Your credit scores demonstrate the liking of you making your payments on time and show a lender or creditor the level or risk they are taking on when lending to you. A credit score ranges between 300 and 900.
Credit scores are calculated using several different factors, including payment history, amount of debt, credit history, and credit inquiries. Higher credit scores typically indicate to creditors that you’re more likely to pay your bills on time than someone with a lower credit score. Higher credit scores also usually result in more favourable loan terms, like low-interest rates and flexible term lengths.
So, what does having credit scores of 650 mean?
What Does It Mean To Have A 650 Credit Score?
Lower credit scores indicate that you have poorer credit, while higher credit scores indicate better credit. It’s important to keep in mind that while high credit scores are always nice to have and will likely result in better chances of approval, creditors do take into account other factors when approving applications.
According to Equifax Canada, one of the country’s two credit bureaus, these are the general credit score ranges:
- 300-559: Poor
- 560-659: Fair
- 660-724: Good
- 725-759: Very good
- 760-900: Excellent
Canada’s average credit score is 660, making a 650 score below average. 650 also falls in the “fair” category according to the ranges from Equifax.
Are Below-Average Credit Scores Bad?
While below-average credit scores aren’t the end of the world it could make it more difficult to get approved for certain loans or credit products, depending on the other factors the creditor is looking at. Having a credit score of 650 isn’t bad, it might mean you’re young and haven’t had enough time to develop a higher credit score yet, or maybe you’re new to Canada. It could also mean you’ve had financial problems in the past and are rebuilding your credit.
What Can You Get With A 650 Credit Score?
Despite some of the challenges, there are still ways to obtain financial products with a 650 score.
Getting A Personal Loan With A 650 Credit Score
Banks will still consider lending you a personal loan with a 650 credit score. But, you might not get the most favourable rates. It’s important to consider how much you need the loan, as it might not be worth it if you have to pay a higher amount of interest. If your credit scores were higher, it’s possible you would receive a larger loan amount and lower interest rates, although this of course depends on the lender.
If you don’t want to, or can’t borrow from a bank with a 650 credit score, there are still other options. Alternative lenders and bad credit lenders will also consider lending to someone with lower credit scores. However, despite qualifying, you’ll be subject to high-interest fees and could be required to put up collateral or have a co-signer.
Getting A Credit Card With A 650 Credit Score
Most credit card providers require you to have a credit score of at least 660 before offering you a credit card product. For highly desirable cards, like credit cards with cash back or generous rewards, you’ll need good credit. With a credit score of 650, you may be more limited in the amount of credit card options available to you.
| Credit Card Product | Card Type | Interest Rates | Earn Rates |
| BMO CashBack Mastercard | Cash back | 19.99% purchase rate | – 5% cash back for first three months – 3% cash back on groceries – 1% on recurring bill payments – 0.5% on all other purchases |
| MBNA Rewards Platinum Plus Mastercard | Rewards Points redeemable for travel, cash back, and more | 19.99% purchase rate | Sliding scale of points system, with some purchases eligible for 4 points, 2 points, or 1 point per dollar spent, depending on the category of purchase |
| HomeTrust Preferred Visa | Travel, cash back | 19.99% purchase rate | 1% cash back on all purchases |
| BMO Preferred Rate Mastercard | Low Interest Rate | 12.99% for purchases and cash advances | None |
| MBNA Smart Cash Platinum Plus Mastercard | Cash back | 19.99% purchase rate | Sliding scale of cash back, with 5% for gas and groceries for six months, 2% after six months, and 0.5% on other purchases |
Getting A Mortgage With A 650 Credit Score
Most mortgage lenders, especially lenders like banks, require borrowers to have a minimum 680 credit score. Other lenders might consider your application with lower credit scores, but they’ll likely charge you higher interest rates, require a co-signer, or require collateral. If you’re looking to apply for a mortgage you should aim to have your credit score in the 620-680 range. Ultimately credit score requirements are up to the individual lender and credit scores aren’t the only factor considered when approving a mortgage application.
Getting A Car Loan With A 650 Credit Score
Car loans are usually easier to obtain with lower credit scores because the car itself acts as security, or collateral, for the lender. However, if the loan is a large amount of money, the lender might require a co-signer or a larger down payment. Most car loans require credit scores that are a minimum of 630, so 650 should put you in a likely position to obtain a car loan.
If your credit scores are even lower than 650, there are lenders that specialize in financing for borrowers with low credit that can help you. However, this usually comes with high-interest rates and costs, so it’s best to consider ways to improve your credit score first if you can.
Ways To Improve Your 650 Credit Score
Before considering a high-cost or high-interest loan, you can build healthier credit. Just keep in mind that everyone’s credit scores react differently so these are some general suggestions. Some options may work for you but may not work for other consumers.
Pay Bills On Time
Your payment history is one of the most significant factors used when calculating your credit scores. Depending on the credit scoring model, your payment history can account for around 35% of your credit score calculation. As such, paying your bills on time and in full can help you build a positive payment history which may help improve your credit scores.
Obviously, individuals who are struggling financially may have more difficulty with this. But, if your credit is suffering because you’re forgetful, you can set up automatic payments to help you better manage your payments.
Secured Credit Card
If you’re looking to build your credit from scratch or are trying to rebuild after a financial hardship, a secured credit card is a good option to consider. Consumers, even those with bad credit, are almost guaranteed approval as you simply need to be able to provide a deposit to secure the card. Once you start responsibly using the card, your payments will be reported to a credit bureau, which may help build credit.
Monitor Your Credit
Monitor your credit report to ensure there are no discrepancies. Sometimes, a credit report might show an outdated debt, or even show a debt that doesn’t belong to you. Monitoring your credit report allows you to rectify any errors, which may be hurting your credit.
Reduce Your Debt-To-Credit Ratio
Your debt-to-credit ratio compares the amount of revolving debt you have to the amount of credit available to you. These ratios are another common factor used in the calculation of your credit scores. It typically accounts for about 30%.
Generally speaking, lenders like to see a ratio of 30% or under, as higher ratios can indicate that you may be financially overextended. One way you can reduce your ratio is by increasing your credit limit, spending less money or by paying off your credit card(s) or line(s) of credit more frequently.
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READ ARTICLE650 Credit Score FAQs
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Final Thoughts
650 isn’t the worst credit score, but it’s considered fair and below average. While there are still loan opportunities for someone with a 650 credit score, the loan terms available aren’t always good. It’s worth improving your credit score before applying for loan products if possible so that you have access to more favourable terms and rates.
