How Bad Is Credit Score of 580: Passable or a Disaster?
When you are looking to apply for a loan, credit scores play a major role. A good score will give lenders a quick and objective measurement of your credit risk.
Credit scores can often be confusing to understand too. People often wonder how bad is credit score of 580, so here is a look at what should you be expecting with a score of 580.
How Bad Is Credit Score of 580?
We will not sugarcoat this. Anything above 750 or more is considered to be excellent. Any score between 660 and 749, puts you in the decently fair credit score category.
Scores below 619 are where things start going downhill. If your credit score is 580, it is considered as a poor credit score.
You have got some serious work to do with such a score. Having a score of 580 will have some major impact on your life.
You will end up spending significantly more on interests in comparison to people who have a higher credit score.
Below, allow us to give you an idea where you stand with a credit score of 580 when you apply for different kinds of loans.
With a credit score of 580, you may get approved for a loan. However, you will have a sky-high interest rate. To give you a basic understanding, let us compare the rate of interest for a three-year car loan for two different people.
]One who has a credit score of 580 and another who has a credit score of 700.
The buyer with the credit score of 580 may get their loan with the rate of interest at roughly 15%. On the other hand, the buyer with a score of 700 has a decent credit score.
Thus he will get a loan with a rate of interest at around 6.5%. Even though the difference between the scores is just a little over 100, it can make a huge difference.
The buyer with the credit score of 580 will likely end up shelling out over $4,000 extra in interest in comparison with the buyer who has a higher credit score over the course of the three-year loan.
If you have a credit score of 580 and you are trying to apply for a home loan, let us break this to you right away that the road is going to be quite difficult.
You will find that a majority of the mortgages require a credit score of a minimum 620.
That being said, it is not impossible to be approved for a home loan with a credit score of 580. However, you have to be prepared to shell out tens of thousands of dollars to pay in interest over the course of your loan.
Knowing how bad is credit score of 580 is imperative to ensure you avoid it altogether. Credit scores are extremely important, and they have a huge impact on your life.
If you do have a credit score of 580 or lower, ensure you adopt better credit habits. While raising your score is a slow and gradual process, once you set the ball rolling, it will definitely begin to increase.
In turn, this will bring in better credit opportunities.