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550 Credit Score: Understanding Your Score and How to Fix It

Wondering if a 550 credit score is good or bad?

A 550 credit score is considered “Poor.” While it’s not the best, there are still ways to improve your score and get it into the “good” range. If you’ve had some financial missteps in the past, don’t despair – there are plenty of things you can do to improve your credit score.

In this article, we’ll provide tips on how to improve your credit score so you can enjoy all the benefits of having a good one. With our tips and advice, you’ll be on your way to a better credit rating in no time!

Keep reading to begin understanding your credit score, what factors are in your credit score, and what you can do today to improve your poor credit score.

 

Understanding the Credit Score Range

FICO Credit Score Ranges

To figure out how to improve your credit score, you need to understand the credit score range. Most creditors use a three-digit credit score system called the FICO score. This ranges from 300 to 850 and is the most common way creditors rate their borrowers.

Five categories fall into the FICO score:

300-580: Your 570 credit score falls in this category. Unfortunately, a low credit score means you’re considered a high-risk borrower, making it difficult to get approved for loans and credit cards.

581-669: A credit score in this range is still considered “Fair,” – but it’s a bit better than the lowest range. If you’re in this category, you may be able to qualify for some loans and credit cards – but you’ll likely pay higher interest rates.

670-739: A credit score in this range is considered a Good credit score.” If you have a score in this range, you’re considered a lower-risk borrower – which means you’ll have better luck getting approved for loans and credit cards, and you’ll probably get a lower interest rate.

740-799: A credit score in this range is considered “Very Good.” If you have a score in this range, you’re considered a low-risk borrower – which means you’ll have great luck getting approved for loans and credit cards, and you’ll probably get the best interest rates.

800-850: A credit score in this range is considered to be an Excellent credit score. If you have a score in this range, you’re considered a very low-risk borrower – which means you’ll have extremely good luck getting approved for loans and credit cards, and you’ll get the best interest rates.

As you can see, a 550 credit score falls into the “Poor” category. But, if you’re in this category, don’t worry – there are still things you can do to improve your credit score. With our tips and advice, you’ll be on your way to a better credit rating in no time!

 

Credit Score Factors

Credit Score Factors

What factors determine your credit score? Five categories make up a creditor’s decision about whether to approve you for credit or not.

If you continue to pay bills on time, constantly show responsible behavior, and make positive contributions to your credit history, your score will increase monthly. But if you stop paying bills or miss payments, these negative actions will eventually damage your credit score.

What’s more important is understanding the factors that make up your credit score, so you know what can decrease or increase it.

Here are some of the most common categories and what they mean:

Payment History (35%): Payment history is the most important factor in credit scores. Creditors want to see that you have a history of paying your bills on time. If you have late or missed payments, that will damage your score.

Credit Utilization (30%): This measures how much of your available credit you are using. If you have credit cards with a $5,000 limit and you’re regularly using $4,000 of that credit, your utilization ratio is 80%. Creditors like to see a utilization ratio of 30% or less.

Credit History (15%): This measures the length of time you’ve been using credit. The longer your history, the better.

Credit Mix (10%): This measures the different types of credit you have, such as revolving credit (like credit cards) and installment loans (like auto loans). Having a mix of different kinds of credit is good for your score.

New Credit (10%): This measures how many new accounts you have opened recently. Opening too many new accounts in a short period of time can be a red flag for creditors.

As you can see, payment history is the most important factor in your credit score. So if you’re looking to improve your credit score, one of the best things you can do is make sure you pay all your bills on time, every time.

 

Getting Approved with a 550 Credit Score

Credit Cards

If you have a credit score of 570, then the likelihood of being approved for any credit card is very slim because most banks require at least a 630 to 680 credit score.

Credit cards offer an unsecured option for people with less than perfect credit scores. However, remember that these cards may come with high interest rates and annual fees, so it’s best to use them only in emergencies if approved.

For example, Capital One offers a credit card that doesn’t require a security deposit but has an APR of 24.9%, and the late payment penalty is $35.

