A 555 credit score is considered poor and is well below the average credit score. It indicates a credit history of missed payments, a high utilization rate, or other financial challenges.
Credit scores range from 300 to 850, with higher scores indicating better creditworthiness. A 555 credit score leaves space for improvement. 555 is not a good credit score, but it’s not the worst either. You will not be able to access the best loans or cards on the market. But do not worry, you still have options.
This article will bring you up to speed on what your poor credit score means, what financial products are available, and how you can raise your rating to get the best deals possible.
What credit card can I get with a 555 credit score?
Obtaining a card with a 555 credit score can be difficult, but there are ones designed specifically for poor scores. 555 credit score credit cards are typically secured. If you have your heart set on an unsecured card, you will be able to find one, but first, do your research.
Unsecured credit cards
Most unsecured cards are out of reach for people with low scores. This is because card issuers don’t want to take on a lot of risk. Luckily, there are subprime unsecured cards designed to help raise your rating. These cards frequently have higher APRs, additional fees, and lower limits. Weight the cost of the card against how much you need it to determine if the fees are worth it for you.
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Secured cards are a lifeline for anyone looking to improve their scores. These cards require a security deposit as collateral, lowering the risk for lenders. Many secured credit card issuers have minimal score requirements allowing almost anyone to obtain a card.
The required security deposit typically ranges from $200 to $5,000. There are secured cards with security deposits as low as $100 and others with no minimum deposit required at all. Deposits are completely refundable as long as you close your account in good standing and pay all your bills in full.
Secured cards can be a great way to improve your score while avoiding the heavy fees and high APRs of unsecured subprime cards.
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What are the best personal loan options for someone with a 555 credit score?
A 555 credit score personal loan is possible to get, but you may need to jump through some hoops to do so. When you have a low score, your loan options will be limited. We’ll go over a few choices below.
Online lenders
Many online lenders specialize in loans for poor scores. These lenders often do not put as much weight on your rating and instead consider other factors like your income and employment history. These loans are easier to get but many come with high interest rates and additional fees. The extra costs protect the lender in case you default.
When you’re looking at online lenders, check out loan marketplaces. These marketplaces connect you with multiple lenders through just one application. Compare lenders and choose the one that offers you the best loan option.
Payday loans
Payday loans are short term loans for a small loan amount, usually no more than $500. These loans are secured by your next paycheck and so do not typically require a credit check. The problem is they have to be repaid within two weeks – which can be difficult – and come with very high fees – some going as high as a 400% APR. Rolling over a payday loan can incur additional fees and lead to a cycle of debt.
Credit unions
Credit unions are friendlier than banks since they are member-run institutions. Many offer personal loans with lower minimum credit score requirements and more favorable terms. You do have to be a member of your local credit union to qualify.
Cash advance app
Cash advance or paycheck advance apps send you a portion of your earnings before payday. These advances are different from a conventional loan since you’re borrowing from yourself rather than a lender. Most apps have 0% APR, no credit check, and little to no fees. You can even usually move to due date with no charge if you need to.
Secured loans
If you have collateral you can put up, then secured loans are the way to go. These loans require you to put up an asset like your house, car, or savings account. You risk losing the asset if you fail to repay as agreed but your approval odds increase and your terms (interest rates, fees, repayment period) will likely be better.
Cosigned loans
Adding a cosigner is another option if you want a conventional loan with decent terms but don’t have a good score. Lenders are more likely to approve a loan with a cosigner who has a good rating. This is because the cosigner guarantees the loan – they will be responsible for the money if you fail to repay. Before you go with this option, make sure you have a payment plan in place.
What does it mean to have a 555 credit score?
A 555 credit score is typically categorized as subpar. In other words, 555 is a bad credit score. You will not be eligible for loans with favorable terms or cards with lucrative rewards. Instead, you will have to settle for loans and cards geared towards applicants with poor scores. These financial products will likely come with higher APRs (annual percentage rate) and additional fees compared to those offered to borrowers with better ratings.
Save money on bills
When you have a higher credit score you will save money on bills. Financial institutions tend to charge fewer fees and lower interest rates to individuals with good to excellent scores. For instance, most subprime cards – cards aimed at individuals with FICO scores below 670 – charge an annual fee. If your FICO score falls in the good range – above 670 – you will have plenty of card options with no annual fee.
The same is true with interest rates. The average credit card APR ranges from 16.44% to 27.89%. Applicants with good scores are more likely to receive APRs on the lower end closer to 16.44%. On the other hand, a lot of subprime cards charge APRs well above average, closer to 35.99%.
