Is 650 a Good Credit Score in Canada?

Your credit score is a critical marker that lenders use to gauge your creditworthiness when you apply for new products. You likely already know that the higher your score, the better your chances of having an application approved, but how exactly does your 650 credit score stack up, and what can you access with this credit rating?

According to Borrowell, the average Canadian credit score is 672, meaning a 650 score is slightly below average. Credit scores are measured from 300 to 900 and fall into five ranges from Poor to Excellent. A 650 score falls within the “Below Average” range. You need a score between 713 and 750 to fall within the “Good” range.

Let’s take a look at the ranges:

• Poor: 300 - 574

• Below Average: 575 - 659

• Fair: 660 - 712

• Good: 713 - 740

• Excellent: 741 - 900

Even though a 650 credit score is considered “below average,” you can still qualify for many credit products, and when you use them responsibly, you should be able to improve your score over time. 

Can I Get Credit With a 650 Credit Score?

If your accounts are in good standing, you can still secure credit with a 650 credit score. The products available will be more limited than if your score was higher, and you may be stuck paying higher interest rates. Still, if you’re strategic with how you use credit, you should be able to improve your score relatively quickly. 

Getting a Mortgage with a 650 Credit Score

It may be challenging to qualify for a mortgage with a 650 credit score, as most mortgage lenders require a score of 680 or higher. However, some lenders may be willing to work with a 650 credit score, although you will likely be subject to higher interest rates.

If your credit score is 650 and you’re hoping to buy a home, it’s well worth investing the time in improving your score. It may mean you have to hold off on purchasing a home, but the higher your score, the better your mortgage options will be, saving you money in the long run! 

The other option is to bring on a co-signer for your mortgage. An ideal co-signer will have a good to excellent credit score. If you go this route, just remember that if you default on your payments, your co-signer will be on the hook for what you owe. Always ensure you can cover the expenses before bringing on a co-signer. 

Getting a Car Loan with a 650 Credit Score

It’s possible to get a car loan with a credit score of 650, but you may be limited as to the cost of the vehicle you’re hoping to finance. You should also expect to pay higher interest rates and put down a larger down payment than you would if your score was in the Good or Excellent range.

The minimum score required to take out a car loan in Canada varies depending on the lender, and there are many programs out there aimed at borrowers with bad credit. Typically these programs charge high interest rates, which means you’ll pay a premium for your car, but they can be a good option if you’re desperate to get into a new vehicle. 

Since the car itself can serve as collateral for a car loan, it’s less of a risk for lenders to take a chance on you even if your credit score is below average. 

Getting a Personal Loan with a 650 Credit Score

You may be able to secure a personal loan with a 650 credit score. Banks and alternative lenders may be willing to work with you but the amount of the loan will depend on your income and your recent payment history. With a below-average credit rating, you probably won’t have access to loans with particularly favourable terms. Expect to pay high interest rates.

Taking out a personal loan can help you build your credit score if you manage your payments responsibly. 

Getting a Line of Credit with a 650 Credit Score

A 650 credit score is sufficient to secure a line of credit, but you probably won’t have access to cards that offer excellent rewards or cashback rates. Additionally, the interest rates for the cards you qualify for will likely be higher than average.

The amount of credit you qualify for with a 650 credit score may also be lower than usual. Your annual income and your payment history influence credit limits. By responsibly managing any credit you have access to, you will soon improve your score. You will have many more options if you can bump your score up to the “Fair” range (660 to 712). 

Getting an Affirm with a 650 Credit Score

You can likely secure an Affirm loan with a 650 credit score, but like any other product, your credit rating isn’t the only factor that determines your approval. Lenders also consider your debt-to-income ratio, annual income, and employment status when determining whether to approve applications. 

Renting an Apartment with a 650 Credit Score

While many landlords will run a credit check before renting you an apartment, your credit score is just one of many factors they use to determine whether to rent to you. Landlords want to ensure that you’ll be able to make your monthly rent payment on time, so your credit score isn’t enough to convince them. You must demonstrate sufficient income to support the apartment rental on top of your other financial obligations.

In a crowded market, the higher your credit score, the better your chances of securing a rental, but only if the landlord deems your income sufficient to cover the rent.  

How to Raise Credit Score From 650 to 700?

Increasing your credit score from 650 to 700 will help you access more favorable credit products, including lower interest rates, larger lines of credit, and better rewards. Here are some tips for boosting your score.

Pay down existing debt

Credit utilization accounts for 30% of your overall credit score, so paying down existing balances will quickly boost your score. The general rule of thumb is to keep your credit utilization below 30% across all of your credit products. If you have two credit cards with $1500 limits, your total credit limit is $3000, meaning you should aim to keep overall balance below $1000 at all times.

Pay your bills on time

Payment history makes up 35% of your credit score, so making on-time bill payments each month is the simplest way to protect your score. Set reminders or use auto-pay features to ensure you never miss a due date.

Diversify your credit mix

Lenders like to see that borrowers can responsibly manage different types of credit, including installment accounts (like a car loan), revolving accounts (credit cards), and open status credit (such as a phone bill). Your credit mix accounts for 10% of your overall credit score. 

While you shouldn’t take on debt you don’t need in the name of trying to diversify, this is a worthwhile factor to keep in mind. 

Let your accounts age

The average length of your credit history accounts for 15% of your credit score. Ultimately, the longer you’ve had your credit accounts, the better. Keeping your oldest credit account open and in good standing is a great way to capitalize on this aspect of your credit score. You should also avoid opening new accounts too frequently, as doing so will bring down the average age of your accounts.

Dispute errors on your credit report

Checking your credit report and disputing errors can help you protect your credit score. Errors may be anything from a failure to report a payment that was made to fraudulent activity, all of which can have negative repercussions on your credit rating. Regularly reviewing your report will help you spot errors before they have a chance to do any long-term damage to your credit score. 

How Do I Get my Credit Score from 650 to 800?

Increasing your credit score to the 800 range will help you access all kinds of favourable credit products, from low-interest rates and valuable rewards to favourable mortgage rates, and beyond.

Ultimately, the steps for increasing your score from 650 to 800 are the same as the ones you would take to increase your score from 650 to 700. The older your accounts and the longer your history of on-time payments, the more your credit score will grow. While keeping your credit utilization rate low, and your credit mix diverse will help you keep your score in good shape, a lot of building your score simply comes down to accruing a longer history of positive credit data. In other words, you just have to maintain good credit habits and be patient. 

The Bottom Line

A 650 credit score may technically be “below average,” but it is still strong enough to give you access to most basic credit products. You should be able to qualify for certain credits, affirm loans, and even a car loan, all of which can help you build your credit if you make payments on time.

While it may be frustrating to be stuck with high interest rates and not have access to the most enticing credit cards and rewards programs, know that as long as you continue managing your accounts responsibly, you’ll improve your score in due time.