A 550 credit score is not good. It is considered “poor”. You’ll have a hard time qualifying for any sort of loan that needs a credit check. If you’re accepted for an account, expect to get a much higher interest rate than you want.
The FICO credit score range is from 300 to 850, with anything below 580 deemed as poor.
Is 550 a Good Credit Score for a Mortgage?
No, 550 is not a good credit score for a mortgage. It is a terrible score. This table reveals that FICO doesn’t provide a credit score interest rate for credit scores below 620.
Mortgage Rates by Credit Score
|FICO Score||APR||Monthly Payment||Total Interest Paid|
From the MyFICO Loan Savings Calculator for a 30-year fixed loan of a $430,000 home, 5/14/22
For a home loan, an FHA mortgage is the greatest alternative for borrowers with a credit score of 550 or higher. A Federal Housing Administration (FHA) lender may take loans with credit scores as low as 500 if you make a down payment of at least 10%.
A credit score of 580 or higher is required for you to get a loan if you can’t afford to put down 10%. But if you put out some effort, you might be able to achieve that mark in a few months.
If you have a terrible credit history and your mortgage lender decides to accept your application, you’ll most likely get the highest possible interest rate. Because mortgages require such large down payments, it’s a good idea to postpone your application until your credit improves.
Is 550 a Good Credit Score for an Auto Loan?
For an auto loan, a credit score of 600 or below is not considered excellent. A 550 credit score allows you to obtain an auto loan, but the interest rate will be sky-high.
Auto loan total obligations may be lower than those of home loans even though their maximum interest rates are many times larger. If you’d like to see some statistics, check out our Credit Score Statistics article.
As a result, if your credit score is poor, you may be paying high-interest rates on your auto loan. The chart below shows typical vehicle loan rates according to credit scores:
Average Car Loan Rates By Credit Range
|FICO Score||APR||Monthly Payment||Total Interest Paid|
From the MyFICO Loan Savings Calculator for a 48-month new auto loan of a $30,000
As shown in the chart above, there’s a significant distinction between the highest and lowest possible interest rates on automobile loans.
You may not be able to postpone your need for a car, but keep in mind the fees linked with terrible credit before financing your next vehicle purchase. It will be worth it if you can devote time to improving your credit score before submitting an application.
Is 550 a Good Credit Score for a Credit Card?
550 is a poor credit score for a credit card. The major credit card companies will reject your applications. You’ll only be approved for small amounts with high fees and unfavorable interest rates. Fortunately, there are a few “bad credit” credit cards that might consider your application.
A credit score of 550 is less difficult to obtain a credit card than it is with other forms of debt. You won’t be able to get the greatest credit card accounts, but at the very least you’ll be able to get one or two credit accounts.
Here are some examples of “poor credit” credit cards:
Another option is to apply for a secured credit card. You’ll need to put down a cash deposit as collateral, which is often equal to the credit limit on the card.
Because of this, secured credit cards are much easier to obtain for those with poor credit. We also have a list of Best Credit Building Apps if you’d like to check it out as well.
How To Improve a 550 Credit Score
Fortunately, there is a solution for those who have bad credit. You may always improve your credit if you apply yourself, put in the effort, and exercise good judgment. If you need assistance in getting started, go through the advice below.
Use Our Credit Building Approved Vendors
When it comes to rebuilding your credit score, patience is a virtue.
It can be much easier if you enlist the assistance of our top credit-building service providers. The following are services we believe you should start with:
- Credit Strong: Credit Strong has the best credit builder loans. They’re a type of loan that uses the money as collateral. Credit Strong’s loans are highly configurable and report your activity to each major credit agency. There’s also no credit check, and you have the option to stop at any time.
- BoomPay: Your rent payments won’t usually be reported to the credit bureaus, but you can use BoomPay’s rent reporting services for a fee. Our top pick is BoomPay, which we think offers the best value for money. For a lower price than their competitors, they submit previous and current rent payments to all three credit bureaus.
- Extra: It is unthinkable to build credit with a debit card because they’re not credit accounts, but Extra has discovered how to do it. It’s a debit card that allows you to develop credit and earn rewards like a credit card, and there is no credit check involved.
- Experian BOOST™: Experian BOOST™ enables you to build credit with the bills for your utilities, phone, and streaming services. It even offers you free access to your Experian credit report and FICO score.
You can build your credit and increase your score faster by using one or all of these strategies.
Maintain a Good Payment History
Payment history has a weight of 35% in FICO’s scoring algorithm, making it the most important component. It’s worth as much as your credit history length, credit mix, and new credit on your credit report combined.
Because of this, it’s critical to do everything possible to avoid late payments in order to improve your credit score. It will be difficult to develop credit if you miss a monthly payment on your credit card once.
Consider setting up automatic minimum monthly payments if you have several monthly obligations to keep track of and are concerned one may fall through the gaps. It will safeguard your credit rating and minimize the chance of overdraft penalties.
Decrease Your Credit Utilization
Credit utilization is one of the main metrics lenders use to assess the health of your current debt levels. In basic terms, it’s the proportion between the amount you owe on an account and its overall borrowing limit. For example:
- If you were to spend $2000 on a credit card with a $4000 limit, your credit utilization ratio would be 50%.
Being knowledgeable about credit utilization ratios will help your score a lot. Keep in mind that the ideal credit utilization ratio is between 1% and 10%.
Start Now To Improve Your Credit History
Improving your credit history is a marathon, not a sprint, no matter what methods you employ. It takes time to build an excellent credit score, and the sooner you begin, the better.
The worst-case scenario is that you begin looking for a house or automobile and discover that your credit score is lower than you desire, at which time you attempt to improve it.
The finest time to begin establishing your credit was yesterday, and the second-best moment is right now. To improve your credit history, take action immediately.
Can I Get Approved With a 550 Credit Score?
A 550 credit score will get you certain kinds of credit from certain lenders. You might be able to obtain an FHA home loan, a pricey auto loan, or a credit card for borrowers with poor credit.
However, you’ll have a much harder time qualifying for an account with a lower score.
Furthermore, you’ll almost certainly get far worse terms, such as a larger down payment or interest rate.
In many cases, it’s better to apply for significant credit accounts once your credit score has improved.
How Can I Raise My Credit Score Fast?
Raising your credit score generally isn’t something you can do quickly. In fact, attempting to boost your credit rating before applying for a home loan or an auto loan may backfire.
If you open a new credit account, for example, you may add a hard inquiry to your credit report and raise the amounts owed on it.
However, there are a few techniques to achieve significant progress in a short period of time. You could, for example:
• Use BoomPay to report your rent.
• Use Experian BOOST™ to report your utilities and streaming service payments.
• Take out an installment loan with Credit Strong.
• Build credit using Extra. (Debit Cards That Build Credit)
These tactics are worthwhile, but they aren’t a substitute for regular, punctual payments and long-term debt reduction.