A 567 Credit Score Is Obviously Not Ideal
By pretty much all measures, a 567 credit score is considered a low score which has several implications for your access to cost effective financing.
As shown above, a score in this range would be considered “Non Prime” by some lenders. Credit Bureaus such as Experian categorize a 567 credit score as “Poor”. Nomenclature aside it is safe to say that all lenders will view this low of a score as being riskier than average. In fact, Experian states that consumers that have a 567 credit score have on average credit card debt of $4,674 which is a large amount in itself, but also likely suggests these consumers have relatively high credit card utilization rates. As discussed in our post on credit scores, the credit utilization ratio is a particularly important determinant of your credit score.
With all of that said, a 567 credit score is not that far from being considered “Prime/Near” and under Experian’s categorization, is only 13 points away from being considered “Fair” and 93 points from a 660 credit score, which is the lower threshold for the prime category. In the following sections we’ll go through what a 567 credit score means for your financing options and offer some best practices to employ to improve your score.
What a 567 Credit Score Means For Your Options
Having a 567 credit score will impact your ability to borrow money at attractive rates and will also limit the the number of lenders willing to extend credit to you. This creates an unfortunate situation where you need to be especially careful not to take on new credit with high interest rates as if the high cost results in you falling behind on your debt payments, your credit score will end up falling even more. These are some of the direct implications of a 567 credit score:
Can You Get a Mortgage with a 567 Credit Score?
it is almost impossible to get a mortgage with a 567 credit score. While lenders don’t usually advertise the minimum scores they accept, most traditional mortgage providers refuse applications unless the applicants have a score of at least 580. Even then, a 580 credit score leads to unfavorable terms.
Statistically speaking, the overwhelming majority of mortgage applications that were approved in the United States in the last two years were for consumers that had credit scores of 620 or higher. So while it is possible to get a mortgage with a 567 credit score, the odds are significantly against you. However, you’ll either need to use a specialty lender with strict terms or have somebody sign as a guarantor on your mortgage, and the mortgage rates offered will higher than average.
Can You Get a Credit Card with this Credit Score?
It will be difficult to get access to credit cards with a 567 credit score. Even in cases where you can, your lender may ask you to place a deposit before giving you access to the money (also known as a secured credit card). As noted earlier, consumers with a score in this range tend to have existing credit card debt and relatively high credit card utilization rates. So you can understand why a credit card issuer might be weary of providing you with new credit.
Can You Get a Personal Loan with a 567 Credit Score?
Yes, it is possible to get access to personal loans, but this will be limited to non-traditional lenders such as Upstart and the rates offered will be relatively high. However, this is still superior to seeking out short-term loan options such as payday loans which carry very high interest rates.
Can You Get an Auto Loan with a 567 Credit Score?
Yes, it is possible to get access to automotive loans in the form of a loan or a lease. Of course the rates offered will be higher. Experian estimated that in the fourth quarter of 2021 consumers with credit scores in the “Non Prime” category paid an interest rate (APR) that was on average 3.34% more than consumers with credit scores in the “Prime/Near” category.
How to Improve From a 567 Credit Score
Following the below steps will help you start improving from a 567 credit score:
- Get Copies of Your Credit Reports: the first step we’d recommend would be to obtain a copy of your credit reports from each of the credit bureaus (Experian, TransUnion and Equifax) and to review them thoroughly to first ensure that all the information that is included on the reports is accurate. It is very important to understand what happened that resulted in your score falling to this level. Every consumer is entitled by law to a free copy of their credit report from each of the three credit bureaus once a year. You can do this by visiting the Annual Free Credit Report. If you notice that there are irregularities on your credit report, you can act by sending a letter to the relevant credit reporting company disputing the information. Viewing your credit reports will also provide you with an idea of what has impacted your score in the past such as late payments and delinquent accounts.
- Prioritize Paying Your Bills On-time – not making your payments on your outstanding credit or making late payments is an easy way to impact your credit score. Your payment history is responsible for 35% of your credit score and so having a poor payment history is one of the common causes of low credit scores. A good practice that is easy to implement is to enroll in auto-pay for not just your credit repayments but other bills. Doing this at least helps you significantly lower the risk that you forget to make a payment and end up becoming delinquent.
- Limit Opening New Accounts – one of the inputs the credit reporting agencies use in calculating your credit score is the length of your credit history. Therefore, each time you open a new account, the length of your history declines. The impact can be more significant if you open a large number of new accounts in a short period of time. This doesn’t mean that you should never open new accounts; rather, it is good practice to avoid opening multiple new accounts each year, especially if it’s just in the pursuit of rewards or cash bonuses.
- Keep Credit Card Utilization Low – another input the credit bureaus use in calculating your credit score is to look at the total amounts owed on revolving credit, such as credit cards, relative to the allowable limits on the credit cards. Keeping credit cards fully maxed out is not only financially imprudent but it has a negative impact on your overall credit score. Ideally, it is good practice to pay off your credit card balance each payment cycle. More practically, prioritize keeping your revolving credit well below the limits.
- Take Advantage of Credit Building Tools – having a 567 credit score limits your options for new loans but at the same time, you need opportunities to demonstrate to lenders that you are creditworthy. This is where credit building tools can be very valuable. These tools exist specifically to allow consumers with limited or poor credit histories to start rebuilding their credit. A common tool is a secured credit card. These cards are offered by many banks, do not require a credit check for approval in most cases, and are an effective way of re-establishing credit worthiness.
- Monitor Your Credit Reports Closely – finally, it is a good idea to pay close attention to your credit scores. Checking your credit reports once a year should be the minimum frequency as while the information might not change every day, over the course of a year a lot can change. Monitoring your credit reports monthly (what we would recommend) allows you to keep track of the progress you’re making in improving your credit scores and enables you to be proactive in the event that an issue arises. There are a host of free credit monitoring tools including Credit Karma and Credit Wise.
It is Possible to Recover From a 567 Credit Score
A 567 credit score is problematic not just in limiting your access to credit but also in terms of affordability as most of the credit options will be more expensive than normal. It’s never too late to start enacting changes. Employing these best practices, limiting new accounts and reducing debt will all contribute to your score recovering over time.