A 598 Credit Score Is ‘Poor’ But Borderline

Lenders will look at 598 credit score as representing a consumer that is likely to default on credit that gets extended to them. The simple fact is that a 598 score falls into the “poor” or “very poor” category, depending on which credit model and credit reporting agency you’re dealing with. For example, TransUnion, one of the three credit bureaus in the United States, categorizes a 598 credit score as “very poor” because it falls into the lowest range of scores.

However, there’s plenty of reason to be optimistic: not only are there many things you can do to improve your credit score from this level, but your score is right on the cusp of moving up into the next category of credit scores. Improving your credit score not only has the potential to open doors to new opportunities for credit extension in the future, but can lead to more affordable options as well. In the following article we discuss what a 598 credit score functionally means, explain what a good credit score is and share some practical tips to help improve your score.

What a 598 Credit Score Means For You

TransUnion uses the credit model VantageScore 3.0 which has the following 5 categories for credit scores with associated letter grades.

transunion-credit-score-rangeA 598 credit score would be considered “Very Poor” according to TransUnion and is the lowest credit score category. However it is just 3 points away from being considered just “poor” and 62 points away from a 660 credit score which is the threshold for the “fair” category.

These might seem like marginal improvements, but as we’ll discuss later, moving from what is viewed as the riskiest category of borrowers to a category will lower risk can have two substantial impacts. First, it can lead to a meaningful reduction in the interest rates lenders offer you.

Second, it can lead to an increase in the number of lenders that are willing to provide you with credit. For example, Lending Club has a minimum credit score of 600 and Credible has minimum score requirement of 620. Both of these thresholds are clearly attainable from a 598 credit score.

What You Can Get Approved For With a 598 Credit Score

As indicated earlier, most of the time there are no hard and fast rules when it comes to how lenders decide on approving applications for new credit. There are a number of factors that they will consider in addition to your credit score, including your monthly income. But in the sections below we have outlined what we believe is the most likely outcome based on our research on credit scores and lender criteria.

Can I Get a Credit Card with a 598 Credit Score?

Yes you can. You will be able to get approved for some credit cards with a 598 credit score, but the majority of the opportunities will most likely be non-traditional credit cards and secured cards.

Unsecured Credit Cards

You likely not get approved for most unsecured credit cards, which is the most popular type of credit card available in the country. 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. As a result, lenders are taking a bigger risk and so consumers with lower credit scores are viewed as riskier borrowers.

Your best bet as far as unsecured credit cards goes might be non-traditional credit card options such as those issued by merchants (also known as “store cards”) would be an alternative for consumers with low credit scores. Examples of a merchant card would be 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 an 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. Several of the large banks offer secured credit cards including Capital One and Discover Bank.

Can You Get a Mortgage with a 598 Credit Score?

It is unlikely that you will be approved for a mortgage with a 598 credit score. The chart below shows the categorization of mortgage approvals in the United States by credit score and is based on data from 2016 to 2021 from the FHFA database.

mortgage-originations-by-credit-score

What should be pretty clear is that the overwhelming majority of mortgage approvals are to people that have credit scores that are considered “good” or better. For the two lowest categories, “poor” and “very poor” they represented only 3% of mortgage approvals over this 5 year period. Importantly, the lowest category (which is where a 598 credit score would fall) represented just 0.1% of mortgage loans issued over this period. So while getting a mortgage with a credit score this low is not impossible, the odds are certainly stacked against you.

Can You Get an Auto Loan with a 598 Credit Score?

The short answer is yes, most likely. You will still be able to get approved for an auto loan with this credit score. However, the terms will be less favorable and there will be a fewer number of lenders available. Moving up into the 600+ category of credit scores can lead to a big decline in the interest rate you get quoted on an auto loan.

incremental-auto-loan-rate-by-credit-score

As shown in the diagram above (source: Experian), the difference in the average interest rate auto lenders charged to consumers that had the lowest credit scores (deep subprime) and consumers that had the next lowest credit scores (subprime) was about 3% in 2021. Therefore by moving up into the subprime category, consumers could save hundreds of dollars each year on the financing cost. For example, on a $15,000 auto loan, you would save $450 each year. To use a more concrete example, the below shows the advertised auto loan rates by Potomac Federal Credit Union, a small credit union based in Maryland.

auto-loan-rates-by-credit-score

Two things to note. First is the letter grading – the credit union would consider a 598 credit score to be a “D” grade and it is also in the lowest category that they show. This suggests that the credit union won’t approve auto loans to consumers below this level. Second, there is a dramatic decline in the rates this credit union charges for auto loans as you move from a “D” grade to a “C” grade. This is especially relevant for consumers with a 598 credit score, and underscores the benefit you can reap from improving your score by just a little bit. Improving your score into the 650-699 range (e.g. a 660 credit score) could save you 50% or more in interest cost.

Can You Get a Personal Loan with a 598 Credit Score?

Yes – 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 and shown earlier.

Can You Get an Apartment Rental Lease with a 598 Credit Score?

Yes but not everywhere. A study by RentCafe in 2020 found that the average credit score of renters in the United States was 638. However, this is of course just an average and so there were both consumers above and below this figure. The same study showed that for “low-end building types” the average renter credit scores was 597.

Therefore while a 598 credit score is below the average of renters in the United States, it is just above the average for certain building types. You will be able to get an apartment rental lease with this credit score, but it might be more difficult to get approved for an apartment rental lease in a high end or luxury building. Those  landlords might require more security (co-signor or larger deposit) for approval.

Is 600 a Good Credit Score? What is a Good Credit Score?

Your sights should rightfully be set on increasing your score to the 600 threshold. That’s the logical next milestone. That said, 600 is still not considered a good credit score by most measures and is also well below 711, which is the average credit score in the United States. 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 are 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 598 Credit Score?

A 598 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:

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 review them 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. You can find more information about disputing information on your credit reports here:

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 598 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.

Next Steps

While a 598 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.

Similar Credit Scores: 560, 567, 575, 585, 590, 600, 613, 620, 633, 645, 671, 700, 750