So, what is a fair credit rating, you may ask? We’re about to give you an in-depth look at what a fair credit rating is. The majority of Americans have a fair credit rating–they are neither exemplary financial citizens nor complete borrower deadbeats–particularly younger people who have had less time to learn the ropes of personal finance and are just finishing school and embarking on their careers. There are many ways to both deal with having only a fair credit rating and to ameliorate it involving effective communication with lenders and sensible personal finance practices.
There is no technically defined range for a fair credit score, but most agree that any range between 640 and 680 could be considered fair. Anything worse than 640 and many lenders will be very cautious in extending loans. People with scores over 680 are offered some of the best interest rates.
People who have fair credit ratings either have one or two delinquent accounts, have a demonstrated pattern of failing to pay back revolving credit balances in full or may have a very poor debt to income ratio. In some cases, a downgraded credit rating can indicate an error on the credit history. It is good practice to check on your credit report regularly to ensure that it is accurate and up to date, particularly after paying off large debts.
People with fair credit often have to work slightly harder to get access to loans at good rates. Negotiating with creditors can often have surprisingly beneficial effects on the loans that you are offered. The evidence of a capacity to negotiate is sometimes considered a positive indicator by financial institutions. One good tactic for improving loan rates is to ask to pay a higher down payment in return for better interest rates. Some foresight and planning can save you substantial amounts of money.
Many people with fair credit can find it difficult to get approved for a lease at many relatively exclusive apartment buildings. Some solutions involve getting a co-signer for the lease, providing proof of income, putting down a larger deposit or even providing several months of rent in advance. These positive steps can demonstrate that despite your tarnished credit, you are sufficiently responsible and financially healthy enough to be a good tenant.
Many people end up hovering at a fair credit score, convinced that it is “good enough.” This is a very risky proposition, particularly as credit markets have tightened significantly. It can be quite easy for someone with fair credit to drop precipitously to a bad credit rating after only a few missing payments. Many credit card companies have taken to aggressively slashing lines of credit or increasing interest charged if a payment is missed. Preparing for the worst will help you persevere, and perhaps improve your fair credit score.