If you possess a credit score of 663, you are typically categorized as a subprime consumer; however, this doesn't necessarily hinder your ability to obtain a loan. As of 2021, the average FICO credit score in the United States stands at 714. Credit scores within the range of 580-669 are regarded as 'fair' credit.
In this article, we will delve into the implications of a 663 credit score, your chances of qualifying for specific loan types, and steps you can take to enhance your credit score.
What does a 663 credit score signify?
As mentioned earlier, a credit score between 580 and 669 is classified as 'fair' credit. While your credit score is below the national average, it doesn't fall into the realm of 'poor credit' and should not necessarily impede your access to certain types of loans.
With a 663 credit score, lenders will generally perceive you as a higher-risk borrower. This implies that you will likely need strong qualifications regarding income, employment, and other debts to secure loan approval. You can also expect relatively higher interest rates on loans compared to borrowers with excellent credit scores.
Can I secure a credit card with a 663 credit score?
Having a 663 credit score might enable you to acquire a conventional credit card. While most credit card issuers do not publicly disclose their minimum credit score requirements, some will approve applicants in the 'fair' credit range. You might not qualify for the most enticing credit card offers, but obtaining a basic credit card or store credit card with your score is plausible.
If you find it challenging to qualify for a credit card, especially one with substantial benefits, you can consider applying for a secured credit card. Secured credit cards function similarly to traditional credit cards, including regular credit reporting. The key difference is that you typically need to make a deposit equal to your credit limit to open an account.
Can I obtain an auto loan with a 663 credit score?
In short, yes, it is possible to secure an auto loan with a 663 credit score; however, you are likely to face significantly higher-than-average interest rates. To put this into perspective, as of November 2022, borrowers with prime credit (a FICO score of 720 or higher) obtained an APR of 5.34% on a 60-month new auto loan. In contrast, those within the 620-659 credit score range faced an average APR of 11.76%. Borrowers with scores of 590-619 experienced an average rate of 15.92%.
It's essential to note that interest rates can vary considerably among lenders, even for borrowers with identical credit scores. This is especially relevant for individuals in the subprime credit category, which encompasses those with below-average credit scores.
Hence, when making significant purchases like a home or car, it's crucial to explore multiple lenders to secure the most favorable loan terms. It's worth mentioning that the FICO model encourages rate shopping. Any credit inquiries made for the same type of loan within a short period, typically two weeks, are treated as a single inquiry for scoring purposes. Consequently, applying to multiple lenders or lending platforms, especially those like Upstart, which consider more than just credit scores, does not negatively impact your credit score.
Get Your Credit Check Today!
Can I secure a mortgage with a 663 credit score?
Yes, a 663 credit score can qualify you for a mortgage, offering you a couple of primary options.
With a credit score of 580 or higher, you can qualify for an FHA loan to purchase a home with a minimal 3.5% down payment. These loans are backed by the Federal Housing Administration and come with their drawbacks, such as mandatory FHA mortgage insurance. Nevertheless, they can be an excellent choice for those aspiring to become homeowners.
For a conventional mortgage, the minimum credit score requirement is 620, according to Fannie Mae's lending standards. However, having a credit score on the lower end of the spectrum entails certain conditions. To secure a conventional loan with a 620 credit score, you must maintain a maximum debt-to-income ratio of 36% and be prepared to make a 25% down payment. If you're seeking a conventional loan with a lower down payment, such as 5% or even 3% in some cases, you'll need a minimum credit score of 660, as per the latest Fannie Mae underwriting standards.
Can I secure a personal loan with a 663 credit score?
Securing the best rates on a personal loan may be challenging without a strong credit score. However, a FICO score of 663 should typically qualify you for a personal loan, particularly from lending marketplaces specializing in loans for individuals with less-than-perfect credit histories.
It's crucial to emphasize that your credit score is just one facet of loan approval. You must also have sufficient income to support the loan and maintain an acceptable level of indebtedness. Even borrowers with stellar credit scores can face loan rejections if they already carry substantial outstanding debt.
Take your 663 credit score with a grain of salt As previously mentioned, there is no universal definition of a 'fair' credit score, and different lenders give varying weight to credit scores. No single metric perfectly predicts consumer behavior. In fact, a 2021 study by professors at the University of Pittsburgh revealed that traditional credit scoring systems inaccurately categorized default risk for about 30% of consumers, especially those with lower incomes and younger individuals.
Upstart, in particular, aims to delve beyond a borrower's credit score by considering over 1,000 data points. This comprehensive approach provides qualified borrowers with less-than-ideal credit scores the opportunity to access the borrowing options they need and deserve.
How can I enhance my 663 credit score?
While a 663 credit score allows you to qualify for loans in many instances, borrowing money becomes more straightforward with good credit. Moreover, a higher credit score can save you money on interest and may improve your prospects for renting an apartment or securing employment.
To that end, here are some steps you can take to elevate your fair credit score and set yourself on the path to achieving good or even excellent credit in the future.
How can I enhance my 663 credit score?Evaluate the situation and check for inaccuracies To comprehend why your credit score falls below the average, you should review your credit reports. You can access a free copy of your credit reports from the three major credit bureaus each year at annualcreditreport.com.
Once you have your credit reports, undertake two essential actions. First, scrutinize for errors. Inaccurate or outdated information can be a senseless reason for a below-average credit score. Therefore, your initial step should involve rectifying any such discrepancies. Second, carefully review your credit report and make note of any negative information, such as late payments, delinquent accounts, charge-offs, collection accounts, judgments, foreclosures, and so on.
Take remedial measures Negative information generally lingers on your credit report for seven years. If your score is in the fair credit range, there may not be an extensive history of adverse information. Nevertheless, you may achieve more than you anticipate through damage control.
For instance, if you have a delinquent credit account, consider reaching out to your credit card company or collection agency to explore potential resolutions. It's not uncommon for a creditor to agree to remove a negative item upon receiving full payment or cease reporting late payments if you explain a financial hardship and promptly
