How to Improve Your 647 Credit Score

by Credit Score, Manage Money

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A 647 credit score qualifies as “fair” and “below average credit score.” It is on the lower end of scores. If this is your score, your loan options are limited and costly. You will have high interest rates with the loans you receive and may need to work to get a loan. Your best bet is to pursue credit repair.

So how do you improve your 647 credit score?

Is A 647 Credit Score Good?

The FICO credit score system gives everyone a score between 300 and 850. A 647 credit score falls in the middle of the range. Around 17% of American’s have a FICO score in this range.

Lenders specializing in subprime lending are pleased to work with you, but they charge high interest and fees.

Check Your FICO Score

The best place to start is knowing your exact FICO score. You don’t want to mess around with “I think it’s something like….”

Go to Credit Karma where you can get your credit report for free. This credit report has a brief explanation about how you got your score. It will look something like this:

You can go into each category to figure out what is impacting your score. If there is a category where you are doing poorly, Credit Karma will give you recommendations about how to fix it.

And Credit Karma is being 100% truthful – this really is a free service. They make all their money off any credit cards you decide to get or accounts you open to repair your credit.  You can search for cards with no fee or choose one they recommend for you. Each card comes with pros and cons, so take your time if it’s the best strategy to increase your credit score.

Credit Karma Credit Card Search
Credit Karma Credit Card Search Results

What Counts Toward Your 647 Score?

In the FICO system, five categories impact your credit score – payment history, amounts owed, new credit, types of credit, and length of credit history. Let’s address each one because improving one or more of them will help increase your 647 score.

Payment History

When you look at credit scores, almost everything ties back to your payment history. Lenders want borrowers who pay on time and are less likely to default. The longer you pay on time, the more trustworthy you are. It’s that simple, even if hard to do.

Payment history is enormous because it tells companies if you are a safe or risky bet. Even one missing payment can bring down your score by almost 100 points if you are over 30 days late. For a one-time mistake, that stings. You may land in the “fair credit score” zone if you have multiple missing or late payments.

One action step is to pay your bill on time each month. Set up an account to automatically withdraw your minimum payment (or more). Another step may be to get a credit repair book and start challenging mistakes.

It is worth your time and energy to fix late payments. According to the author Thomas Harris, increasing your score from ‘fair’ to ‘good’ saves you an average of $86,200 over a lifetime. That’s a worthwhile investment of time!

Utilization of Revolving Credit

Revolving credit is how much of your credit limit you are using at one time. It asks if you are “maxing out” your credit card accounts by using them or keeping them at low usage. It takes all of these accounts and determines if you are under the ideal percentage.

Credit CardBalanceLimitUtilization Rate (%)

Most experts agree that you want to keep this utilization rate under 30%. The more you borrow, the higher the utilization rate goes. And the closer that number gets to 100%, the more you are penalized, and your credit score declines.

One simple way to lower this utilization is to pay off your borrowed debt. Even if you can’t pay off your revolving credit all the way, getting under that 30% mark is critical to your credit score’s health. If you pay your account in full each month, you’ll avoid this altogether.

Age of Credit

Unfortunately, this doesn’t help if you’re a new borrower, but age is your friend. The longer you have credit accounts open, typically the higher your score. A lender looks at the average age of your credit accounts and the length of your oldest account.

Time is also your friend when you are repairing your credit. The more time between any late payments, the higher you will see your score rise. Unfortunately, you can’t make this aspect go faster, but it is 15% of your score. If the other four categories are healthy, this will not dock you many points on your score.

Total Debt and Type

The total debt looks at all the debt you have; credit card, car loan, personal loan, mortgage, student debt, mortgage, and others to see how much you need to repay. Financial institutions get a good idea if you have the margins to get another loan by adding all of your debts up.

For example, if you have $50,000 total in student loan debt and an auto loan, they can guess your monthly payments and determine if you make enough for a mortgage. The higher your percentage of pay goes to debt, the less likely you are to get a loan.

In addition, with a 647 credit score, mortgage lenders consider you a risky loan. You will have to pay higher interest rates and go through a more complicated process to buy the house.

If you find ways to increase your income through promotion or a new job, this total debt shrinks against your pay. The lender wants to make sure they’ll see their loan money get paid back!

