A 633 credit score is considered slightly below average and is categorized in the “fair credit score” group. Despite the fact that you are not in the poor score category, there is still so much room for growth, and you should take advantage of it. Think of your score as a stepping stone to bigger...
Credit scores typically range between the 300s and the 800s depending on your credit history. A 550 credit score is normally deemed below average. It is not considered good credit, nor is it considered poor credit. It will not guarantee that you will be approved for a loan, but it also is not going to impress the credit bureau in any way.
However, if your score falls in this range, it is best to look for ways in which you can improve it. Consumers with this score have typically fallen due to late payments, debt, credit report errors, or even high credit utilization. It is crucial to know what specific factors affected your credit so that you can reverse those steps to bring it back up. To sum it all up, if you are asking yourself, “is 550 a good credit score?” The answer is not necessarily, but it is still redeemable if you are willing to put in the work.
- Is 550 a Bad Credit Score?
- Credit Cards for a 550 Credit Score
- Car Loan with a 550 Credit Score
- Personal Loans for a 550 Credit Score
- The Mortgage with a 550 Credit Score
- How to Improve a 550 Credit Score?
Is 550 a Bad Credit Score?
If we are taking a look at the normal range of 300-850, a credit score of 550 is considered bad. Do not let this discourage you. This particular score is only a couple of points away from being considered fair (usually around the 600 marking).
Bad scores can be a result of multiple factors. Some people pay their bills on time each month and still have bad scores. This can be a combination of many things. For example, you could have a high balance on a credit card, you could be maxing out your cards monthly, or you could even have an error on your credit statement that you never consented to. Make sure you stay on track of your score so that you are aware of why it is where it is. With the proper efforts of making correct patterns, you will be able to bring up your score.
Credit Cards for a 550 Credit Score
Consumers with a 550 credit score are not exactly the target market for credit cards. You most likely would not be able to get a high-end credit card, but there are still many options out there for those looking to build their credit. If you are looking for a credit card for 550 scores, here are some of the options that might approve your application. Check them out.
Discover It Secured Credit Card
Secured credit cards allow you to begin establishing your credit back by giving the company a deposit. This lowers the risk for them, allowing them to trust you even with a lower score. Discover also has a good cashback program where you can earn 2% back on gas stations and restaurants and 1% back on all other purchases.
Secured MasterCard from Capital One
Capital One is another secured credit card helping you redeem your damaged credit, which is considered one of the best credit cards for 550 credit scores. There is no annual fee, and the company also allows you to monitor your credit for free so that you can stay on top of your credit rebuilding.
OpenSky Secured Credit Visa
Although this card does have an annual fee, it also offers credit-building tips and tricks on the side. Depending on the consumer, this might be worth it!
Self Credit Builder Secured Visa
This is another card that provides online resources to help you on your credit journey. They do not require a credit check meaning your score will not decrease from a hard inquiry. This allows the application process to be stress-free.
Credit One Bank Platinum Visa for Rebuilding Credit
This card is not secured, so it does not require a deposit. It also allows you to check to see if you qualify in a way that does not harm your credit score. Lastly, it has a cashback program that provides 1% cashback rewards on eligible gas, grocery purchases and mobile phone service, internet, cable, and satellite TV services.
Car Loan with a 550 Credit Score
Are you asking yourself, “can I get a car loan with a credit score of 550?” Well, it is not going to be easy. However, it is still doable. To many’s surprise, there are specific types of lenders that work with consumers who have bad credit and give out 550 credit score auto loans.
When buying a car with a credit score of 550, it is essential to look at the type of lenders available. These specific subprime lenders work with special dealerships to finance options that are best for you. If you choose to go through a subprime lender, be aware that you might experience higher interest rates. Make sure you know what your budget is before you attempt to get a car loan with a 550 credit score. Here are some things that you can do to increase your chances of getting approved:
- Making a larger than normal deposit;
- Adding a cosigner;
- Get pre-approved for a loan.
The following graphic is a table with auto loan rates that you are most likely to receive with each prospective score according to the Consumer Finance Government Report:
Personal Loans for a 550 Credit Score
It is not impossible to get a 550 credit score personal loan. You may have to jump through extra hurdles in order to make this happen for yourself. Do not let your low score stand in your way! To get a personal loan for a 550 credit score, it might be easier to get a cosigner. If you have a trusted person in your life with a higher score, your chances of approval could skyrocket.
Another option is making sure you pre-qualify for loans before you apply. If you do this, companies can tell you if you are qualified without performing a hard inquiry. This way you will not need to hurt your credit score to potentially get rejected from a loan. Pre-qualifying also allows you to compare multiple offers. Being aware of all of your options is crucial when you have a lower score. You cannot afford to pay higher interest rates if you do not need to. Be sure to follow all of these steps in order to heighten your chances of approval.
