635 Credit Score : What It Means and Why It Matters
Explore the Benefits, Financial Opportunities, and How to Maintain an Exceptional 635+ Credit Score
(888) 803-7889Explore the Benefits, Financial Opportunities, and How to Maintain an Exceptional 635+ Credit Score
(888) 803-7889A credit score of 635 is generally considered a "fair" score, which means it is above poor but below what lenders typically consider good creditworthiness. While a 635 score shows some level of financial responsibility, it often indicates potential risks such as past late payments or high credit utilization. Borrowers with this score may find it harder to obtain loans or credit cards with favorable terms, and when approved, they might face higher interest rates and stricter conditions. However, it is possible to qualify for many types of credit, including personal loans and mortgages, though usually at less competitive rates. Improving a 635 credit score is achievable by consistently making on-time payments, reducing debt levels, avoiding frequent credit inquiries, and maintaining a good mix of credit types. Over time, these efforts can help elevate the score, unlocking better financial opportunities and loan terms. Overall, a 635 credit score is a starting point that signals the need for careful financial management to reach higher credit tiers.
The Rebuilder: Someone who has had a major negative event (e.g., foreclosure, bankruptcy, repossession) in the past but has since begun to rebuild their credit responsibly.
The Inconsistent Payer: A person who has a history of occasional late payments (30-90 days late) but no severe defaults.
The High Balancer: An individual who consistently uses a high percentage of their available credit limit on their cards, which can lower their score.
The Credit Newcomer: Someone with a relatively short credit history who is still building a proven track record of on-time payments.
| Credit Score Range | Credit Status | Description |
|---|---|---|
| 300 - 579 | Poor | Individuals in this range have difficulty qualifying for loans. If approved, they often face high interest rates and fees. |
| 580 - 669 | Fair | Scores in this range indicate moderate risk. Borrowers may qualify for credit but often with higher rates and restrictions. |
| 670 - 739 | Good | This range is generally considered good credit. Borrowers have better chances of loan approval with competitive interest rates. |
| 740 - 799 | Very Good | Individuals here have shown strong credit behavior and typically receive better loan terms and lower interest rates. |
| 800 - 850 | Excellent | Scores in this range indicate the highest creditworthiness, unlocking the best financial offers and terms. |
With a 635 credit score, you will face higher interest rates across all loan types. Lenders charge more to offset the perceived risk of lending to someone with a less-than-ideal credit history.
Mortgages: You will likely be offered an FHA loan rather than a conventional loan, requiring mortgage insurance and a higher rate.
Auto Loans: Your APR will be significantly higher than the promotional 0-3% rates advertised, often landing between 6% and 15%.
Credit Cards: You will qualify for fewer cards, primarily those with higher APRs and annual fees.
Personal Loans: If approved, your loan will come with a much higher interest rate, increasing the total cost of borrowing.
While your options are limited, you still have access to several financial products.
Secure a Credit Card: You may qualify for secured credit cards (require a cash deposit) or unsecured cards designed for building/rebuilding credit.
Get an Auto Loan: Special financing at "buy-here, pay-here" dealerships or subprime lenders is possible, but rates are high.
Obtain an FHA Mortgage: The FHA backs loans for borrowers with scores as low as 580 (with a 3.5% down payment).
Apply for a Personal Loan: Some online lenders specialize in loans for fair credit, though APRs can be steep.
Consider Credit-Builder Loans: These loans are designed specifically to help people improve their scores.
A credit score of 635 is often viewed as the minimum threshold for many conventional mortgage loans, but borrowers may face higher interest rates and stricter approval requirements. However, there are several mortgage options available for those with a 635 credit score, including FHA loans, VA loans for eligible veterans, and USDA loans for rural buyers. FHA loans are particularly popular because they offer lower down payments and more lenient credit requirements, though they include mortgage insurance premiums. VA and USDA loans often provide favorable terms such as no down payment for qualifying applicants. Understanding these options will help borrowers with a 635 credit score find a mortgage that aligns with their financial situation while working on improving their credit score for better rates in the future.
