How Good Is a Credit Score of 605?

FT Contributor
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A credit score of 605 is categorized as “Fair” on the FICO credit score scale. It’s important to be aware that 605 is close to the cusp of the “Very Poor” credit score range which encompasses scores between 300-579. 605 is lower than the average credit score and represents room for improvement.

As long as nothing major has happened (e.g. serious delinquency, defaults, bankruptcy), you should be able to increase your score with a few good habits.

It’s also important to note that just because your score is on the lower side, does not mean you’re automatically denied for things like credit cards, personal loans, auto loans, and mortgages. However, it may mean that you have less attractive interest rates and high monthly payments.

Be sure to keep track of your credit score and any bad marks on your credit report. You are entitled to a free credit report annually from each credit bureau. Contact the individual bureau with questions about your credit report.

Why Your Credit Score Is 605

There are a lot of factors that could contribute to your score of 605. Because a score of 605 is on the lower end of the credit score scale, some of these have likely affected your score.

Past-Due Payments

Any past-due payments (30 or more days late) will cause a derogatory mark on your credit report. Once your creditor has reported that you made a late payment, it stays on your credit report and can contribute to a lower credit score.

It’s important to stay on top of your credit card and loan payments. The best way to ensure on-time monthly payments is to only spend what you can afford. If you overspend your credit limit and can’t afford your monthly payments, this can contribute to a downward spiral of bad credit habits.

Short Credit History

Another contributing factor to a lower score is short credit history. The length of your credit history accounts for about 15% of your overall credit score. Creditors also look at the individual lines of credit. This is another reason it’s harmful to open multiple credit accounts in a short period.

Establish credit as soon as you turn 18. This does not mean applying for multiple loans and credit cards. The best way to establish credit is by taking out a secured loan or a low-limit, low-interest credit card.

Start your credit history the right way by proving you can make on-time payments and not go over your credit limit. And be sure to only open lines of credit or apply for loans when you need them and/or can absolutely afford them.

High Credit Utilization

High credit utilization is one of the biggest factors that contribute to a lower credit score. The ideal utilization of your credit limit is 30%. This means that you only use 30% of the credit that has been extended to you. For example, if you have a credit card with a limit of $1,000 it’s recommended that you keep the balance below $300.

The credit utilization ratio is calculated by taking your total credit utilization (debt) and dividing it by the total limit of all your loans and credit cards. If the utilization is below 30%, this is considered good.

If your utilization is over 30%, try to make higher payments each month. Paying only the minimum can end up costing you interest in the long run. And as we mentioned before, be sure to only spend what you can afford.

It’s easy to spend money using your credit card and think, “I can pay this later” and put it out of your mind. But you do have to pay for it, and it’s important that you only spend what you can pay off.

What Can You Do With a 605 Credit Score?

As we mentioned, a score of 605 is considered “Fair.” So, there is room for improvement.

A score of 605 will allow you to get credit cards and other loans, but the rates will be higher than they would if you had a better score. You will most likely be able to take out a credit card for your favorite shop or store, but those carry notoriously high interest rates and are limited on where you can use them.

If you were to improve your credit score and get into the “Good (670 to 739),” “Very Good (740 to 799),” or “Exceptional” (800 to 850) categories of credit scores, you would have a lot more opportunities.

Here are some things that you benefit from when you have a good credit score:

  • The best options for rewards credit cards.
  • Lower/competitive rates on credit cards and loans.
  • Approval for 0% introductory interest opportunities.
  • The best mortgage rates.
  • The option for airline credit cards.
  • Lower auto insurance premiums.

These are just a few of the benefits of keeping a good credit score. Anyone can have a good credit score as long as they maintain good spending habits and keep the utilization ratio below 30%.

How to Improve a 605 Credit Score

As we mentioned, there are ways to improve your credit score of 605. With a score of 605, you may benefit from credit repair services, too.

The best ways to improve your score are:

  • Low credit utilization.
  • On-time payments.
  • Good credit history.
  • Not taking out new credit lines.

If you are looking at the possibility of bankruptcy, civil judgment lawsuits, or even just a lot of late payments, you may benefit from credit repair services.

Credit repair services can help you get back on track to a better credit score. Some extremely credible credit repair companies have a track record of helping their customers increase their scores.

These companies have trained professionals (and often legal professionals) who can help mediate between you and the credit bureaus.

It’s important to get back on track with your credit score because of all the things that a good credit score can afford you. Even applying for an apartment could be extremely difficult with a score of 605. Increasing your score will help tremendously.


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