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Chances are, you’ve heard about credit scores. Ranging from 300 to 900, your credit scores are one of the factors used by potential lenders and creditors to determine the likelihood of you making your payments on time.
Governed by two Canadian credit bureaus, TransUnion and Equifax, the exact formulas that are used to calculate your scores are private. But we do know that there are five common factors that are generally used to calculate your credit scores: payments, credit history, debt-to-credit ratio, credit inquiries, and your public records. Although keep in mind that one factor may affect your scores more than others.
What Does It Mean To Have A 600 Credit Score?
According to TransUnion, one of Canada’s two credit bureaus, the average Canadian credit score is 660, which falls in the fair credit score range. So if one of your credit scores is 600, it’s safe to say that your credit is fair.
While your credit scores are only one of the factors used by lenders and creditors to determine your creditworthiness, low credit scores can influence your ability to access affordable credit and other services.
What Can You Get With A 600 Credit Score?
Sometimes, fair credit scores mean that it can be difficult to access financial products, even resulting in higher interest and ultimately larger payments. To give yourself the best chance of gaining access to the products and services you need, it is important to understand how your credit may affect your ability to qualify.
600 Credit Score Personal Loans
If you walk into a bank with a 600 credit score, looking for a personal loan, you may leave disappointed. Banks usually lend to those ringing in at 650 and over. Bear in mind that even with an alternative lender, one who may be more willing to overlook the credit, there are still pitfalls. Alternative lenders generally charge higher interest rates and may require collateral or a cosigner for you to qualify.
Car Loans And 600 Credit Score
While it will be easier to qualify for a car loan than a mortgage with a 600 credit score, it is still suboptimal. Because the car itself acts as the collateral for the loan, you may qualify. However, depending on the lender they may still see you as high risk and may require a cosigner and a sizable downpayment before they qualify you.
With a 600 credit score, you could try applying with a dealership as many of them lend to those with subprime credit, however, even then, most are inclined to lend to those with a credit score of 630 or higher. Alternative approaches include pursuing a second-hand vehicle for a lower price through an auto retailer. Many offer in-house financing that enables you to deal with only one party, simplifying the process. Beware that getting a car loan with a score of 600 means you’ll likely pay more to borrow. Unless you need the car ASAP, such as for employment or childcare, it may be better to improve your credit before getting a car.
Best Credit Cards For 600 Credit Score
The internet is awash with flashy cards boasting impressive rewards. However, these credit cards are often only available for those with higher credit scores. When you look for a credit card with a 600 credit score, aim for long-term planning. It is better to stick to one option and use it steadily to help build your credit. Among the options for which you qualify are:
- Retail Cards: Have you ever been shopping and been offered an in-house credit card? These are usually really easy to access, even with lower credit scores. They often offer in-store incentives and can usually help build credit, so they can be a good option.
- Prepaid Cards: There are many prepaid cards available in Canada. While these don’t help build credit, many companies like KOHO, have designed their cards to have similar benefits as a credit card such as cashback rewards and discounts.
- Secured Cards: Requiring no credit check to qualify, these cards help you establish a steady payment history, which may help you improve your credit scores. However, you will be required to make a deposit to secure the card.
- Student Cards: If you’re a student who’s looking to build credit, you could apply for a student credit card. These usually have no annual fee and have very few requirements to qualify. However, the limits are often lower and there may be certain limitations on transactions. These are designed for students starting out, offering the opportunity to enter the job market with a good credit standing.
Alternative Mortgage Lenders And 600 Credit Score
If you are keen on pursuing a mortgage with a 600 credit score, there are available options. If you’re unable to get a mortgage at a bank or credit union, there are alternative mortgage lenders that enable access to home loans. The requirements to access these services are less demanding and make it easier to access financing for those with lower credit. It’s not without a cost, though. The trade-off is the significantly higher price of a loan through an alternative lender. Be ready to offer a decent down payment and expect steep interest rates.
Additional Reading
How To Build Credit Without A Credit Card
Rebuild Your Credit With These Programs
What Your Credit Score Range Really Means
Ways To Improve Your Credit Scores
It’s all about climbing up the credit ladder by making small, regular, and prudent decisions. Ultimately, until you improve your credit scores, the amount you’ll pay for services will likely be higher than it has to be. Thankfully, there is a solution. Your credit scores are a blend of a variety of factors. According to Equifax, there are five common factors used to calculate your credit scores: payment history, public records, credit history duration, number of credit file inquiries, and how much credit you use relative to how much is available.
By leveraging the factors to your benefit, you can take active steps to help grow your credit scores.
Pay Bills On Time
Paying your bills on time affects your payment history which typically accounts for around 35% of your credit scores. This makes it one of the most essential components to growing your credit. It also shows that you are prudent and living up to the agreements you have with your lenders and creditors.
Lower Your Credit Utilization Ratio
Most consumers don’t know that the amount of credit they use compared to how much they have available to them (debt-to-credit ratio) is important. Your debt-to-credit ratio accounts for around 30% depending on the credit scoring model used. If you have $5000 worth of available credit (either through one credit card or multiple) you should aim to use less than 30% of it. Many lenders prefer to see a debt-to-credit ratio of 30% or lower as higher ratios can indicate financial troubles. If you like to use your credit card(s) to pay for everything and accumulate points, try paying off your card twice a month to help keep your utilization ratio low.
Increase Your Credit Limit
If you want to focus on your debt-to-credit ratio to try to help improve your credit, asking for a credit limit increase on your credit card can be a good idea. Increasing your limit, but keeping your spending level the same will help decrease your ratio, which may have a positive impact on your credit.
Access A Secured Credit Card
Should you be having difficulties accessing a standard credit card, you can opt for a secured card. As discussed above, a secured credit card requires a deposit and your payments will be reported to a credit bureau which may help improve your credit.
Keep Tabs On Your Credit profile
This part is essential to success, in the digital age, protecting your information and credit is imperative. You can use a range of no-cost services to access your credit score, though if you want something more thorough, you can access your Equifax credit report for free and get a free consumer disclosure from TransUnion. In most cases, this is only needed if your regular check-ins highlight odd behaviour.
Ensure The Information Is Correct
Finally, if you do see any red flags on your accounts, such as a strange inquiry or report, fix it immediately. Contact the credit bureau and dispute the information as soon as possible. Typically, these issues can be remedied easily, provided you act on the incident in a timely manner. Just remember that only false information can be removed.
600 Credit Score FAQs
Why do I have a low credit score?
Low credit scores can be a result of a short credit history, avoiding the credit system, making late payments, or over-utilizing the credit you have. The trick is identifying and addressing the issue early by taking steps to build your credit.
How do I check my credit score for free?
There are multiple third-party providers that offer low or no cost credit scores. Many include a trial period and a paid subscription thereafter. This usually comes with a credit monitoring feature. Or you can choose to check your credit with one of the two credit bureaus. Equifax is free for everyone in Canada. TransUnion only offers their credit score for free to consumers in Quebec. If you are looking to avoid payment altogether, check out CompareHub to access your credit score for free.
Is 600 a good credit score?
Technically, 600 does not fall into the good credit score range, and it is below the avenger Canadian credit score. Remember that you can make responsible credit decisions and work to build your credit over time.
Bottom Line
Credit scores are one of the many important factors that can affect your financial life and impact your access to housing, loans, and vehicles. The good news is that you can take a 600 credit score and build it into something better. By doing your research, taking it one step at a time, and prioritizing your financial self-care, you can use today’s 600 credit score to achieve your long-term goals.
