If you’re wondering ‘is 660 a good credit score,’ your credit score isn’t as high as it should be or could be, and it’s likely costing you money. An analysis by Zillow, the real estate marketplace, reveals just how much money.
According to Zillow, if a homebuyer with fair credit and one with excellent credit were to each finance the same $354,000 home at current interest rates, the homebuyer with fair credit will pay about $103,000 more in interest over the life of a 30-year mortgage than the homebuyer with excellent credit.
The difference is due to the significantly higher interest rate the fair-credit borrower likely would get.
A lower credit score can also mean paying more on other loans, auto insurance, utility deposits, and more. So it literally can pay to improve your credit score. So is your 660 credit score costing you money or saving you money when it comes to borrowing?
Here is a look at how good or bad a 660 credit score is, how that number is determined, and how you can improve it.
Is 660 a Good Credit Score? A Look at Scoring Ranges
Most lenders consider a credit score to determine a potential borrower’s creditworthiness. It is not the only factor, but it is a significant one.
Many lenders use FICO Score by Fair Isaac Corp., but some use VantageScore, or others may have their own formula to determine borrower creditworthiness.
In general, all credit scoring models are similar, so as the information on your credit reports from the major credit bureaus improves or worsens, all credit scoring models will adjust accordingly.
Since most lenders use a FICO score, it is a good scoring model to reference and see where your score ranks. FICO has a 300 score at the low end, with 850 being the best credit score. Here are the score ranges as defined by FICO:
- Poor: 300 to 579
- Fair: 580 to 669
- Good: 670 to 739
- Very Good: 740 to 799
- Exceptional: 800 to 850
As you can see, a 660 FICO score is considered “fair,” but it is at the higher end of the “fair” range and much closer to “good” than “poor.”
VantageScore also considers 660 a “fair” credit score. However, VantageScore’s “good” range begins at 661, so a 660 score is just one point away from “good” on its scale.
What Does It Mean To Have a Fair Credit Score?
So 660 is a fair credit score, but what does that mean? To a lender, it means there is a good chance you’ll default on your loan at some point.
A FICO score is specifically used to predict how likely a borrower will fall 90 days behind on a bill within the next 24 months. Many traditional lenders consider those with a fair score very likely to fall behind and typically do not lend to them.
For borrowers, a fair credit score often means turning to subprime lenders and significantly higher interest rates.
How Does a 660 Score Compare to the Average Credit Score?
According to Experian, one of the three major credit reporting bureaus, the average credit score in the U.S. in 2021 was 741, which is considered a “very good” score. So if you have a 660 score, your credit is worse than the average consumer and could use a boost.
The good news is that credit scores aren’t set for life, and a 660 credit score is not too terrible. In fact, by taking the proper steps, you can go from a fair score to a high credit score over time.
How Is a Credit Score Determined?
To better understand why your credit score is less than good and how you can improve it, it can help to know a little about how a credit score is calculated.
Regarding your FICO score, FICO uses an algorithm that analyzes the information on your credit reports from the three major credit bureaus, Equifax, TransUnion, and Experian. It uses this credit report to calculate your score based on the following:
Payment History
Your payment history consists of both on-time and late payments and is the most significant factor in FICO’s credit score calculation. Some lenders report all late payments, and others only report those 60 days past due.
Your payment history accounts for as much as 35% of your score, so late payments can greatly damage your score.
Credit Utilization
The amount of your available credit that you use determines your credit utilization. Suppose you have a credit card with a $10,000 credit limit, and you owe $4,000. Your credit utilization is 40%.
Experts recommend keeping your credit utilization to 30% or less for a healthy credit score since your credit utilization rate accounts for about 30% of your overall score.
Length of Credit History
Your credit history begins when you first borrow money, but it takes time to build credit. While young people are technically penalized by this part of the credit score calculation, it only makes up 15% of a credit score. If your credit score is 660, other negative factors are likely bringing down your score other than a short credit history.
Credit Mix
Not all debt is created equal as it pertains to your credit score. Installment loans with fixed monthly payments, such as a car loan, are different than revolving credit accounts, such as your credit card. Lenders like to see you can manage all types of debt.
The more variety you have in the type of debt you currently use or have used, the better your credit score, although credit mix only makes up 10% of your score.
Recent Loan and Credit Applications
Anytime you apply for a credit card or loan that results in a hard inquiry of your credit score by a lender, the inquiry can impact your score. It does not matter if you are approved for or denied the loan or card. It affects your score, although not by much. Recent applications only comprise 10% of your credit score.
