If you’ve taken a look at your credit score recently and learned your score is 586, you might be wondering if that’s good or bad and, perhaps most importantly, what that will get you. In this article, we’ll explore what a 586 credit score really means and how it can help you achieve your financial goals.
What is a 586 credit score?
The FICO Credit Score is the most widely known and used method for calculating your credit score. Although there are other versions, like the VantageScore, we’ll look at the FICO Score for the purpose of this article.
Simply put, your credit score is a three-digit number that is used to determine your creditworthiness. It typically ranges from 300 to 850, with the higher end being the better score. But, your credit score is far more than just a number. It impacts everything from your ability to get approved for a credit card, mortgage or car loan to the amount of deposit you may have to put down for utility services, cell phones and more. In some cases, it can even influence whether or not you get hired for a new job.
If you have a 586 credit score, you can see from the graph below why it is considered fair credit on the FICO score range.
FICO credit score ranges
| Credit Score Ranges | Credit Score Values |
|---|---|
| Exceptional Credit Score | 800 & Above |
| Very Good Credit Score | 740 - 799 |
| Good Credit Score | 670 - 739 |
| Fair Credit Score | 580 - 669 |
| Poor Credit Score | 580 & Below |
Source: Fair Isaac Corporation (myFICO.com).
However, if you have a 586 credit score you’re not alone. Below, you’ll find that 38% of the U.S. population under 30 has a credit score that falls in this range. In fact, overall 27% of the population have credit scores in this range.
U.S. Population Categorized by the Five FICO Ranges for Credit Scores
| Age | < 580 | 580 - 669 | 670 - 739 | 740 - 799 | 800 > |
|---|---|---|---|---|---|
| Under 30 | 29% | 38% | 17% | 11% | 5% |
| 30 - 39 | 35% | 24% | 10% | 16% | 15% |
| 40 - 49 | 26% | 24% | 10% | 17% | 23% |
| 50 - 59 | 19% | 22% | 10% | 17% | 32% |
Source: We ran a survey of 550 US consumers in different age groups on 9/26/2018 to understand which credit score ranges they fell into.
If you’re interested in improving your 586 credit score, there are smart strategies you can put into place to help you see significant changes. Let’s look at some of those strategies.
How to improve your 586 credit score
Improving your 586 credit score doesn’t have to be difficult. In fact, there are several fairly easy ways to see an improvement in your score almost immediately. Here are just a few of those ways:
- Become an authorized user. Consider asking a trusted friend or family member to add you as an authorized user to their account. By being associated with their account, you are essentially borrowing their good credit history — and you will see your credit score quickly improve. Before you become an authorized user, ensure that the credit card company reports authorized user data to credit score bureaus.
- Apply for a secured credit card. A secured credit card is another great way to improve your credit. A secured credit card is easier to qualify for than a traditional credit card since it requires an up-front deposit. This deposit becomes your credit limit — so, if you default on your payments, the lender can simply take the funds out of your deposit.
- Apply for a credit building loan. Adding a credit building loan is a great way to not only build your credit history, but to also diversify your credit portfolio. When you take out a credit building loan, a set amount of money is set aside for you in a special account. You continue to make payments until your loan is paid off — and then you have full access to the account.
These strategies can have a significant impact on credit score improvement.
Average Credit Score Improvement starting with fair credit
| Method | Credit Starting Point | 3 Months | 6 Months | 12 Months |
|---|---|---|---|---|
| Ontime payments | 586 | 589 | 597 | 612 |
| Secured credit card | 586 | 589 | 597 | 614 |
| Credit building loan | 586 | 589 | 597 | 612 |
Source: Review of 600 individuals increased their credit by different methods The study was conducted in February of 2016 and concluded April of 2016.
Individuals who started with a 586 credit score were able to see a 3-point improvement in just 3 months, for instance, by making on-time payments. Similarly, they also saw a 3-point improvement in just 3-months by getting a secured credit card. Those improvements continued over time — improving to 612 and 614, respectively.
Of course, to really understand why these strategies work, it’s important to understand how your credit score is calculated.
Factors in your credit score
Your FICO credit score is primarily made up of the following factors:
- Payment history. Your payment history has the single biggest impact on your credit score of all factors. Always make at least the minimum payment, and make all of your payments on time every month.
