Credit is the engine that moves the modern world (for better and for worse), and more and more people rely on it to satisfy their most essential needs. Given this state of affairs, maintaining a good credit score has transitioned from being a matter of personal convenience to an absolute priority.
If you’re reading this, chances are you’re curious to know whether your credit score of 590 makes you eligible for decent funding options. Well, the answer will not be very encouraging, we’re afraid. While a 590 FICO technically could fall within the “Fair” range, it’s important to remark that a significant portion of the American population — roughly 67%, according to Experian — have a higher score than that. As a result, a great number of reputable lenders could view a “Fair” score unfavorably, making it more challenging to secure good financing.
In this short article, we’ll briefly analyze the context of a 590 score and its implications. But first, let’s get some of the basics straight:
Understanding Credit Scores
Credit scores are essentially three-digit numbers (ranging from 300 to 850) that gauge creditworthiness. A low score indicates poor credit habits while, conversely, people with a higher score tend to enjoy better and more affordable loan offers.
Creditors rely heavily on these scores as a standard metric to ascertain whether you’re responsible enough to handle debt and repay it on time. The task of calculating these scores falls under the purview of “credit bureaus” or “credit reporting agencies.” The community of lenders entrusts these organizations to collect and handle their prospective customers’ credit information (“credit history”) in exchange for a fee. In the U.S., the three major credit bureaus are Experian, Equifax, and TransUnion.
Your score is heavily affected by your credit history, which encompasses various factors such as the number and types of accounts and their duration, as well as your debt levels, repayment history (or lack thereof), total credit utilization, recent loan applications or inquiries, and more. These elements collectively make up the basis for the calculation.
Evaluating a Credit Score of 590
As disclosed earlier, credit scores range from 300 to 850, but, at the same time, this same range is divided into different segments, namely:
- Excellent
- Very Good
- Good
- Fair
- Poor
As you can discern, “Fair” is just a step above “Poor,” so you’d still be in a credit nightmare, so to speak.
FICO scores in the range between 800 and 850 are typically deemed “Excellent,” while a “Good” credit score is one that passes the 670 threshold.
As we reach the bottom end of the FICO spectrum, we find that scores from 300 to 579 are “Poor,” and from 580 to 669 are classified as “Fair,” according to both Equifax and Experian. TransUnion is the only one — out of the three major bureaus referenced — that strays from this criterion and labels 590 as “Poor” (or anything below 661, for that matter). Consequently, if the lender abides by TransUnion’s parameters, chances are you’ll be shown the proverbial door or be subjected to more onerous terms and conditions in comparison. That said, a “Fair” score is still hardly something to celebrate.
Impact of a 590 Credit Score
Regardless of what we just explained, it’s no reason to feel discouraged. Even as you suffer from a “Poor” credit rating, you can still apply for a plethora of financing offers while you work towards improving it, keeping in mind the obvious caveats. These are:
- Mortgage Loans: Many FHA loans are available for people with a minimum 500 FICO score but beware of the 2.3% differences in APR (which are quite noticeable in loans of this magnitude).
- Auto Loans: You could get loans to buy a car even with a “Poor” or “Fair” credit, with APRs that can range from 3% to 10% and repayment terms of up to 84 months, give or take.
- Personal Loans: Conditions vary considerably between personal loan offers, though people with 590 FICO scores must be prepared for APRs closely hovering around the 36% areas, as well as up to a whopping 10% origination fee.
- Car Title Loans: These are among the most expensive, and arguably the riskiest loans you can obtain and arguably the quickest as well. They come with exceedingly short repayment terms (usually a month or less) and interest rates that could potentially soar into the three digits.
Keep in mind that maintaining a score below “Good” levels brings about repercussions that extend far beyond your ability to get financing. Case in point, some landlords can pull a rental applicant’s credit score (with the applicant’s consent, that is) to deliberate on whether to approve or deny the application.
Steps to Improve Your Credit Score
It’s never too late to get your credit back in shape, though it’s not an overnight endeavor by any stretch.
Perhaps the most important action you must undertake involves your already-existing debt. Pay it all off in full if possible. If you’re unable to settle all debts, we strongly advise you to at least get rid of the most expensive ones first to not accrue unnecessary interest (interest from credit card balances can spiral out of sight quickly, for example.) Also, check for any unpaid bills that you might have overlooked.
In addition to the above, peruse your credit reports carefully. If there’s an instance of potential fraud or identity theft, you ought to deal with that as soon as possible! Likewise, look out for any inaccuracies that might have crept into your report and contact your bank so that they help you sort them out. Even the most seemingly inconsequential mishap could have dire effects on your creditworthiness, so make sure you address them swiftly.
Rebuild Your Credit Score
Another effective way to revamp your credit score is by “rebuilding” it. This is attained with the help of specific financial products like a secured credit card or a credit-builder loan. Secure credit cards are relatively inexpensive credit rebuilders, all things considered, even though they’re not your safest bet if you need money badly.
Credit-builder loans open another path out of the lowest FICO tiers. These loans consist of money deposited into a locked savings account which you must unlock after you’ve made a certain number of monthly payments. These payments are subsequently reported to the credit bureaus in your favor.
As with the secured card option, credit-builder loans are designed with the primary goal of increasing your credit reputation and should not be viewed as an expedited way to get cash.
We should obviously emphasize the need to engage in responsible credit usage as you make your way towards rebuilding your credit history. There’s no use in trying to avail yourself of these products if you aren’t going to fulfill your repayment duties, whatever the reason may be.
If you’re unsure about the best route to take, you might want to seek guidance from a professional financial advisor or credit repair service, as they can provide the necessary expertise and support towards better credit health.
If you are running a business, you might also need to work to build up your credit health. There are business credit companies that can help with this challenge.
To Conclude
A 590 credit score is considered either “Fair” or “Poor,” which evidently falls short of the score you ought to have if you want access to more cost-efficient loans. While you could still theoretically obtain some loans, you should be prepared to cope with costly fees and interest rates.
If you wish to steer clear of those challenges, you should strive towards leveling up your score to attain the “ideal borrower” profile! Cultivate a mindset of responsible borrowing and manage your finances in a diligent manner that can gradually earn you positive ratings from reporting agencies.
