What is fair credit, and what does it mean if you have it?

That said, each lender sets its own criteria when it comes to classifying credit scores and setting the approval criteria you need to meet for approval. And, with some diligent attention to your finances, it’s possible to improve your credit to a good credit score or better. In this guide, we’ll help you evaluate if your credit score is fair and what your options are if that’s the case.

What is a fair credit score? 

Lenders use credit scores to assess the risk of loaning money to potential borrowers. Fair credit scores are numbers that fall within a particular range in a credit scoring model. 

If you aren’t sure what your credit score looks like, there are multiple ways to check your score for free (and checking your credit score does not damage it). For instance, registering for an account with the credit bureau Experian allows you to check your FICO Score for free.

Base credit scores, both FICO and VantageScore models, typically range between 300 and 850. With FICO Scores, a fair credit score ranges between 580 to 669. A fair credit score on a VantageScore credit scoring model ranges between 601 to 660. Here are how the commonly used FICO and VantageScore credit score tiers break down:

What does fair credit mean? 

The job of a credit score is to predict how likely you are to repay your credit obligations as promised. A higher credit score means that you represent less risk to potential lenders. 

Around 17% of consumers have a fair FICO Score according to Experian data. Meanwhile, 13% of consumers have a fair VantageScore credit score. 

Nonetheless, if you have a fair credit score it also means that your score is below average compared to other consumers. Based on the most recent data available at the time of writing, the average FICO Score in October 2023 was 718. The average VantageScore credit score in January 2024 was 701.

Having fair credit puts you in a better position than having bad credit or no credit. But when you have fair credit, you are likely to face certain challenges such as the following. 

• Qualification problems. Some credit card issuers and lenders may require you to have good credit or even excellent credit to qualify for certain financing offers. If you have a fair credit score, you might not be eligible for these credit cards or loans.
• Higher interest rates and fees. When you have fair credit, you’re unlikely to qualify for the most attractive interest rates and borrowing terms. Credit card issuers and lenders often reserve their best offers for applicants with good credit or better. 
• Less attractive credit card rewards and benefits. If you want to open a premium credit card with the best welcome bonuses or best rewards and benefits, you’ll typically need good credit or excellent credit to qualify for such offers. 
• Higher insurance premiums. In many states, your credit history can impact your car insurance rates. Your history is used to formulate a credit-based, insurance-specific score. While this isn’t quite the same as the credit scores lenders check when deciding whether or not to issue you money, the principle is similar—a good score can save you money, while one that indicates some blemishes might cost you.

Can I get a credit card with fair credit? 

In many cases, it is possible to qualify for a credit card with a fair credit score. But you should be strategic about the types of credit cards you apply for when you have a credit score that falls into the fair credit category. 

With a fair credit score, you probably won’t qualify for certain credit cards. For example, many credit cards with the best cash-back rewards, as well as those with the best travel rewards and perks, generally require applicants to have credit scores in the good to excellent range.

If you’re interested in these types of offers, you should work on improving your credit score before you apply. In the meantime, there are credit cards for fair credit and credit cards for bad credit that could be a better fit. For example, secured credit cards require the customer to submit a cash deposit (typically in the amount of your desired credit limit), but otherwise function like any other credit card and can help you build credit if used responsibly. 

SPONSORED PARTNER

Chime Credit Builder Secured Visa® Credit Card

Who is this card good for?

The Chime Credit Builder Visa card is good for those who want to build credit but don’t want to be bound by minimum deposits.

Annual Fee	None
Security deposit	$0

How to improve a fair credit score

A fair credit score can hold you back from certain types of financing offers. It could also cause you to pay higher interest rates, higher insurance premiums, and trigger other unpleasant consequences. Therefore, if you have a fair credit score, it’s wise to try to improve it and build good credit over time. Following are a few tips on how to improve a fair credit score:

1. Review your credit reports. 

As you begin working on your credit, it’s wise to review your three credit reports from Equifax, Experian, and TransUnion. You can visit AnnualCreditReport.com to download a free copy of all three of your reports. This is the website where consumers can access a free report from each of the major credit bureaus once a year, as stipulated by federal law—though during and after the coronavirus pandemic, the bureaus have made free reports available weekly. 

Once you have your reports, review each of them to search for any possible errors. If you discover mistakes or questionable information, the Fair Credit Reporting Act (FCRA) gives you the right to dispute those issues with the appropriate credit bureau. 

2. Pay down credit card debt

Everyone’s credit situation is different. But in many cases, one of the most actionable ways to improve credit score is to pay down your credit card balances. 

Your credit utilization ratio (the relationship between your credit card balances and credit limits) can have a meaningful impact on your credit score. This scoring factor plays a major role in the “amounts owed” category of your FICO Score—a category that’s worth 30% of your score. 

As you pay down credit card balances, your credit utilization ratio should go down as well. In general, a lower credit utilization ratio should help your credit score, as long as you’re not making other missteps that would hurt your score (such as missing payment due dates). 

3. Open new accounts

If you lack positive information on your credit report, opening a new credit card or a credit builder loan might be worth considering. When you open new credit accounts and manage them in a responsible manner—most importantly always paying on time—these tradelines may have the potential to help you establish positive credit history and build your credit scores over time. 

Keep in mind that you should only consider accounts from credit card issuers and lenders that report to all three major credit bureaus. Otherwise, the credit card or credit builder loan won’t help your situation as much as you may hope. 

Remember, it’s essential to pay on time (every time) and to keep your credit utilization ratio low in the case of credit card accounts and to keep your payment history intact. Also, with a credit card, it’s best to pay off your full balance every month to avoid paying expensive interest charges.

When selecting a new financial product to apply for, avoid those that aren’t transparent about their terms or that seem designed to take advantage of people with bad or fair credit. For example, if a credit card doesn’t require a deposit but charges an interest rate over 30% and assesses fees such as an account opening fee and a monthly maintenance fee, you’d likely be smart to avoid it and open a secured card from a respected bank instead. 

The takeaway

As long as you have fair credit, you’ll probably be blocked from the very best credit card rewards and benefits, and you’ll likely end up paying more on products such as personal loans and auto loans. You could even end up paying more on your auto insurance in some states. 

But, even though it’s below the average and can be a stumbling block when applying for financial products you may desire, a fair credit score isn’t cause for despair. Think of it as a signal for you to map out a plan and identify manageable steps that will empower you to improve your credit situation and build a good credit score. In time, if you pay down debt, keep your utilization ratio low and pay on time, you can attain good—or even exceptional—credit.

Please note that card details are accurate as of the publish date, but are subject to change at any time at the discretion of the issuer. Please contact the card issuer to verify rates, fees, and benefits before applying.