The following graphic is a table with personal loan rates that you are most likely to receive with each prospective score according to bankrate.com:
|Score range||Interest rate|
The Mortgage with a 550 Credit Score
550 credit score mortgages are especially tricky because the loan values are typically much higher than other types of loans. There are ways to get around a lower credit score so that you can get approved for a mortgage with a 550 credit score.
Try applying for an FHA loan instead of a traditional loan. Private loan companies not only allow lower credit scores but also allow you to put less than 20% down in your initial deposit. If you are a first-time homebuyer, you have a higher chance of getting approved for an FHA loan. A conventional loan is not backed up or insured by the government and is also an option. This is helpful if you are struggling with this secondary issue of having a high deposit.
You can improve your chances of getting approved for a mortgage loan by decreasing the amount of existing debt you are currently dealing with. The higher your debt to income ratio is, the less likely you will be approved for the loan that you want.
If you have bad credit, cash can play a good hand. Having a higher initial deposit will lower the loan value that you will need. It also becomes less mortgage that you would need to pay interest on. Speaking of interest rates, make sure you are prepared to pay a higher amount every month because your interest rates will most likely be higher due to your credit score. The following graphic is a table with mortgage loan rates that you are most likely to receive with each prospective score.
|Mortgage Type||Min Credit Score||Recommended for|
|FHA Loan||500 (the required down payment is 10%)
580 (the required down payment is 3.5%)
|Borrowers with scores from 500-620|
|VA Loan||580-620 (contingent on the lender)||Eligible veterans and servicemembers|
|Non-qualified (Non-QM) Mortgages||500-580||Borrowers who don’t qualify for a conventional or government-backed loan|
How to Improve a 550 Credit Score?
It can be a frustrating time building up your credit, but there is a light at the end of the tunnel. A score of 550 could always be worse, and the good news is that there is a multitude of ways to amend your 550 FICO score. If you are wondering how to fix 550 credit scores, here are some steps that you can use to improve your score.
Stay under the 30% utilization rate of your credit limits
Credit card companies like to see lower usage when it comes to your credit limit. This proves to them that you are not struggling financially. For example, if you had a higher utilization rate, companies might make assumptions that you are having a hard time paying your bills on time. Combat this by staying under 30%, to begin with.
Make payments on time and avoid late payments
Making your payments late is the most common way for your score to decrease. Especially if this is the reason your score dropped in the first place, it is extremely important to stop this behavior! Making your payments in a timely manner can help your score jump quickly if you are making this practice consistent.
Dispute credit reporting errors
Always be sure to check your credit report often to make sure there aren’t any errors or remarks that you did not consent to. If there are, dispute them immediately. You can do this by contacting the credit bureau and asking for proof of verification. If they agree that it is not an accurate statement, it will be removed and your credit score will go back up to where it was supposed to be.
Make frequent payments
This step falls under the same boat as lowering your utilization rate. A good way to do this is by making frequent payments. When you pay more often, your utilization rate stays at a low level. This is a fool-proof way to make sure you do not go over that 30% limit. Some consumers prefer to pay weekly so that they can still manage to stay on a schedule
Limit how often you apply for new accounts
If you are applying to many accounts in the same period of time, your score will most likely decrease. This is because each credit line will perform an inquiry of your score before becoming approved. Try not to apply to any additional credit lines or loans in the time period that you are attempting to improve your poor credit score.
Become an authorized user
To become an authorized user, you basically need a primary cardholder willing to issue a card in your name. This is typically a parent or trusted family member. This is a great way to improve your score because you do not need to experience an inquiry before adding another credit line.
Get rid of any debt
Holding debt in your credit lines can be a cause of a low credit score. Make sure all of your debt is balanced first before spending any more on that specific line. Make your payments in full to avoid debt from accumulating in the future. No more minimum payments!
Use a credit repair company
Credit help companies are the big guns of the credit world. They are able to fix aspects of your credit that you may never have noticed. Try using websites such as CreditRepair.com, The Credit People, or Sky Blue Credit Repair. Companies like these can be a big assist in bringing up your score from the bottom.
Getting loans for a 550 credit score is not easy. Knowing what you can get with a 550 credit score can make your life less difficult. You must understand where this credit score stands and what you can do with it. Although this score is considered bad on the traditional scale, it is not awfully poor. Since it is not to the point of no return, there is always a way to improve it!
Make the right efforts and increase your score so that you have better chances of getting approved for loans and credit lines. With positive information on your credit report, you will have a better score in no time. Good luck and happy hunting for profitable loans!