Discover what it means to have a credit score below 347, how it's calculated, what loans you can get, and how to improve your credit score
A credit score is needed for you to be able to get a loan or credit. The reason behind this is because it will help financial institutions to determine your creditworthiness. They will also see every loan that you made and the payment history that you have. Find out more about it by reading the information below.
Credit scores are calculated based on the proprietary algorithm. This will include the person's outstanding debts, payment history, and the length of the individual's credit history.
Credit scores can range from 300 to 850. The higher the individual's score, the lower the risk. People who have lower credit scores are considered high risk, which will make lending companies ask for more requirements.
About Fico scores
Fair Isaac Corporation is the one who established FICO, and it is one of the most commonly used credit scoring systems today.
According to FICO, 90% of the most reputable and respected lenders today are making decisions according to this kind of credit scoring system. Get to know more about Fico scores by reading the information below.
How are credit scores calculated?
The weight of each of the five categories are; 30% of amount owned, 10% is for the new credit, 15% accounts for the length of credit history, 10% is the credit mix and the last 35% accounts for the person's payment history.
The FICO score takes into consideration positive as well as negative aspects of the credit report. The percentage or the weight of any of the categories mentioned above may differ from a person to another depending upon the information available in the credit report.
The FICO score takes all of the information from your credit report. However, the banks or any other lending institution might look at your income, type of credit and employment history when you apply for a loan or mortgage.
Once a certain lender asks for a client's credit report, they can also ask for the Fico score. Other sources say that your Fico score will include 35% of your payment history, 30% of your credit utilization, and 15% as to how long have you been borrowing.
Explanation of credit score ranges
It is important to know the category that you fall into when it comes to credit score for you to be aware. The range of a credit score can go from 300 to 850. Always remember that the higher your score, the higher the chances of you to qualify for a loan. There will also be instances where a financing company is okay with 650 scores, while the other is fine with a 750 score. It will all depend on the lender itself.
A lender or a bank will check your credit score if you qualify for the application that you are requesting. Here are some of the credit score ranges that you should know.
Bad credit score
People with a credit score below 579 is known as high risks. Foreclosures, poor payment history, and bankruptcies are the reasons why people fall into this category.
Good credit score
A good credit score ranges from 680 to 719. People with this credit score can expect approvals and interest rates that are better.
Very Good
A very good credit score ranges from 720 to 799. People with this credit score is known to be small risks, and they often get loan amounts that are higher than usual.
Excellent
An excellent score ranges from 800 and above. Financial freedom is expected to people with this score.
What does it mean to have a credit score under 347
The credit score ranges from 347 to 850. The credit score of 347 is the lowest one can possibly achieve. The credit score of 850 is the highest credit score one can achieve. You cannot have a credit score below 347. You can have a credit score over 347 or no credit score. Because, getting the score of 347 itself, is tough.
In America, according to research, only 7 percent of the people lie in the credit score of 347 to 549. Therefore, if you haven't been involved in any credit transfer, then you are most likely to have no credit score rather one that is below the minimum credit score of 347.
Credit cards with a credit score under 347
People who are getting credit cards with a credit score under 347 may have a hard time availing one because of their poor score.
Credit card companies often see people with a credit score under 347 as high risk. That is why they come up with different alternatives for people with poor credit scores. The secured credit card is one of the options that they have. Here are some of the cards that you can apply.
Navy Federal nRewards Secured
Navy Federal nRewards will let you earn 1 point for every USD 1 you spend. The annual fee is zero, while the interest rate is 2.99% for the first 12 months.
US Bank Secured Card
US Bank Secured Card can provide you a limit of up to USD 5,000. The annual fee for this card is USD 29, which is smaller than other secured credit cards.
Car loans with a credit score under 347
If you are planning to get car loans with a credit score under 347, then knowing your options is essential.
Having a credit score under 347 can be a problem because this is known as a poor score. But don't worry because financing companies can still grant you the loan that you need but with a higher interest rate. Of course, there are ways on how you can avoid getting an enormous interest rate, which can only make it hard for you to pay off your loan.
Co-Signee
One of the ways on how you can avoid a high-interest is by having a co-signee. Your co-signee should have a good credit score for your loan to be approved. You can ask a parent or a relative to co-sign the loan that you are requesting.
Having a Collateral
Another way on how you can get the approval that you want is by having a collateral. The company will be more comfortable in granting you the loan because they can repossess the collateral that you have given them if you can no longer pay them off.
Mortgages with a credit score under 347
It is virtually impossible to be below the lowest point of 347 points. However, some of the other credit rating systems used by banks and other financial institutions do go below that threshold.
Lower the score, difficult it is for you to acquire a home loan or mortgage. The lending institutions put a high risk of defaulting on your payments or obligations.
In such conditions, you have very few options available for you. You can either get a new credit card and use the credit to pay for mortgage or home loan. The credit card companies pay little interest to your credit score.
You can also ask a friend or family member to co-sign for your loan. It improves your chances of getting the loan.
Home Loans with a credit score under 347
According to the newest model used for calculating the credit score, 347 is the minimum score that you get. At the score of 347, you are most unlikely to get a home loan. Most of the banks will not be willing to lend you for home and mortgage. A score of 347 is virtually considered a zero or minimum point.
You will be required to use different means of acquiring loans. You can try for government loans which are difficult under such low score. You can also apply for online loans. Online lenders pay little or no interest in your current credit scores. Therefore, your chances of acquiring home loans are significantly increased.
With a low credit score, you might be able to get a new credit card. You can also use the facilities of a credit card to get credit for your new home and mortgage.
Personal Loans with a credit score under 347
The lowest credit score that can obtain you a personal loan formally is 347. Below 347, it is almost impossible to be issued with loans by financial institutions. You are considered a liability with poor financial practices that don't benefit any organization. However, you still have limited sources for your personal loans.
Credit union loan
You only qualify by being a member of a specific credit union. Even though, the amount that you are eligible for is minuscule to meet your demands. You will most likely be given an emergency loan upon satisfaction that you need.
Pawn shop loanIt is the most accessible option for you with this credit score. You can take your valuables to a pawn shop and be issued with a credit equivalent or slightly lower than the value of that property.
Title loan
It should be the last option for you since you may end up losing your vehicle if you forfeit payments. You should only use your car to get a loan if you are looking for finance to make an investment that guarantees you returns.
Things you can do to improve your credit score of 347
347 is the lowest credit score that most formal financiers can consider you for a loan. You risk being blacklisted by banks if your rating goes below this score. Therefore, it is necessary for you to make a deliberate effort to ensure your credit score improves progressively. A good credit rating improves the terms and rates you get for credit.
Pay your premiums on time
Late payments usually damage your rating. A late payment of even a day or week impacts on your credit scores negatively. You can set a reminder from your creditor or allow them to debit your credit automatically at the end of every month.
Pay debt instead of buying it off
Taking a loan to pay off another loan is not such a good idea. Some banks can offer you another loan on condition that they buy off the loan you owe to another financier. This practice can damage your score since you increase your debt and the period you are in debt.
Cut down credit card use
Overreliance on revolving credit especially credit cards drastically diminishes your rating. Your credit score can be affected by a high outstanding debt especially when looking for extra financial support.