Do You Have a 550 Credit Score? Here’s What You Should Know

Michael Collins
Dec 01, 2020

550 Credit Score 

Your Fico credit score is a simple, three-digit number that has a giant impact on your access to many financial services like loans and credit cards. If you have a good high credit score, you can expect lower interest rates on your loans and larger lines of credit for things like your credit card. If you have a low credit score, you will be faced with worse loan terms and there is a higher chance your loan and credit applications will be rejected. While a 550 score is not the best score, it is in a gray area in terms of where you stand for getting access to loans. 

Have a score that’s around 550? If so, you’ve come to the right place. Let’s take a look at what having an average credit score of 550 means for you and what you can do with this score to improve your chances of getting a good loan!

Is a 550 Credit Score Good?

Put shortly, a 550 credit score is not good. However, a 550 credit score is not horrible. Having a 550 credit score is not the end of the world. Fico credit scores can range anywhere from 350 to 800, with 800 being the best possible score you can achieve. A 550 score is somewhere right in the middle of all that. Unfortunately, this does not necessarily mean you are on par with the typical credit score. 

The average Fico credit score in America is 688. On average, older generations tend to have higher credits scores compared to Millennials. This shows that with time your credit score can increase, which we will discuss in more detail later. This is good news if you are young and have a bad lower credit score, as you have a long time ahead of you to right your wrongs and increase your credit score

Many sites have different criteria for what they consider to be a “bad” or “good” credit score. In general, any score above the 670-700 range is considered to be a fairly good credit score. The higher you go above this credit score range, your loan term and loan application acceptance rate can only increase. However, as you start falling below this threshold, your loan applications will get denied more frequently and you will likely pay more interest. 

The lines between a “good” and “bad” credit score are not as black and white as you may think. Every single lender has their own criteria for the credit score they are looking for in their borrowers. For example, compared to other lenders, banks tend to have a much higher required credit score. Certain personal loan lenders allow those with lower scores to have more access to their loans than other lenders might. 

Certain loans require different credit scores. For example, you will need a fairly good credit score to get a mortgage loan or any other loan with a similar amount. This is because lenders are loaning out big sums of money and want to be absolutely sure they can trust the borrower. Smaller loans like auto loans and boat loans will likely accept lower credit scores than mortgage lenders. Smaller personal loans may accept even lower credit scores, especially the smaller the loan sum is. 

Within these types of loans, there are lenders that are willing to lend to those with lower scores and there are those that will require you to have an excellent credit score. Let’s take a personal loan for example. Like we mentioned, a bank will have much stricter standards and may require you to have a higher credit score than an online lender. Large and established credit card companies and banks may also require a better score for their cards than online banks and other lenders. Small personal loans like payday loans are widely available to applicants with a lower credit score. 

Overall, having a 550 is not the end of the world. While your options are indeed more limited and you may end up paying more for your loan, you will still have access to some loans and credit cards. While 550 is not a great score, it is good enough that you can turn it into a good credit score without too much pain or time (which we will discuss later). 

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What You Can / Can’t Do With a 550 Credit Score

If you currently have a 550 credit score and need a loan or credit card immediately, you won’t have enough time to boost your score properly. If you have less than 30 days or so before you need your money, you are essentially stuck with the current score you have. Assuming you are stuck with your 550 credit score, these are the things you can and can’t expect to have access to. 

What You Can Do

  • Payday Loans: Payday loans are personal loans that are mostly smaller than $500. These loans are usually paid back over the next week or two and have very high APRs. These loans are arguably the most accessible financial service to those with low credit scores. Unfortunately, payday loans are part of a predatory industry that is known for trying to keep their customers in a debt trap cycle
  • A Loan with Possible: Possible is not a traditional lender. Our loans are available for lower credit scores. Our loans are easier to pay off and have lower APR’s than similar lenders. Our loans also help build your credit score, which we will get into more detail with later. 
  • Credit Cards: While banks will want you to have higher credit scores for some of their credit cards, many lenders and credit card companies are willing to give you a credit card with a score of 550. Some examples include the Open Sky Secured Visa Credit Card and the Indigo Mastercard for “those with less than perfect credit.” While you will be able to get credit cards with a low credit score, do not expect to qualify for the many cards with great rewards. Likewise, you may be more likely to have to pay annual fees for these credit cards. 

