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0 A credit score of 651 falls within the “Fair” range, according to most major credit scoring models like FICO and VantageScore. While a 651 credit score is not the worst, it does limit your financial options. You may face higher interest rates, fewer credit offers, and difficulty securing loans or credit cards. Fortunately, improving a 651 credit score is entirely possible with the right approach.
In this guide, we’ll outline simple and effective steps to boost your credit rating. Along the way, we’ll also touch on important financial concepts like how bankruptcy works and how it affects your credit, as well as strategies for managing debt.
Understanding a 651 Credit Score
What Does a 651 Credit Score Mean?
A credit score of 651 is typically classified as “Fair” or “Average.” It means that while you might still qualify for credit, you are unlikely to receive the best terms available. Lenders will view you as a somewhat risky borrower, which can result in higher interest rates, fewer credit card options, and stricter loan conditions.
Here’s a breakdown of FICO credit score ranges for context:
- 300-579: Poor
- 580-669: Fair
- 670-739: Good
- 740-799: Very Good
- 800-850: Excellent
With a 651 credit score, you’re just shy of moving into the “Good” credit range. Improving your score could open up better financial opportunities and save you money over time by helping you qualify for lower interest rates and better credit offers.
Factors That Influence Your Credit Score
To improve your 651 credit score, it’s essential to understand the factors that affect it. The most widely used credit scoring models, such as FICO, take the following factors into consideration:
- Payment History (35%): This is the most significant factor. Late or missed payments can severely impact your credit score.
- Credit Utilization (30%): This refers to the percentage of your total available credit that you are using. Ideally, you should keep your utilization below 30%.
- Length of Credit History (15%): The longer you’ve had credit accounts open, the better.
- New Credit Inquiries (10%): Opening too many new accounts in a short period can hurt your score.
- Credit Mix (10%): A healthy mix of different types of credit (e.g., credit cards, loans, mortgages) can positively affect your score.
Simple Steps to Boost Your Credit Score
Improving your credit score requires patience, discipline, and strategic financial management. Here are actionable steps to help boost your 651 credit score.
1. Pay Bills on Time
Payment history accounts for the largest portion of your credit score, making it critical to pay your bills on time. If you’ve missed payments in the past, make it a priority to avoid further delays. Setting up automatic payments or reminders can help ensure you stay on track.
Tip: Address Late Payments
If you have past late payments on your credit report, consider reaching out to your creditors. Sometimes, they may agree to remove a one-time late payment, especially if you’ve since demonstrated good payment behavior.
2. Reduce Credit Card Balances
Credit utilization—the amount of your available credit you’re currently using—plays a significant role in your credit score. Keeping your credit utilization below 30% is ideal, but lower is always better.
How to Lower Your Utilization:
- Pay down balances: Prioritize paying off high-interest credit cards first.
- Increase your credit limit: You can ask your credit card issuer to increase your credit limit. This will improve your utilization rate, but only if you don’t accumulate more debt.
- Avoid new debt: Refrain from making large purchases on your credit cards while trying to improve your score.
3. Dispute Credit Report Errors
One of the quickest ways to potentially boost your credit score is by reviewing your credit report for errors. Mistakes such as incorrect account information, outdated balances, or accounts that don’t belong to you can unfairly lower your credit score.
Steps to Dispute Errors:
- Request your credit report from the three major credit bureaus (Experian, TransUnion, and Equifax).
- Carefully review each report for inaccuracies.
- File disputes online or by mail with the respective credit bureau to have errors corrected.
4. Avoid Applying for New Credit Unnecessarily
Each time you apply for new credit, a hard inquiry is placed on your credit report. Multiple hard inquiries in a short period can lower your score, as it signals to lenders that you may be overextending your finances.
Tip: Focus on Existing Credit
Rather than opening new credit accounts, focus on improving your payment history and reducing debt on your current accounts. This approach will help strengthen your credit score without adding additional inquiries to your report.
5. Consider Debt Consolidation
If you have high-interest debt spread across multiple accounts, debt consolidation may help. This strategy involves rolling several debts into a single loan with a lower interest rate, making it easier to manage payments and reduce your overall debt burden.
How Debt Consolidation Works:
- You take out a consolidation loan (or use a balance transfer credit card) to pay off multiple debts.
- Moving forward, you only make one payment, often at a lower interest rate.
Debt consolidation can simplify your finances, prevent missed payments, and help you pay off your debt faster, which can positively impact your 651 credit score.
6. Become an Authorized User
If you have a family member or trusted friend with a strong credit history, ask if they would be willing to add you as an authorized user on one of their credit cards. As an authorized user, their good payment behavior and credit utilization can positively affect your score without you needing to use the card.
How Bankruptcy Affects Your Credit Score
What is Bankruptcy?
Bankruptcy is a legal process that helps individuals and businesses who are unable to repay their debts get a fresh financial start. There are different types of bankruptcy, the most common for individuals being Chapter 7 and Chapter 13. Understanding how bankruptcy works is important if you’re considering it as an option for managing overwhelming debt.
- Chapter 7 Bankruptcy: This involves liquidating assets to pay off as much debt as possible. The remaining debt is typically discharged, meaning you are no longer responsible for paying it. Chapter 7 stays on your credit report for 10 years.
- Chapter 13 Bankruptcy: This type involves creating a repayment plan to pay back a portion of your debt over three to five years. Once the repayment plan is complete, the remaining eligible debt may be discharged. Chapter 13 stays on your credit report for seven years.
How Bankruptcy Impacts Your Credit Score
Filing for bankruptcy will have a significant negative impact on your credit score. In fact, it could lower your score by 100 to 200 points or more, depending on your starting point. However, if you’re already struggling with unpaid debts and collections, bankruptcy can provide a path toward rebuilding your financial future.
Rebuilding Your Credit After Bankruptcy
Although bankruptcy stays on your credit report for several years, it doesn’t mean you’re stuck with a poor credit score forever. Here’s how to start rebuilding your credit after bankruptcy:
- Start with a secured credit card: Secured credit cards require a deposit, but they report to credit bureaus just like regular credit cards. This can help you rebuild your credit history responsibly.
- Make payments on time: Whether it’s a secured credit card, car loan, or rent, making payments on time is crucial to improving your score after bankruptcy.
- Monitor your credit report: Regularly check your credit report to ensure that any debts discharged in bankruptcy are accurately reflected.
Bankruptcy should be considered as a last resort, but understanding how bankruptcy works can help you make an informed decision if your financial situation becomes unmanageable.
How Long Will It Take to Improve a 651 Credit Score?
Improving your credit score from 651 to a higher range takes time, but by following the steps outlined above, you can start seeing positive changes within a few months. On average, with consistent effort, most people see a noticeable improvement in their credit score after six months to a year of diligent financial management.
Remember, credit improvement is a marathon, not a sprint. By paying bills on time, reducing debt, and avoiding new credit inquiries, you’ll be on the right path toward achieving a higher credit score.
Conclusion
Improving a 651 credit score is achievable with discipline and smart financial practices. By focusing on reducing debt, making timely payments, and avoiding unnecessary credit applications, you can gradually lift your score into the “Good” or even “Excellent” range. If debt becomes overwhelming, understanding how bankruptcy works is essential, but it should only be considered as a last resort. With patience and a solid plan, you can boost your credit score, unlock better financial opportunities, and live a healthier financial life.