Credit Applications and New Credit Accounts

A job recruiter once told a story where an applicant turned in his resume. Each of his last positions the applicant held for less than a year before moving to the next job. The recruiter pointed that this behavior is a yellow flag – the regular job bouncing may mean they’re difficult to work with, hard to lead, or a poor employee. The recruiter interviews candidates like this with extra care. This is similar how lenders look at credit card applications and new credit.

When you apply for a ton of credit cards in a short window, it is a signal “this might be a dangerous credit customer.” The lender knows you bring a greater risk of not paying the bills by applying for new debt.

Fear not. New credit applications tend to dip your credit score only temporarily. With a few months of timely payments, your score tends to rebound, which is why this is only 10% of your credit score.

Public Records

Unfortunately, sometimes you can’t get out of financial ruin and declare bankruptcy. Personal bankruptcy can stay on your credit score for up to 10 years and keep you from getting a loan or new credit. The good news is that they do not show up on every credit report.

Another public record is any sort of foreclosure on your home, failure to pay taxes or debts that have gone to a collection agency because you default.

These need to be dealt with in different ways, and there are several books to guide you.

Get A Secured Credit Card

With a 647 credit score, you are considered a “risk” to lenders. Credit card companies are hesitant to give out their cards to those with poor credit. If credit issuers notice that you’re a credit risk because of past defaults, missed payments, bankruptcy, or unpaid bills, they’ll likely pass on issuing you a card.

What are you to do?

Apply for a new credit card – a secured card.

A secured credit card has one big difference from a typical credit card – Secured cards require you to provide a cash deposit, usually equal to your credit limit. This deposit gives security for the card company and is only lost if you fail the loan terms.

This card is a win-win for you and the company. You get to rebuild credit, and they hedge their risks.

What Cards Should I Apply For?

Consider the Total Visa® Credit Card or Discover It® Secured Credit Card.

You can get approved with the Total Visa® Credit Card in as little as 60 seconds for a $300 credit limit. It’s built for those with fair to bad credit. Depending on your score, an annual fee may apply as well as a setup fee. A checking account is required to own this card.

The Discover It® Secured Credit Card has no annual fee, and you earn up to 2% cash back on gas stations and restaurants, plus 1% cashback on everything else. Deposit $200 to get started after approval, and you’re on your way. Discover is accepted by 99% of the places that take cards nationwide. As a bonus, if you use this card well, you can automatically upgrade it to the Discover It card.

Consider A Credit-Builder Loan

A credit-builder loan is not a widely known tool but can be excellent to help you save money and build credit at the same time.

Smaller banks and credit unions typically offer this type of loan.

When you get this loan, the money you agree to borrow is deposited into a bank account owned by the lender. You then make monthly principal and interest payments the lender reports to the credit bureaus. Usually, they are small loans between $300 and $1000, lasting 6 to 24 months. At the end of the loan, you get the money from the account.

It will not feel like a loan because you don’t get a dollar until the loan is paid in full.

In essence, you’re building a savings account nest egg and building credit at the same time.

Shop around for a local bank or credit union, and this strategy can work well for you.

Consider A Debt Management Plan

If you feel stuck and overwhelmed with debt, a debt management plan may help you succeed.

Debt management plans create a path for you to pay off your debt in three to five years.  Typically several debts are rolled into one for a reduced interest rate. Companies that offer these plans usually charge a setup fee and monthly fee for their services.

There are a few things to consider.

First, will you make a consistent monthly payment? If you miss one, it may end your interest rate. Two, debt management plans are primarily for credit card debts – they can’t be used for student loans, medical, or tax obligations. Will you pay the monthly fee to use the service?

On the positive side, they often cut your interest rate by half or more. Accountability can help you pay off debt faster than doing it yourself and coming up with your plan. And you can focus on one payment instead of multiple – there are fewer bills to potentially miss!

Consolidate Other Debts

Debt management plans are not for everyone. You may consider this alternative if you want to DIY getting out of debt.

Changing debt from a high interest rate to a lower interest rate is the best way to deal with it. This will result in lower interest payments, potentially saving you thousands over the life of the loan. 

First, list all your debts 

  • Credit cards 
  • Car loans 
  • Student debts 
  • Mortgage 
  • Payday loans 
  • Personal loans 
  • Etc. 

Then, see which you are paying the highest interest rates. If you qualify for debt consolidation through a company like Sofi, you can refinance that debt. Refinancing can be lumping debts together or taking one exceptionally high interest rate and making it more affordable. 