What You Can’t Do

  • Get Mortgages or Other Large Loans: Like we mentioned earlier, qualifying for large loans like a mortgage loan and auto loan is something you should not expect if you have a 550 credit score. According to data from Equifax, people with scores around 550 only make up around 2.5% of all home equity loans. Because lenders are allowing borrowers to loan such large sums of money from them, they want to be absolutely sure the borrower will be able to pay it back. Whether or not you think you could successfully pay it off, a 550 credit score still falls into the bad credit score category and they will be unlikely to give you the loan. 
  • Get Cheap Insurance: Did you know many insurance agencies check your credit? Data and research has shown a correlation between low credit scores and individuals filing insurance claims with their providers. The more claims filed, the worse it is for the insurance provider. Because of this, insurance agencies will charge higher insurance costs for people those with a bad credit score to make up for the many claims that this group of people file. It may seem wrong, but that is how it works. 
  • Limited Renting Opportunities: Like insurance companies, many landlords may also check your credit. They will look at your credit score and your credit report to try to get more information to properly gauge what type of tenant you will be. If you have a poor credit score as a result of failing to make loan and credit card payments, your landlord will be more skeptical of your ability to make rent payments. 

How to Improve a 550 Credit Score 

Your credit score will not change overnight. Here are some of the best ways to improve your credit overtime so you can be on your way to fixing your 550 credit score. 

Secured Credit Card

There are two types of debt. Secured and unsecured debt. Unsecured credit card debt means that you don’t have to put up any collateral for the loan or line of credit. Secured credit card debt on the other hand means that you need to put up collateral just in case you fail to pay the debt back. If you default on your debt or can’t pay it back, your lender has the right to take whatever you used as collateral. 

Secured debt is more safe for the lenders and they will be more willing to lend secured debt to those with slightly lower scores. Secured credit cards are one such type of debt that you will be able to get with a 550 credit score. If you continually pay off this credit card, your credit score will go up. Likewise, if you use no more than 30% of your credit limit, your score will go up as a result as well. 

Authorized User 

Credit cards and other accounts allow you to have something called “authorized users” on the account. Authorized users are people that can use the line of credit or other debt but are not necessarily liable for paying it back. Being an authorized user on an account that never misses its payments is a great way to build your credit score. 

If you are comfortable, ask a friend or family member to add you as an authorized user on one of their accounts, such as their credit cards. Overtime, as your friend or family member successfully pays back their debt, you will get credit for paying the debt back as well. You do not need to spend a single dollar or pay back any money, and your credit can still increase! Just be aware that as soon as the account you are an authorized user on closes, the positive effects of being an authorized user will vanish and your score may go back down. 

Pay Off Current Debt 

One of the most surefire ways to boost your credit score is by paying off your outstanding debt. Think about it; a potential lender will not want to see you have outstanding debt that you need to take care of. If you try to get a loan or credit card with outstanding debt, your next lender will be skeptical that you will be focused on paying their money back. This is factored into your credit score and can hurt it as a result. 

Chances are, failing to pay your current debt off is the reason why your score is low in the first place, or why you can’t seem to increase your score. Focus on paying off the smaller sums first, and then focus on the bigger ones. You could see your score get a boost as a result. 

Contact your Lender 

Did you know that your lender is not required to report your successful and unsuccessful payments to the credit bureau? This means that you could have been perfectly paying back your loan or your credit card and the credit bureaus could have no idea. If your successful payments are not being reported, your credit score will not go up.

Check your credit report and credit history with the three credit bureaus (you can do this for free for each credit bureau once a year). If there are any gaps in your credit report and credit history and your lender has not been reporting your payments, reach out to your lender. Kindly ask that they start reporting your successful payments so that your credit score can go up. Again, they are not required to do so but more often than not they will be happy to report your recurring payments and payment history. 

Possible Credit Builder Loan 

At Possible, we offer an awesome product we call a “credit builder loan.” It is just what it sounds like. It is a small loan that helps to build your credit when you pay it off!

Most small loans are part of the payday loan industry that is extremely predatory. They gouge you with giant APR’s and make you pay your money back within a week. At Possible, we want to go against this injustice. Our loans are paid back in 4, weekly installments. Our APR is comparably low, and if you are struggling to make a payment, you can extend your payment up to 29 days right within our app. 

We understand that having bad credit is difficult, and it is even harder to build your credit up  if you have bad credit. This is why we offer our product to those with lower credit scores. As you pay back our loans, your credit score will go up as a result. We have helped so many of our customers financially, while raising their credit scores at the same time. If you need a loan or just want to raise your credit score, consider getting a loan with Possible. Download our app today and get started!

Michael Collins

Michael has a passion for writing and has since brought that passion to Possible. He enjoys reading everything there is to know about film, sports, and finance. His studies in college allow him to be on the forefront of business knowledge so he can better inform his readers.

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