you can do about it other than waiting it out.

Keep in mind that if you’re in the midst of bankruptcy proceedings, you’ll need to obtain approval from the court to open a secured credit card.

Repair Your Credit

Credit repair companies specialize in finding errors on your credit reports and disputing them with the reporting bureaus. Once they’re removed, and you’re back on track, you could see your 585 credit score increase significantly.


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