If you’re approved, make sure to pay your balance on time and avoid carrying a large balance because that will increase the interest rate. The goal is also to show good credit behavior, which can eventually help improve your FICO credit score.

You can also opt for a secured credit card. With this type of card, you’ll need to make a deposit that will serve as your credit limit. The advantage of using a secured credit card is that it reports to the credit bureaus, so if you make on-time payments, it can help improve your score.

A credit card we recently reviewed is OpenSky Credit Card. It’s a secured credit card that offers people with bad credit the opportunity to rebuild their score.

 

Home Loans

For a home loan, you’ll need a minimum credit score of 580 to qualify for a 3.5% down payment. If you have a credit score of 500 or below, you may still qualify for an FHA loan but will be required to put 10% down.

Keep in mind that your credit score is just one factor that lenders look at when considering you for a loan. They’ll also look at factors like your employment history, income, debts, and the property value you’re looking to buy before approving any loan amount.

So if you have a 550 credit score and other strong qualifying factors, you may still be able to get approved for a mortgage.

 

Auto Loans

For a car loan, you’ll need a credit score of at least 620 to qualify for the best interest rates. If you have a credit score below that, you may still qualify for an auto loan but will likely have higher repayment terms and interest rate.

If you’re looking to finance a new car, your best bet is to get pre-approved for an auto loan before you start shopping. That way, you’ll know how much you can afford to spend and can negotiate based on that number.

One of the online lenders we recommend, MyAutoLoan.com, can help you get pre-approved for an auto loan. The process is quick and easy, and it doesn’t impact your credit score. In addition, MyAutoLoan.com works with people with a variety of credit scores, so even if you have a 550, you may still be able to get approved.

Visit MyAutoLoan.com

 

Personal Loans

For a personal loan, you’ll need a credit score of at least 580 to qualify for the best interest rates. If you have a credit score below that, you may still qualify for a loan but will likely pay a higher interest rate.

One website we recommend, BadCreditLoans.com, offers personal loans to people with bad credit. The process is quick and easy, and you can get pre-approved in minutes without impacting your credit score.

Keep in mind that when shopping for a personal loan, it’s important to compare offers to ensure you’re getting the best deal from the loan term. 

BadCreditLoans.com can help you compare offers from multiple lenders so you can choose the one that’s right for you.

Visit BadCreditLoans.com

 

Tips To Improve Your Credit

1. Check Your Credit Report

The first step to improving your credit is to check your credit report for errors. You’re entitled to a free copy of your report from each of the three major credit bureaus once per year. You can request them at AnnualCreditReport.com.

If you find any errors, dispute them with the credit bureau. This can help improve your credit score.

 

2. Dispute Inaccurate Information

If you find any inaccurate information on your credit report, dispute it with the credit bureau. This can help improve your credit score.

Make sure you keep track of all communication and put everything in writing to prove if necessary. You can include supporting documentation such as receipts or bills to prove that what you’re saying is true.

 

3. Track Your Spending

The next step is to track your spending and payment habits. This will help you identify any areas where you may need to make changes.

For example, if you find that you’re consistently carrying a balance on your credit card account, you may want to work on paying down your debt. Or, if you’re not using your credit cards regularly, you may want to consider using them more often to help improve your score.

 

4. Pay Your Bills On Time

One of the most important things you can do to improve your credit is to pay your bills on time. Payment history is the most significant factor in your credit score, so it’s essential to make sure you’re always paid up.

Set up automatic payments if you have trouble remembering to pay your monthly payments. This way, you can ensure that your bills are always paid on time.

 

5. Fix Past Due Accounts and Collections

If you have any past-due accounts or collections, it’s important to take care of them as soon as possible. This can help improve your credit score.

There are a few different ways to do this. You can try to negotiate with the collection agency to have the debt removed from your credit report. Or you can pay off the debt in full.

If you have the money to pay off the debt, you may want to do that. Once you pay it off, make sure to get confirmation from the collection agency that the debt has been paid and that it will be removed from your credit report.