- Credit utilization. This is basically how much of your available credit you’re currently using. For the best score, you should aim to keep this number at or below 30% (some experts even suggest trying to stay below 10%, although this can sometimes be difficult).
- Length of credit history. The length of your credit history also factors into your score. Always keep your oldest accounts open and in good standing.
- Types of current credit. Creditors and lenders like to see a responsible use of a mix of credit types. If you only have credit cards, consider adding a credit building loan. Similarly, if you only have something like a student loan on your credit report, consider applying for a credit card or store account card.
- Account inquiries. The number of credit inquiries for your account can also impact your score. Soft inquiries (when you check your credit yourself) do not affect your score, but a hard inquiry, such as when you apply for a new credit card, can. Limit the number of your applications for the best score.
Now, let’s take a closer look at just how much each of these factors can impact your score.
FICO scoring model calculation (weight) factors
| Credit Factors | Credit Score Weight |
|---|---|
| Payment History | 35% |
| Credit Utilization | 30% |
| Credit Age | 15% |
| Different Types of Credit | 10% |
| Number of Inquiries | 10% |
Source: https://www.myfico.com/credit-education/whats-in-your-credit-score
As you can see, your payment history and credit utilization are the two factors that most impact your credit score, with the age of your credit history coming in third at 15%. Now that you know how your score is created, let’s look at what you can expect with a 586 credit score.
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What can you expect with a 586 credit score
The interest rates you pay on various types of loans or lines of credit tend to be a direct reflection of your credit score. With this in mind, let’s take a quick look at the average interest rates for consumers with fair credit.
Interest Rate Ranges for Different Credit Score Ranks
| Type of Loan | Poor Credit | Fair Credit | Good Credit | Very Good Credit | Exceptional Credit |
|---|---|---|---|---|---|
| 30 Year Fixed Mortgage Interest Rate | 6.352% | 5.588% | 5.158% | 4.767% | 4.545% |
| Car Loan Interest Rate | 15.24% | 14.06% | 7.02% | 4.95% | 3.60% |
| Credit Card Interest Rate | 24.9% | 17.6% | 14.9% | 12.2% | 13.9% |
Source: Credit Sesame asked 400 members about their interest rates during a three week period beginning in January 18, 2018.
As you can see, someone with a 586 credit score, which falls into the fair credit range, pays significantly more in interest than someone with good or excellent credit. While these numbers may not seem greatly different, even a slight difference in the interest rate can have a huge financial impact when you consider the 30-year life of a mortgage or a 6+ year term of a car loan.
Now, let’s look at some of the big purchases you might be considering to see how your 586 score impacts your ability to get a loan.
Can you get a car with a 586 credit score?
If you have a 586 credit score and are considering the purchase of a car, your credit score can, and will, affect not only your ability to get approved for a loan but also what percent interest you will pay. To help, we surveyed 600 Credit Sesame members with various credit scores to see how car loans were distributed in 2017. Take a look at what we found below:
Percentage of New & Used Car Loans Distributed Among Credit Rank of Consumers
| Credit Score | New Car Loan in 2017 | Used Car Loan in 2017 |
|---|---|---|
| Excellent (800+) | 24% | 16% |
| Very Good (750+) | 22% | 25% |
| Good (700+) | 19% | 28% |
| Fair (581+) | 17% | 18% |
| Poor (<580) | 13% | 13% |
Source: Credit Sesame followed 600 Members in 2017 documenting their choices for automobile financing and purchasing decisions and were divided by FICO Credit Score Ranking. The poll was conducted from January 2017 until December of 2017.
Only 17% of new car loans in 2017 went to consumers with credit scores in the fair range. Similarly, only 18% of used car loans went to the same group. If you’re trying to improve your chances of getting a car loan, you may also consider getting a cosigner for your loan, which will help improve your creditworthiness.
Can you get a credit card with a 586 credit score?
Can you get a credit card with a 586 credit score? The answer is yes, but keep in mind your interest rate will likely be higher than those with better credit.