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Improve your score and you’ll get more favorable borrowing options with lower APRs and fewer fees. This can save you hundreds to thousands over the life of the loan or on your credit card bills.
Can you get approved with a 555 credit score?
Yes, you can get approved for financial products with a 555 credit score. The products you’ll be approved for though may not be the best. You might be compelled to settle for a personal loan with a higher interest rate, additional fees, and a short repayment term. Your personal loan’s interest rate could rival or surpass the APR on your cards. Waiting until you’ve improved your score could enable you to apply for a personal loan boasting a lower APR and more favorable terms.
Your card options will be similarly restrictive and costly. Most subprime cards charge high APRs, extra fees, and offer low limits.
While you can get approved with a 555 credit score, you can anticipate higher costs in comparison to borrowers with better scores. In the end, you may be better off waiting until you raise your rating.
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What makes a good credit score?
A good score falls between 670 and 850. Most Americans have scores between 600 and 750. Getting a good score is not too hard, you just have to follow a few key financial practices: always pay on time, keep your utilization rate low, and apply for new accounts only when needed.
Maintaining a strong score gives you access to lower APRs and larger borrowing limits. You will be charged fewer fees and usually will have more time to repay your loans.
There are two main scoring models. Both range from 300 to 850 and are based on the same consumer behavior.
The FICO scoring model is most used by lenders. A good score on this model ranges from 670 to 739. Once your FICO score hits 760 you will get the best rates and terms available.
- Exceptional: 800-850
- Very Good: 740-799
- Good: 670-739
- Fair: 580-669
- Poor: 300-579
Vantage Score was created by the three main credit bureaus. Scores are calculated similarly to FICO but factors are weighed slightly differently. Once again, your score must be over 600 to be considered good.
- Very Good: 701-850
- Good: 601-700
- Fair: 500-600
- Poor: 300-499
Both models reward responsibly repaying what you owe.
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What affects your credit score?
Various criteria influence your scores. Understanding how these elements affect creditworthiness can help you make informed decisions to enhance your rating.
The five factors that are weighed when calculating your FICO score are:
- Payment history – 35%
- Utilization rate – 30%
- Length of time you’ve had accounts – 15%
- Credit mix – 10%
- New inquiries – 10%
Not all factors have the same importance. For instance lenders like to see how you can handle different financial products – cards, auto loans, and home loans – but do not take on debt you do not need. This factor is not very important and you can easily raise your rating without it.
On-time payments by credit score range
| Credit score range | Average percentage of on-time payments |
|---|---|
| 750-850 | 99.5% |
| 700-749 | 96.7% |
| 640-699 | 93.1% |
| 300-639 | 46% |
Check your credit reports to understand your scores
The first step to a good score is to check your credit reports. Your reports are records of your credit history. They can tell you what mistakes you’ve made and habits you need to correct. You can get your reports for free once a year via AnnualCreditReport.com.
Your credit report is not necessarily a perfect record. If you see any errors they can be simple mistakes or signs of identity theft. Watch out for inaccurate negative marks and dispute any you find with the issuing bureau.
Pay on time
A positive payment history is the best thing you can do for your score. Making timely payments shows lenders and creditors that you can be trusted to repay money as agreed.
Setting up automated payments or electronic reminders is to ensure that your bills are paid on time. Late payments can do a lot of damage to your score. The later you are on a bill or debt payment, the worse it will get.
Catch up on past-due payments
Addressing past-due debt payments is critical for enhancing your score. Contact creditors to establish payment plans or settle outstanding debts. Once you’ve caught up on debt payments, it’s time to stay current.
Keep your balances low
Strive to keep your balances low compared to your overall credit limit. This means don’t max out your cards. Experts recommend using 30% or less of your limit.
One way to keep your utilization rate low is to pay more than the minimum payment. Paying off your entire balance will help you keep a low usage rate and save you money on interest.
A poor score is not irredeemable. Folks anywhere can gradually rebuild their scores and access favorable financial products by implementing healthy financial habits.
Bottom line
Converting a poor score to fair and then to good is a gradual process. It will take time. Have some patience as this is the best thing you can do to access loans with favorable terms and cards with rewards.
Start developing practices that support good scores immediately, you should notice some consistent improvements within a few months.
This content is general in nature and is provided for informational purposes only. MoneyFor is not a financial advisor and does not offer financial planning services. This content may contain references to products and services offered through MoneyFor marketplace.