What Is Considered a Fair Credit Score?

The majority of Americans have fair credit--they are neither exemplary financial citizens nor complete borrower deadbeats--particularly younger people who have had less time to learn the ropes of personal finance and are less likely to be locked into a long-term career. There are many ways to both deal with having only fair credit and to ameliorate it involving effective communication with lenders and sensible personal finance practices.

Identification

There is no technically defined range for a fair credit score, but most agree that any range between 640 and 680 could be considered fair. Anything worse than 640 and many lenders will either be very cautious or will not offer loans to you at all. People with scores over 680 are offered some of the best rates, and are generally not very far from achieving good or excellent credit ratings.

Significance

People who have fair credit ratings either have one or two delinquent accounts, have a demonstrated pattern of failing to pay back revolving credit balances in full or may have a very poor debt to income ratio. In many cases, a downgraded credit rating can merely indicate an error on the credit history. It is good practice to check up on your credit report regularly to ensure that it is accurate and up to date, particularly after paying off large debts.

Function

People with fair credit often have to work slightly harder to get access to loans at good rates. Negotiating with creditors can often have surprisingly beneficial effects on the loans that you are offered. Merely the evidence of a capacity to negotiate is considered a positive indicator by financial institutions. One good tactic for improving loan rates is to ask to pay a higher down payment in return for better interest rates. Some foresight and planning can save you substantial amounts of money.

Considerations

Many people with fair credit can find it difficult to get approved for a lease at many relatively exclusive apartment buildings. Some solutions can involve getting a co-signer for the lease, providing proof of income, putting down a larger deposit or even providing months of rent in advance. These positive steps can demonstrate that despite your tarnished credit, you are sufficiently responsible and financially healthy enough to be a good tenant.

Prevention/Solution

Many people end up hovering at a fair credit score, convinced that it is "good enough." This is a very risky proposition, particularly as credit markets have tightened significantly. It can be quite easy for someone with fair credit to drop precipitously to a bad credit rating after only a few missing payments. Many credit card companies have taken to aggressively slashing lines of credit, and mortgage holders with adjustable rates to increase minimum payments required without warning. Preparing for the worst will help you persevere, and perhaps improve your fair credit score.