| Loan Type | Minimum Credit Score | Down Payment | Mortgage Insurance | Key Benefits |
|---|---|---|---|---|
| Conventional Loan | 620 (Minimum) | Typically 5% or higher | Private Mortgage Insurance (PMI) if down payment < 20% | Widely available but may have higher interest rates for 620 score |
| FHA Loan | 580 (sometimes 500 with a larger down payment) | As low as 3.5% | Mortgage Insurance Premium (MIP) required for life of loan | Lower credit score requirements, more lenient underwriting |
| VA Loan (Veterans) | No official minimum, 620 often accepted | 0% | No PMI required | No down payment and competitive rates for eligible veterans |
| USDA Loan (Rural) | 620 or per lender requirements | 0% | Guaranteed by USDA, may have fees | No down payment for eligible rural properties |
A credit score of 635 is considered on the lower end for car loan approvals but does not disqualify borrowers from getting financing. Many lenders offer car loan options for individuals with fair credit scores, though these loans may come with higher interest rates and stricter terms. Options may include loans from banks, credit unions, and online lenders who specialize in lending to customers with less-than-perfect credit. It is advisable to compare offers, consider used car loans to lower the loan amount, and work on improving the credit score to access better rates over time.
| Loan Type | Typical Minimum Credit Score | Interest Rate Range | Down Payment | Notes |
|---|---|---|---|---|
| Prime Auto Loan | 620 - 700 | 7% - 12% | Typically 10% or more | Offered by banks and credit unions; better rates with higher scores |
| Subprime Auto Loan | 580 - 619 | 12% - 20%+ | 10% - 20% | Higher interest rates due to increased risk; lenders may require co-signer |
| Used Car Loan | 600 - 620 | 8% - 16% | 5% - 15% | Loan amount based on vehicle value; ideal for budget-conscious buyers |
| Pre-approved Car Loan | Varies | Varies | Varies | Existing bank customers may receive pre-approved offers with expedited processing |
A credit score of 635 in the USA is considered fair credit, which means there are credit card options available designed to help build or rebuild credit. These cards typically offer manageable fees, reward programs tailored for fair credit holders, and opportunities to improve your credit scores through responsible use. Secured credit cards and cards from issuers that specialize in fair credit are common choices. It's important for consumers to review annual fees, interest rates, and rewards to find a card that fits their spending habits and credit goals.
| Credit Card | Type | Annual Fee | Rewards & Benefits | Highlights |
|---|---|---|---|---|
| Capital One Platinum Credit Card | Unsecured, Fair Credit | $0 | No rewards | Build credit with no annual fee, automatic credit line reviews |
| Capital One QuicksilverOne Cash Rewards | Unsecured, Fair Credit | $39 | 1.5% cash back on all purchases | Good for cash back rewards with fair credit |
| Discover it® Secured Credit Card | Secured Card | $0 | 2% cash back at gas stations & restaurants | Cash back and helps build credit with security deposit |
| Credit One Bank Platinum Visa | Unsecured, Fair Credit | $0 - $99 (varies) | 1% cash back on eligible purchases | Offers credit line increases and credit monitoring |
| Avant Credit Card | Unsecured, Fair Credit | $0 - $59 | No rewards | Designed for rebuilding credit with manageable fees |
A credit score of 635 is considered fair credit in the USA, and while it may limit access to the best personal loan rates, there are still multiple lenders and loan products available. Borrowers with this score can expect higher interest rates compared to prime borrowers, but with careful shopping, they can find loans that fit their budget and needs. Common lenders who work with fair credit scores include Best Egg, Prosper, Upgrade, Axos Bank, OneMain Financial, and LendingPoint. Loan amounts typically range from $1,000 to $50,000, with repayment terms from 2 to 7 years. Personal loans can be used for debt consolidation, home improvement, emergencies, or other expenses.
| Lender | Minimum Credit Score | Loan Amount | Interest Rate Range (APR) | Loan Term | Special Features |
|---|---|---|---|---|---|
| Best Egg | 600+ | $2,000 - $50,000 | 6.99% - 35.99% | 3 to 5 years | Fast funding, flexible repayment |
| Prosper | 640+ | $2,000 - $40,000 | 7.95% - 35.99% | 3 to 5 years | Peer-to-peer lending, debt consolidation focus |
| Upgrade | 600+ | $1,000 - $50,000 | 7.99% - 35.99% | 2 to 7 years | Multiple rate discounts, credit building tools |
| OneMain Financial | 600+ | $1,500 - $20,000 | 18% - 35.99% | 1 to 5 years | Flexible funding options, secured loans available |
| LendingPoint | 600+ | $2,000 - $50,000 | 7.99% - 35.99% | 2 to 5 years | Fast funding, online application |