Financial Education
Understanding Your 640 Credit Score
AA 640 credit score falls within the 580 to 669 range of FICO Scores, classifying it as fair. Improve this score by making on-time payments for bills, credit cards, and loans. Avoid unnecessary credit applications to maintain steady progress.
Some lenders may consider a 640 score risky, as it is a subprime score. But that being said, you may still qualify for different types of financial products when you need financial assistance.
According to Experian, the average credit score in 2023 was 715.¹ If a consumer has a 640 score, they only need 75 more points to reach the national average. Time Magazine reports that most consumers working on building credit can see a monthly increase of up to 10 points.²
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Key Takeaways for a 640 Credit Score
Overview of Your Rating
A 640 credit score is fair. Fair credit indicates that a borrower is a moderate credit risk. While you still have a good chance of getting approved for financial products, your rates and terms will be dissatisfactory. Look for lenders that offer pre-approval estimates to compare your options.
Borrowing Options
Subprime borrowers may still be eligible for all types of installment loans, such as personal loans and auto loans. However, since a 640 score is on the lower end, borrowers may benefit from bad credit loans that have lower minimum credit score requirements.
Improving Your Score
Fair credit borrowers can improve their credit scores by avoiding missed or late payments, asking for credit limit increases, and reducing their outstanding debt. Remember that improving your credit will take time, but consistent effort will provide desirable results.
Is a 640 Credit Score Good?
A 640 score falls within the middle range of bad and good credit scores. A fair credit score is a good stepping stone, which means borrowers can work on improving their credit and still have financial opportunities open to them.
Pro Tip: Many lenders look beyond just the score. Consistent income and recent payment history can still unlock opportunities.
US Population Credit Score Distribution
25
20
15
10
5
0
300-579
580-669
670-739
740-799
800-850
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Personal Loans
A personal loan is a versatile loan option that borrowers can use for a wide variety of expenses. Since personal loans are designed to cover various costs, the loan amounts generally range from a few hundred to several thousand dollars.
The eligibility requirements for personal loans vary by lender. One lender may have a high minimum credit score requirement, while another may not. If you have fair credit, look for a lender that offers flexible qualification requirements. There are legitimate online lenders that work with almost any credit score range.
The eligibility requirements for personal loans vary by lender. One lender may have a high minimum credit score requirement, while another may not. If you have fair credit, look for a lender that offers flexible qualification requirements. There are legitimate online lenders that work with almost any credit score range.
Bank Loans
Banks offer all types of loans, most commonly personal loans. While banks can provide decent interest rates and high loan amounts, the approval requirements can be strict. Borrowers are generally expected to have good credit for approval. However, you may be able to get a preapproval decision from a bank before submitting a loan application. Just remember that the approval process for a bank loan can take longer, so you may not be able to get instant emergency cash.
Credit Cards
A subprime credit card is a card meant for borrowers who do not have good credit. These credit cards usually have higher interest rates and lower credit limits. However, credit cards can be beneficial as they allow you to borrow money, repay it, and then borrow again.
Just ensure that you are capable of repaying the balance in full each month. If your unpaid balance is rolled over to the next month’s billing cycle, you can end up paying a significant amount in interest fees. If you are close to reaching your credit limit, your credit score can decrease due to a high credit utilization rate.
These are some of the best credit cards for a fair FICO score:
• Capital One QuicksilverOne Cash Rewards Credit Card
• Credit One Bank® Platinum Visa® for Rebuilding Credit
• Secured Chime Credit Builder Visa® Credit Card
• Mission Lane Cash Back Visa® Credit Card
• Fortiva® Mastercard® Credit Card
Just ensure that you are capable of repaying the balance in full each month. If your unpaid balance is rolled over to the next month’s billing cycle, you can end up paying a significant amount in interest fees. If you are close to reaching your credit limit, your credit score can decrease due to a high credit utilization rate.
These are some of the best credit cards for a fair FICO score:
• Capital One QuicksilverOne Cash Rewards Credit Card
• Credit One Bank® Platinum Visa® for Rebuilding Credit
• Secured Chime Credit Builder Visa® Credit Card
• Mission Lane Cash Back Visa® Credit Card
• Fortiva® Mastercard® Credit Card
Action Plan
Action Plan
Action Plan
How To Improve Your 640 Credit Score
Maintaining a fair credit score is an accomplishment, but it’s still possible to get an even higher credit score. Below are some tips to help you maintain and improve your fair credit rating.
Pay Bills on Time
A borrower’s payment history is the most important determining factor for credit scores, as it makes up 35% of a FICO score. Late payments can result in penalty fees and dips in your credit, so it’s critical to make all your monthly payments on time. A long history of timely payments can positively impact your 640 score and help you achieve good credit.
Keep Credit Balances Low
Your credit utilization counts for 30% of your FICO score. If you max out your credit limits, you can negatively impact your credit. To maintain and improve a fair credit score, financial experts recommend using less than 30% of your total credit limit. Suppose your line of credit is $5,000. To maintain your current credit score, avoid a balance higher than $1,500.
Monitor Your Credit Reports
Monitoring your credit reports from each of the major credit bureaus can help you identify and correct errors that may be affecting your credit. Credit bureaus can make mistakes, so it’s not unusual to find an incorrect balance or account status on a credit report. If you notice an error, you can dispute your credit report by contacting the credit bureau directly.
Can I Buy a House With a 640 Credit Score?
If you want to purchase a home, rest easy knowing that home ownership is possible with a 640 score. You may have no issues qualifying with a mortgage lender that offers conventional loans. A conventional loan is a mortgage that is not backed by a government agency, such as the Federal Housing Administration (FHA).
However, it’s important to understand that you may have to provide a higher down payment on a conventional loan. If you cannot provide at least 20% of the home’s purchase price, then you will have to acquire private mortgage insurance (PMI). PMI is a type of mortgage insurance that protects the lender against default.
To better understand what loans and credit products you can get with fair credit, check out this helpful guide:
Disclaimer: This table reflects the general lending environment for individuals with a credit score around 640. It’s important to note that specific terms can vary by lender and current economic conditions.
However, it’s important to understand that you may have to provide a higher down payment on a conventional loan. If you cannot provide at least 20% of the home’s purchase price, then you will have to acquire private mortgage insurance (PMI). PMI is a type of mortgage insurance that protects the lender against default.
To better understand what loans and credit products you can get with fair credit, check out this helpful guide:
Disclaimer: This table reflects the general lending environment for individuals with a credit score around 640. It’s important to note that specific terms can vary by lender and current economic conditions.
Mortgage Type
Description
Credit Score Requirements
Key Features
FHA Loan
Insured by Federal Housing Administration.
As low as 500 with 10% down.
Lower down payment requirements.
VA Loans
Backed by Dept. of Veterans Affairs.
Typically 620 (varies by lender).
No down payment required; no PMI.
USDA Loans
For homebuyers in rural/suburban areas.
640 for automatic underwriting.
No down payment required.
Disclosure: This table provides estimates; requirements and features can vary by lender and situation.
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