In simple terms, if you can refinance a $10,000 credit card debt (20% interest rate) to Sofi at 2.74%, you’ll save $3,779 in interest. Even if you get a refinance rate of 5.1%, you’ll still save $3,141 over five years.

Pay Your Bills On Time

Paying your bills on time counts for 35% of your score. It’s a simple truth, pay your bills on time. It is the best way to increase your score and keep it high long-term.

Paying on time can be difficult, but even if you must only pay the minimum on your debt, pay it. This will help increase your score as you work on other areas that may need attention.

Reduce High Credit Utilization Rates

You want to keep your utilization rate under 30%, and there are a couple of ways to do that.

The first is obvious but hard – pay down your outstanding credit card debt. It’s unsexy advice, but it’s true.

The second needs to be used with caution but works effectively – apply for a credit limit increase. If you spend $600 on a $1000 credit limit, you are at 60% utilization. If you apply for a credit limit increase and get it higher to $2000, you are now at 30% utilization.

Getting a credit increase is a double-edged sword; you can now spend more. Only do this if you have the discipline to pay down your debt. Otherwise, you’ll be drowning in more.

Dispute or Remove Negative Records

There is a secret form you can use to dispute records – it’s called a 609 letter.

Section 609 of the Fair Credit Reporting Act lets you send a dispute letter to remove negative information on your credit report. As a part of the Fair Credit Report Act, bureaus are responsible for removing any information from your report that can’t be confirmed. The idea behind these 609 letters is it’s difficult to verify a disputed claim, even if truthful!

If credit bureaus cannot confirm your negative record, they are required to remove it.

609 Letter Templates & Credit Repair Secrets

Bradley Caulfield’s book refers to Section 609 of the Fair Credit Reporting Act. This lets you send a dispute letter to remove negative information on your credit report. As a part of the Fair Credit Report Act, bureaus are responsible for removing any information from your report that can’t be confirmed. The idea behind these 609 letters is it’s difficult to verify a disputed claim, even if truthful!

If we could use a sports analogy, a 609 Letter is like a challenge in football. If the credit bureaus can’t “confirm” your negative behavior, they have to remove it!

The templates are easily the best part of this book. The author gives you fill-in-the-blank sections to input in your information and send the 609 dispute letters. This strategy doesn’t guarantee removal, but it’s another tool in your toolbox.

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07/13/2022 02:47 am GMT

Frequently Asked Questions

Can I Get a Mortgage or Home Loan with a 647 Credit Score?

Yes. The minimum score depends on what time of loan you are trying to get. According to QuickenLoans, there are four different scores for four types of loans.

Type of LoanMinimum FICO Score
Conventional Loan620
FHA loans requiring 3.5% down payment580
FHA loans requiring 10% down payment500
VA loans580

Can I get a Car/Auto Loan With a 647 Credit Score?

Yes. There is no minimum credit score to get a car loan. Your 647 credit score will result in higher rates and terms for your loan.

Can I Get a Personal Loan or Credit Card With a 647 Credit Score?

Yes, there is not a magic number to get a personal loan. You qualify for loans with a 647 credit score but may need to pay higher interest rates to compensate for the lower credit score. To get lower interest rates, increase your credit score.

How to Get Above a 647 Credit Score?

Start by always making your payments on time. This is the most significant influencer on your credit score. Then start reducing your debt as quickly as you can. The less outstanding debt you have, the higher your score will be. Finally, if there are any bad marks on your credit report, find ways to resolve them as quickly as possible. If you’d like a book on the subject, start here.

Can I get a $5,000 loan with a 647 Credit Score?

Yes. If your score is above 580, you can qualify for a personal loan. If it is below 580, you may need a cosigner to get a personal loan. To get a higher loan amount, you may need a higher credit

In Conclusion

A 647 credit score qualifies as “fair.” By checking your credit score, you can determine what’s impacting it the most and figure out how to improve it. Just by moving your score from “fair” to “good,” you can save over $86,000 in your life. That’s a lot of money to put in your pocket. This means the time you take to improve your 647 score is well worth it.

Ryan Pramberg

Ryan Pramberg

Ryan loves to serve people. The more he learned about money, the more it became apparent that he enjoyed talking about it with other people. My goal is to be wealthy in all aspects of life: faith, family, friends, and financial. I hope the things I learn help you live a life of purpose.

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