You can check your own credit score without harming it. Checking your score is a soft inquiry and does not impact it
Derogatory Credit Report Information
A bankruptcy or foreclosure on your credit report, or an account in collections, are classified as derogatory information. It is no surprise that something such as bankruptcy can do quite a bit of damage to your score.
FICO does not assign a percentage to this category of its scoring calculation, but derogatory information can negatively impact your overall score significantly.
How VantageScore and FICO Scores Differ
The VantageScore scoring model is similar to FICO’s, with payment history having the most significant impact on an overall credit score. However, it does emphasize credit mix over credit utilization.
Even though VantageScore and FICO may differ in calculating credit scores, their purpose is the same. They help lenders determine if a consumer is more likely to handle credit responsibly or default.
The better your score, the more likely you are not just to get a loan but get one at a reasonable interest rate. Here are some steps to improve your 660 credit score so you can borrow for less interest.
How Can You Improve Your 660 Credit Score?
The best way to raise your credit score is to determine how you can improve each category described above, from payment history to recent applications. The following tips can help you do just that.
Start With Your Credit Reports
It can help to look at your credit reports from all three credit bureaus to determine what may be harming your credit score. For instance, you might know you’ve made a few late payments, but perhaps you’ve made more than you realize.
You can get a free copy of your credit reports by visiting AnnualCreditReports.com.
Also, check for errors as you go over your reports. Sometimes things get misreported and can hurt your score. You could find that one significant error is the reason for your 660 score, and having it corrected can get your score back into the “good” range.
Pay Your Bills on Time
Your lenders report both on-time and late payments to the major credit bureaus. Since your payment history makes up more than a third of your credit score, you want to ensure every payment is on time.
According to NerdWallet, about six months of on-time payments should improve your credit score, providing other factors aren’t negatively impacting your score.
While improving your payment history is not a quick fix, it can be significant.
Reduce Your Credit Utilization
While you might wonder about the point of having credit if you get penalized for using most of it, a high credit utilization hurts your score nonetheless.
Credit cards and other revolving credit have the most significant impact on credit utilization. So stop putting more on your cards and begin paying down your balances. If necessary, start a side hustle or get a part-time job that can help you pay down your balances faster.
Improving your credit utilization comes with the added benefit of paying less interest.
You’ll sometimes hear financial advice that getting another credit card is a quick way to improve your credit utilization. In theory, this is true, and it can benefit some people. You’ll automatically have more available credit with a new card.
However, unless you are disciplined enough not to use that available credit, getting another card can be a dangerous way to improve your credit score. If you tend to overspend or make credit mistakes that hurt your score, you could end up financially worse off and with a lower credit score than 660.
Don’t Apply for Any New Credit Until Your Score Improves Considerably
If you have a 660 credit score, you probably will not qualify for any affordable loans or credit. As previously mentioned, additional credit could result in additional debt if you tend to overspend. Applying for additional credit will likely only serve to damage your credit score further.
Consider Credit Coaching
The steps to improving a credit score may be simple, but they aren’t easy. Having a financial expert coach you through the process can help you succeed and find the quickest path to success. A credit expert can help you review your credit reports and create a plan tailored to your financial situation.
What Steps Should You Take Once Your Credit Score Improves?
Once you get your credit score back into the “good” range, or preferably the “very good” range, you should look at all your loans to determine which are worth refinancing. You might be able to refinance your car or home at a lower rate depending on interest rates, your credit score at the time you borrowed, and current interest rates.
Also, contact your credit card issuers to see if they will lower your interest rate based on your improved credit score. If not, you can apply for a new card with a lower rate.
Just remember what financial habits led to your 660 credit score. For some, unavoidable circumstances may have led to your lower credit score. But if overspending and late payments got you to a 660, make sure you don’t fall into bad habits that can lower your score and reverse all of your hard work in raising it.
How Will You Get Your Credit Score from Fair to Excellent?
The answer to the question ‘is 660 a good credit score’ is no. It is not a good score. But it isn’t too many points away from being good.
The steps to building your credit score are simple but not necessarily easy, and they will take time. However, the money you can save with a great credit score will make the effort of improving your credit well worth it.
If the thought of improving your credit feels overwhelming, consider taking my credit lifestyle class. It can teach you what you need to know about credit and help you improve your credit score faster.