If you don’t have the money to pay off the debt, you can try to negotiate with the collection agency. You may be able to get them to agree to remove the debt from your credit report if you pay a portion of what you owe. Or you may be able to set up a payment plan.

Whatever you do, make sure that you get everything in writing, so you have documentation of your agreement.

 

6. Improve your Credit Utilization Ratio

If you have a good payment history, you may be able to get your credit limit increased. This can help improve your credit score.

To do this, call your credit card issuer and ask for an increase. If you have a good history with the company, they may be willing to increase your limit.

If you don’t have a good history, you can try to get a new credit card with a higher limit. Or you can use a credit card with a lower limit and pay off your balance each month so that you’re only using a small portion of your available credit.

 

7. Avoid Opening New Credit Accounts

When you open a new credit account, it can lower your credit score. That’s because it can increase your credit utilization ratio.

If you need to open a new account, make sure you keep your balances low and pay off your bill in full each month.

 

8. Keep Old Accounts Open

It can also be helpful to keep old accounts open, even if you don’t use them much. That’s because it can help improve your credit history and length of credit history, both of which are important factors in your credit score.

If you have an old account that you don’t use much, consider making a small purchase on it every now and then and paying it off in full each month. This can help improve your credit score over time.

 

9. Have the Right Credit Mix

Another factor in your credit score is your credit mix. This refers to the different types of credit you have, such as credit cards, store cards, auto loans, and mortgages.

It’s generally good to have a mix of different types of credit. So if you only have credit cards, you may want to consider getting an auto loan or a store card. This can help improve your credit score.

 

Consider Hiring a Credit Repair Service

If you’re not sure how to fix your credit on your own, you might want to consider hiring a credit repair service. This may be a great option as these services can help you dispute inaccuracies on your credit report, negotiate with creditors, and set up payment plans.

Just be aware that there are a lot of scams out there, so you should only use a reputable credit repair service.

Both Credit Saint and Sky Blue Credit are reputable credit repair services that might be able to help you.

 

Credit Saint and Sky Blue Credit Repair

credit-saint-review

Credit Saint is a credit repair company that has been in business since 2004. They have an A+ rating with the Better Business Bureau and have helped remove charge-offs and other negative items from people’s credit reports.

Credit Saint offers various services to help you fix the most derogatory marks on your credit reports, such as late payments, charge-offs, and other services.

Credit Saint can help you with credit counseling, credit monitoring, and identity theft protection.

Credit Saint has a high customer satisfaction rate and offers a money-back guarantee on all their services.

Visit Credit Saint

 

Sky Blue Credit Repair is another credit repair company that has been in business since 1989. They have an A+ rating by the Better Business Bureau and have high customer satisfaction.

Just like Credit Saint, Sky Blue Credit Repair can help you remove a charge-off along with any other delinquent account from your credit report. They also offer a money-back satisfaction guarantee on all of their services.

Both Credit Saint and Sky Blue Credit are reputable credit repair companies with a long history of helping people repair their credit. If you’re struggling to remove a charge-off from your credit report, hiring one of these professionals may be the best step for you.

Visit Sky Blue Credit Repair

 

Wrapping It Up

Fixing your 550 credit score can be challenging. However, your past mistakes don’t determine your future financial freedom. It’s important to remember that you have options to address your lower credit score. There are steps you can take to improve your credit score. The best ways to start, is focusing on your current debt and paying it down as fast as possible.

If you’re not sure where to start, consider talking to a credit counseling service or hiring a credit repair company. They can help you develop a plan to improve your credit score. Just be sure to research any credit repair company before you hire them to make sure they’re reputable.

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Credit Weld is committed to providing you with the most up-to date, accurate and detailed information possible. In order for us to offer this information for free, sometimes we are compensated by various companies that we feature. This helps pay for our writers time in order to provide meaningful and helpful information to get our readers on the path to better credit. 

Regardless if a company is compensating us or not, we only accept these opportunities when the post, will be helpful or valuable to our readers and is something that fits within the context of this blog. 

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