550 credit score: A guide to credit scores
Quick insights
- A 550 credit score is considered poor by FICO® and subprime by VantageScore® scoring models.
- A credit score of 550 may indicate a higher risk for lenders, which could make it more difficult to get approved for credit.
- To help improve a 550 credit score, you may want to check your credit report for errors, reduce debt and make timely payments.
A 550 credit score is considered poor by most major credit scoring models, including FICO and VantageScore. This means lenders may see a borrower with a 550 credit score as a higher risk borrower, making it potentially harder to get approved for credit. If you do get approved, you could face less favorable rates and terms. What else do you need to know about a 550 credit score? Let’s dive in.
Understanding a 550 credit score
Lenders use credit scores to help assess the risk of lending money or extending credit to someone. That’s why a higher score may be useful as it may help you get access to the credit or products you need.
Credit scores typically range from 300 to 850, with higher scores indicating better creditworthiness.
Is 550 a good credit score?
A 550 credit score falls into the poor or subprime category, depending on which scoring model you’re looking at.
VantageScore's scoring ranges for VantageScore 3.0 are:
- Superprime: 781 to 850
- Prime: 661 to 780
- Near prime: 601 to 660
- Subprime: 300 to 600
FICO's credit score ranges for FICO Score 8 are categorized like this:
- Exceptional: 800 to 850
- Very good: 740 to 799
- Good: 670 to 739
- Fair: 580 to 669
- Poor: 300 to 579
Lenders may view a 550 credit score as a sign of financial instability or past credit issues, and lenders may set minimum credit score requirements for approval—among other requirements.
With a 550 credit score, you may face higher interest rates or denial for credit applications. Improving your credit score can open up more financial opportunities and better terms.
Is 550 a bad credit score?
If your credit score falls in the poor category as referenced by some models, you might feel this is "bad credit." While there is technically no definition of a "bad" credit score, in this article the term "bad credit" refers to low credit scores.
This score could suggest a history of late payments, defaults, high credit utilization or more. Borrowers with a 550 credit score may struggle to qualify for mainstream credit products. They may be limited to subprime lenders, which often charge higher fees and interest rates.
Insurance companies and landlords may also use credit scores to assess risk, potentially affecting premiums and rental approvals. A “bad” credit score could impact your financial goals and limit your options.
Chances of approval with a 550 credit score
Approval odds for loans and credit cards are lower with a 550 credit score. Some loans may be available from subprime lenders, but you may have higher interest rates and stricter requirements for these types of options. Some lenders, depending on the loan, may require additional documentation or collateral to offset the risk.
Improving your credit score before applying for credit can help increase your chances of approval and secure better terms.
How to improve a 550 credit score
Credit scores can help increase your approval odds and get you more favorable terms and interest rates. So how do you improve your credit? Here are some tips to get started:
- Make your payments on time: This is an important one, as payment history is a major factor making up your credit score.
- Review your credit reports: This allows you to check for errors and dispute any inaccuracies that could be negatively affecting your credit.
- Lower your credit utilization ratio: You can do this by paying down existing debts and balances. A credit utilization ratio of 30% or below is typically favorable.
- Avoid applying for new credit unless necessary: This matters because hard credit checks can temporarily lower your credit score.
- Consider keeping old credit accounts open: This helps to lengthen your average account age, which is another factor that can help your credit score.
- Monitor your credit: Keeping an eye on your credit score can help you to track your progress and be proactive. Using a free credit monitoring tool like Chase Credit Journey® can help you to monitor your credit and get updates about your credit.
It’s important to be patient and consistent. Improving your credit score is possible, but it takes time and responsible financial behavior.
Conclusion
A 550 credit score doesn’t have to be your score forever—remember that it can be improved with effort and discipline. Focus on building positive credit habits and addressing any negative marks on your credit report. Don’t hesitate to seek professional advice if you need help managing debt or creating a plan.
Other helpful tips include monitoring your credit score regularly to track your progress and stay motivated. Taking proactive steps today can help improve your financial health and open up better opportunities in the future.