Percentage of Credit Sesame Members Who Open New Credit Accounts in 2017
| Credit Ranking | Credit Cards | Store Credit Cards | Auto Loans | Mortgage Loans |
|---|---|---|---|---|
| Bad (550<) | 19% | 23% | 6% | 1% |
| Poor (649<) | 24% | 29% | 10% | 3% |
| Fair (699<) | 28% | 26% | 20% | 16% |
| Good (749<) | 22% | 20% | 25% | 19% |
| Very Good (750>) | 19% | 14% | 22% | 24% |
| Excellent (800>) | 15% | 7% | 33% | 25% |
Source: Review of 1000 Credit Sesame Members during December 2017 until December 2018. 167 participants made up each credit ranking (Bad, Poor, Fair, Good, Very Good, Excellent).
28% of consumers in the fair credit range were able to secure a credit card, with 26% opening store cards. If you’ve applied for a credit card and have been denied, consider asking a friend or family member to add you as an authorized user on their account. This can help improve your score drastically, at which point you can try again.
Dealing with negative information on your credit report
While there are processes in place for you to dispute inaccurate findings on your credit report, if negative information on your report is accurate, it’s a waiting game for it to come off your report. But how long do negative marks stay on your credit report? Here’s a quick guide:
- Late payments or past due accounts: 7 years
- Collections: 7 years from original date of delinquency
- Hard inquiries: 2 years
- Bankruptcy: 7 years for Chapter 13, 10 years for Chapter 7
With that said, here is how negative marks can impact a 586 score. Let’s take a look below:
Negative Impacts on Fair Credit Ranking over 6, 12, and 24 Months
| Negative Factor | 6 Months | 12 Months | 24 Months |
|---|---|---|---|
| Account Charged Off | -81 | -174 | -202 |
| Credit Collections | -48 | -70 | -123 |
| Loan Defaulting | -34 | -75 | -98 |
| Filing Bankruptcy | -88 | -121 | -162 |
| Home Foreclosure | -78 | -185 | -211 |
| High Credit Utilization | -16 | -29 | -43 |
| Closing Credit Card | -11 | -15 | -24 |
Source: Credit Surveyed 80 people with a Fair Credit Ranking who reported negative impacts to their credit score over a period of two years between February of 2015 and March of 2017. The numbers represent the average credit score points gained or lost by the stated factors.
These negative marks can have a huge impact on your credit score. This is why it’s important to do all that you can to keep your credit score in top shape.
Believe it or not, nearly 40% of credit reports can contain errors, so it’s important to regularly check your credit report for any inaccurate or outdated information. If you find any errors on your report, you have the right to dispute the mark and have it removed from your credit report.
But what negative marks make the largest impact on your credit score? Let’s explore below:
Largest Impacts in Inaccurate Credit Reports
| Credit Ranking | Incorrect Information | Lender Closed Accounts | Old Debts | Duplicate Accounts |
|---|---|---|---|---|
| Poor | 33% | 34% | 18% | 15% |
| Fair | 29% | 32% | 31% | 8% |
| Good | 33% | 26% | 22% | 19% |
| Very Good | 1% | 3% | 1% | 6% |
| Excellent | 0.5% | 0% | 0% | 0% |
Source: Credit Sesame surveyed 250 people, 50 had a poor credit ranking, 50 participants had a fair credit score, 50 members had a good credit rating, 50 people were listed as very good, and 50 members reported they had an excellent credit score. The study was conducted October 20, 2017 over a period of two weeks.
Among those with fair credit scores, the largest impact was caused by lender closed accounts, followed closely by old debt.
We spoke with Credit Sesame member, James, to see what techniques he used to increase his credit score by 50 points in just 6 months. His story is unique and may not represent the outcome by all customers.
How James Improved His 586 Credit Score by 50 points in 6 months
Member Since: 10/15/2014
We interviewed James on September 23, 2018; he earns $45,000 a year is 34 years old and lives in Phoenix, Arizona. He is single and doesn’t have kids and is currently studying for his masters program at ASU.
While everyone may not be able to increase their score like James did, does not mean that it won’t increase. His story also shows how being focused can help increase your score.
TLDR; what can you do with a 586 credit score?
In conclusion, a 586 credit score is certainly not the worst possible score you could have, but it definitely leaves room for you to grow. With a few smart strategies and some work on your part, it’s possible for you to boost your score using the methods we’ve discussed. For more ways to improve your credit score, check out this article.
