Their score is in the 300 to 579 range, which is considered very poor. A 515 FICO® score is well below the average credit score.Many lenders choose not to do business with borrowers whose scores fall into the very poor range because they have unfavorable credit. Credit card applicants with scores in this range may have to pay additional fees or make deposits on their cards. Utilities may also require them to post security deposits for equipment or service contracts.
16% of all consumers have FICO® scores in the very poor range (300-579).
About 62% of consumers with credit scores below 579 are likely to become seriously delinquent (i.e., go more than 90 days past due on a debt payment) in the future.
How to improve your 515 credit score
The bad news about your FICO® score of 515 is that it is far below the average credit score of 704. The good news is that there are many ways to boost your score.
99% of consumers have FICO® scores higher than 515.
A smart way to start building your credit score is to get your FICO® score. Along with the score itself, you'll get a report that lists the major events in your credit history that lower your score. Since this information comes directly from your credit history, it can highlight issues you can address to increase your credit score.
How to get beyond a very bad credit score
FICO® scores in the very poor range often reflect a history of credit missteps or mistakes, such as. B. Several missed or late payments, defaulted or foreclosed loans, and even bankruptcy.
Among consumers with FICO® scores of 515, 19% have a credit history that reflects being 30 or more days past due in the past 10 years.
Once you are familiar with your credit report, its contents and its impact on your credit scores, you can take steps to build your credit. As your credit behavior improves, your credit scores tend to follow suit.
What affects your credit score
While it's useful to know the specific behaviors in your own credit history, the types of behaviors that can lower your credit score are common knowledge. Understanding them can help you focus on your credit score-building tactics:
Public information: When bankruptcies or other public records appear on your credit report, they usually hurt your credit score severely. Settling liens or judgments at the first opportunity can reduce their impact, but in bankruptcy, only time can reduce their harmful impact on your credit scores. A Chapter 7 bankruptcy stays on your credit report for up to 10 years, and a Chapter 13 bankruptcy stays there for 7 years. Even though your credit score may begin to recover years before a bankruptcy falls off your credit file, some lenders may refuse to work with you as long as there is a bankruptcy on your record.
The average credit card debt for consumers with FICO® scores of 515 is 2.734 USD.
Credit utilization. To calculate a credit card's credit utilization rate, divide the outstanding balance by the card's credit limit and multiply by 100 to get a percentage rate. To calculate your total utilization rate, add up the balances on all your credit cards and divide by the sum of their credit limits. Most experts recommend keeping utilization on a card basis and below 30% overall to avoid hurting your credit score. Utilization contributes up to 30% to your FICO® score.
Late or missed payments. Paying bills consistently and on time is the best thing you can do to promote a good credit score. This can account for more than one-third (35%) of your FICO® score.
Length of credit history. All other things being equal, a longer credit history tends to lead to a higher credit score than a shorter history. The number of years you've been a credit user can affect up to 15% of your FICO® score. Newcomers to the credit market can't change this factor much. Patience and diligence to avoid bad credit behavior will lead to score improvements over time.
Total debt and credit mix. Credit scores reflect your total outstanding debt and the types of loans you have. The FICO® credit scoring system tends to favor users with multiple credit accounts, and a mix of revolving credit (accounts like credit cards that allow borrowing within a certain credit limit) and installment credit (loans like mortgages and auto loans, with a set number of fixed monthly payments). If you only have one type of credit account, expanding your portfolio could help your credit score. Credit mix is responsible for up to 10% of your FICO® score.
Current credit activity. Constantly applying for new loans or credit cards can hurt your credit score. Credit applications trigger events known as hard inquiries, which are recorded on your credit report and reflected in your credit score. In a hard inquiry, a lender receives your credit score (and often a credit report) for purposes of deciding whether to lend to you. Hard inquiries can cause credit scores to drop a few points, but scores usually recover within a few months if you keep up with your bills – and don't make additional credit requests until then. (Checking your own credit is a soft inquiry and does not affect your credit score.) New credit activity can account for up to 10% of your FICO® score.
Improving your credit score
There are no quick fixes for a very poor credit score, and the negative impact of some problems that cause very poor scores, such as bankruptcy or foreclosure, only diminishes over time. You can immediately start adopting habits that favor credit score improvements. Here are some good starting points:
Consider a debt management plan. If you're overextended and having trouble paying your bills, a debt management plan could provide relief. Working with a nonprofit credit counseling agency to negotiate a workable repayment plan, effectively closing your credit card accounts in the process. This can greatly lower your credit scores, but it's less draconian than bankruptcy, and your scores can recover from it faster. Even if you decide this is too extreme a step for you, consulting a credit counselor (as opposed to a credit repair company) can help you identify strategies for building stronger credit.
Think about a credit builder loan. Credit unions offer several variations of these small loans to help people build or rebuild their credit history. In one of the most popular options, the credit union deposits the amount you borrow into a low-interest savings account (instead of giving you the money directly). Once you've repaid the loan, you get access to the money plus any interest it generated. It's a smart savings method, but the real benefit comes when the credit union reports your payments to the national credit reporting agencies. Make sure before you apply for a credit builder loan that the lender reports payments to all three national credit reporting agencies. As long as this is the case and you make regular on-time payments, these credits can lead to credit score improvements.
Try to obtain a secured credit card. When you open a secured credit card account, you put down a deposit equal to the full amount of your spending limit – usually a few hundred dollars. When you use the card and make regular payments, the lender reports them to the national credit reporting agencies, where they are recorded in your credit files and reflected in your FICO® score. Making timely payments and avoiding "maxing out" the card will encourage improvement in your credit scores.
Pay your bills on time. There is no better way to improve your credit score.
Avoid high credit utilization rates. Try to keep your utilization on all your accounts below about 30% to avoid lowering your score.
Among consumers with FICO® credit scores of 515, the average utilization rate is 113.1%.
Try to build a solid mix of loans. The FICO® credit scoring model tends to favor users with multiple credit accounts, and a mix of loan types, including installment loans like mortgages or auto loans and revolving loans like credit cards and some home equity loans.
Learn more about your credit score
Every growth process has to start somewhere, and a 515 FICO® score is a good starting point for improving your credit score. As you increase your score into the fair range (580-669), you can gain access to more credit options, lower interest rates, and reduced fees and terms. You can get rolling by getting your free credit report from Experian and checking your credit score to find out specific problems that are keeping your score from going up. Read more about score ranges and what a good credit score is.