A 590 credit score level represents a person’s credit rating at a Subprime level. This particular credit score generally represents an above average risk for a lender and a below average score in relation to the main credit bureau ratings.
Some important notes to acknowledge with a credit score of 590 are as follows:
- The score of 590 is only 50 points above the level at which ‘normal’ credit rates are refused. A credit rating at this level will attract lenders specialising in Subprime credit which means higher interest rates and less favourable terms;
- The rating of 590 is 90 points below that of 680 which is generally considered a ‘prime’ credit level. This means low risk to lenders and rewards clients with favourable credit terms;
- Credit may or may not be granted at a rating of 590, however this is dependant on the particular lender;
- The estimated interest rate for a 100,000 unit mortgage offered to a person with a 590 credit rating is likely to be about 2.5% to 3% higher than that of a person with a top tier credit score of 720 and higher. This means a difference in repayments of about 250 to 300 units higher per month;
- Due to people with credit scores of 590 mainly receiving Subprime credit offers, these credit products themselves often negatively affect a person’s credit history simply by the Subprime conditions being added to the credit history. This in turn may lower the credit score and attract further Subprime agreements, having a negative spiralling circle effect on the person’s credit;
- It is possible to increase a credit score with relative speed from a level of 590 to a safer risk level of 650 by continuing good credit practices with lenders. For example, keep the credit used at 30% of the level of available credit, never ‘max out’ a credit card and make repayments on time. Also check credit history entries to ensure that there are no out of date additions that may be negatively effecting the credit score unnecessarily;
- A bankruptcy will effectively deduct 160 to 220 points from a credit score, if this happens to a person with an existing score of 590, the resulting score of 430 (maximum) will mean the only option for a client will be credit at the maximum levels of interest, if at all;
While a 590 credit score level is not particularly favourable to lenders, credit should be offered by most and with good account management, it is possible to increase the score to a better level fairly quickly. At this point Subprime lending will not be required and favourable interest rates and terms will be offered. On the other hand by having Subprime agreements at this level, a few missed payments may result in a quickly diminishing credit score.
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