The average U.S. FICO score as of April 2021 is 716, which falls within the good credit score range. A 600 FICO score is below average and falls within the fair credit score range.
Although there are credit cards that target fair credit, the interest rates will be on the high side. You may even have trouble getting approved for a mortgage since 600 would be considered a subprime credit score by many lenders.
But you don’t have to stay in the fair credit range. There’s no reason you can’t bump your 600 score up into the good credit score range.
All you need is a better understanding of how scores work and the right strategies to improve your score.
Your payment history is the most influential factor in your score. As long as you pay all of your bills on time, you’ll be in good shape. Lenders want to see that you paid as agreed, and that tells them you’re creditworthy. Once you miss a payment, it can really drop your score.
Amounts Owed: 30%
You have a credit utilization ratio, which is the amount of credit you’ve used compared with the amount you have available.
Here’s an example: Let’s say you have a credit card with a $1,000 credit limit and you have a $700 balance. This means you have a credit utilization ratio of 70% (700/1,000 = 70%). This ratio is considered unacceptable. You need a ratio that’s less than 30% to avoid a decrease in your score.
But here’s an insider tip: To really maximize this part of the score, keep your utilization ratio less than 10%. Using the details of our example, this means your balance shouldn’t exceed $100 (100/1,000 = 10%).
And before you think you can run up the balance on one card while keeping others low, you should know that the algorithm looks at your utilization ratio across all of your cards and at the ratios on each credit card.