A credit score of 406 is a lot closer to the lowest credit scores (300) than the highest (850). That means it can be a lot harder to get approved for loans, credit cards, or mortgages.
Fortunately, there are ways to improve your credit score. By following a few simple tips, you can make your 406 credit score a lot more desirable.
Overview of a 406 Credit Score
If your credit score is 406, you probably need to take immediate action to improve it. Improving your credit score could help you get approved for better rates on loans, lower interest fees, and more credit options.
Having a good mix of different types of credit accounts and paying them off on time is also beneficial to your score. This means having more than one type of revolving credit, such as a credit card, and an auto loan or mortgage, that you pay off on time every month.
Your credit utilization rate is another important factor that lenders look at when evaluating your credit report. Having a high utilization rate can hurt your score, so try to keep it as low as possible on a card-by-card basis and overall.
Credit Card Options with a 406 Credit Score
A 406 credit score is considered to be “bad.” This means that you’ll have a hard time getting approved for most unsecured loans. You’ll also have to pay higher interest rates and fees than borrowers with higher scores.
One of the best ways to improve your 406 credit score is by applying for a secured credit card. These cards require a security deposit and regular credit reporting to the national credit bureaus.
Another option is to get a “starter” credit card from a bank or credit union. These cards usually have low credit limits and high interest rates, but they can help build your credit history and raise your credit score.
Payment history accounts for 35% of your credit score. Making your payments on time is the best way to boost your credit.
Auto Loans with a 406 Credit Score
Your credit score is one of the most important numbers in your financial life. It impacts your ability to get a loan and how much you have to pay for it.
A 406 credit score is considered very bad, and it’s a lot closer to the lowest score possible (300) than the highest score (850). Lenders see you as a riskier customer and often reject your application for a loan or credit card.
If you have a bad credit score, it can make auto loans difficult to obtain. Many car dealers and lenders are less willing to work with borrowers with credit scores below 600, so you’ll have to do some shopping around for the best rates and terms.
The first step is to improve your credit score, which isn’t as hard as it seems. You can start by paying down any outstanding debts and making timely payments on your bills. It may take some time, but you’ll be on your way to building up a higher score before long!
Personal Loan Options with a 406 Credit Score
If you have a 406 credit score, it may be difficult to get approved for a personal loan. Many lenders consider borrowers with this score to be high-risk, and you might be charged higher fees or interest rates than those with better credit scores.
A secured loan — which requires collateral like a car, house or a bank account — is one option. These loans can be an excellent choice if you want to borrow money for a big purchase or consolidate high-interest debt.
However, these types of loans are largely considered riskier than unsecured credit options because you could lose your assets if you default on the loan. So, you need to be sure that a personal loan is the best solution for your financial needs before applying.
Mortgages with a 406 Credit Score
A 406 credit score means you are considered to be a high-risk borrower, and this makes it difficult to get approved for most types of mortgages. You can still purchase a home with a 406 credit score, but you will likely pay a higher interest rate than borrowers with better scores.
Fortunately, there are many ways to improve your 406 credit score, including by paying your bills on time and keeping your debts low. In addition, it can help to broaden your credit mix by obtaining more revolving and installment credit. One good option is to obtain a secured credit card with a small limit, and then make timely payments on the card. This will help to build your credit, and it may also allow you to get a better interest rate on your next mortgage.