A 575 Credit Score is Considered ‘Poor’
If you have a 575 credit score, the bad news is that although this credit score is right in the middle of possible credit scores (which range from 300 to 850) it is in fact in the bottom 16% of Americans according to Experian, one of the three credit bureaus in the United States. The good news however is that there many steps that you can take to improve your score from this level. Your credit score is easily one of the most important numbers in your financial life mainly because it determines your access to most forms of credit including credit cards, personal loans, and mortgages and, just as important, the terms and cost of credit.
For this reason, it is important to monitor your credit frequently, to be proactive in resolving issues that arise that impact your credit score, and to ensure that you’re taking steps to steadily improve your credit score over time. In this post we outline what a 575 credit score means, recap how your credit score is calculated, outline what is considered a good credit score and share some practical tips to help improve your score.
The Practical Implications of a 575 Credit Score
As noted earlier, a 575 credit score would be considered “poor” according to Experian and is the lowest credit score category. The chart below shows the 5 categories of scores.
Credit scores between 300 and 579 are considered poor while credit scores between 580 and 669 are considered “fair”. Therefore, a 575 credit score is on the cusp of being considered fair. With a 575 credit score, while you will still have multiple options for gaining access to credit, the total number of lenders willing to lend to you will be lower and the interest rates charged to you will be relatively high. The reason for this is that there is typically going to be an inverse relationship between your credit score and the interest rates lenders are willing to charge you. Practically speaking some lenders will have strict minimum credit scores required for them to consider providing you with a loan. For example, Lending Club has a minimum credit score of 600 and Avant has a minimum credit score of 580. But there is some variation as other lenders such as Upstart, have a minimum credit score requirement of just 300. The point is that the total number of lender options decreases the lower your credit score is.
What You Can Get Approved For With a 575 Credit Score
The reality is that for a lot of financial products the decision about whether to approve your application will include other information in addition to your credit score. So while for each category below we have outlined an outcome, it’s important to understand that this is simply our view of the most likely outcome based on our research on credit scores and lender criteria.
What Credit Card Can I Get with a 575 Credit Score?
You will be able to get approved for some credit cards with a 575 credit score, but these will most likely be non-traditional credit cards and secured credit cards.
- Unsecured Credit Cards – you likely not get approved for most unsecured credit cards. Unsecured credit cards represent most credit cards available in the United States. The distinction between unsecured and secured credit cards is that with unsecured cards you don’t need to make a security deposit or post any form of collateral. This means that lenders are taking a bigger risk and as result consumers with lower credit scores from the lender’s perspective are riskier borrowers. Non-traditional credit card options such as those issued by merchants would be an alternative for consumers with low credit scores. An example of a merchant card is the Lowe’s Advantage Card. Because these credit cards are issued and designed to encourage spending at the respective stores, there are additional considerations in their decision to approve a credit card application.
- Secured Credit Cards – these cards are designed for consumers that have limited or poor credit histories. Because these cards are prepaid, cardholders can only spend amounts that have been pre-funded or “secured”. While this means that secured credit cards function very similarly to debit cards, they do have the added benefit of the payment information being reported to the credit reporting agencies and so these are great credit building tools.
Can You Get a Mortgage with a 575 Credit Score?
It is unlikely that you will be approved for a mortgage with a 575 credit score. Based on data from 2020, 100% of conventional mortgage loans that were approved in the United States had a credit score of 620 or better. Even government-sponsored loan programs such as FHA loans which offer down payments as low as 3.5% require a minimum credit score of 580. So overall, while a 575 credit score doesn’t mean you won’t be able to get access to any form of credit, it is low enough to limit your mortgage loan options.
Can You Get an Auto Loan with a 575 Credit Score?
You will still be able to get approved for an auto loan with a 575 credit score, but the terms will be less favorable and there will be a fewer number of lenders available. A score within this range would be considered subprime which is the second lowest category of scores.
Can You Get a Personal Loan with a 575 Credit Score?
You will be able to get approved for personal loans, but the number of options will be more limited, and the rate charged will be higher, as discussed earlier.
Can You Get an Apartment Rental Lease with a 575 Credit Score?
It will be difficult to get approved for an apartment rental lease with a 575 credit score. Some landlords might require you to have a co-signor or to submit a more significant security deposit.
Is 600 a Good Credit Score?
With a 575 credit score your sights should rightfully be set on increasing your score to the 600 credit score threshold. That’s the logical next milestone. That said, 600 is still not considered a good credit score by any measure and is also well below 711, which is the average credit score in the United States. Raising your score to 660 credit score range will put you at an important threshold in the eyes of many lenders who tend to categorize their customers into buckets: the below 660 and above 660 ranges.
What is considered a Good Credit Score?
We consider a 750 credit score to be a good credit score. The answer to this question will vary depending on who you ask, but in our view a good credit score is high enough to allow you to get approved for most forms of credit extension. With a 750 credit score not only are you comfortably above the average credit score in the United States, but when it comes to getting approved for a mortgage (the gold standard of credit approvals) your score places you above the median. This means that your odds of being approved for a mortgage with a 750 credit score (assuming the rest of your application meets the criteria) is very good. With a 750 credit score you will also be eligible for most credit cards, personal loans and auto loans with attractive features and rates.
How Can You Improve From a 575 Credit Score?
A 575 credit score is not a great score to have and so it’s important to start implementing strategies and habits that can help improve your credit score over time. The following are steps you can take:
- Obtain and Examine Your Credit Reports: the first step we’d recommend would be to review your credit reports thoroughly to first ensure that all the information 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.
- Ensure You Always Pay Your Bills On-time – forgetting to make your credit payments on-time 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 the number of new accounts you open – one of the inputs the credit bureaus 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 (e.g. several months). This doesn’t mean you shouldn’t ever 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 575 credit score limits your options for new loans and 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.
While a 575 credit score is considered poor, by implementing some of the best practices we outlined above you can start to see an improvement in your credit score in a matter of months. But you should view your credit score and credit history over a longer time frame and plan to develop habits that you can sustain over the long run. A 575 credit score is very close to being considered “fair” as well as close to the threshold for what is needed to be approved for certain credit cards, personal loans and mortgages, so the benefit for implementing changes can be quite significant.