Financial Education

Understanding Your 555 Credit Score

A credit score of 555 is considered poor by most credit bureaus. Consumers may struggle to get loan and credit card approvals. Improve it by enhancing your payment history and paying off debts. Setting up autopay can help ensure timely payments and strengthen your payment record.

Unfortunately, consumers with a 555 credit score may have a hard time finding approval for loans and may struggle with other financial difficulties as well.

But, the good news is there is always room for improvement. Keep reading to learn about how having a 555 credit score can affect your finances, and how you can work towards improvement and ultimately earn a good credit score!

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Key Takeaways for a 555 Credit Score

Overview of Your Rating

Generally, 555 is considered a poor credit score by the credit bureaus. Luckily, we have plenty of tips for how to boost your score and get back on track!

Borrowing Options

Due to the potential financial risk associated with bad credit borrowers, borrowing options may be limited for consumers with credit scores at or around 555.

Improving Your Score

Consumers may be able to achieve a higher credit score by working on their payment history, limiting new credit inquiries, paying off debt, and reviewing their credit reports often.

Is a 555 Credit Score Good?

Looking at the average FICO credit scoring model, 555 is considered poor, or bad credit. But, if you have this type of credit score, know that you’re not the only one! According to Experian, 16% of consumers have a FICO score in the “poor” range. 555 falls within the lowest credit score tier, encompassing consumers with scores between 300 and 579. After that, there are consumers with scores between 580 and 699 who have fair credit. Next up are scores between 670 and 739 which is considered the “good” credit range, followed by the “very good” credit range (scores between 740 and 799). At the very top are excellent credit consumers who have scores between 800 and 850.

Pro Tip: Many lenders look beyond just the score. Consistent income and recent payment history can still unlock opportunities.

US Population Credit Score Distribution
25
20
15
10
5
0
Poor
Fair
Good
Very Good
Exceptional
300-579
580-669
670-739
740-799
800-850

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Explore financial products tailored for your current credit standing. These partners specialize in helping people rebuild.

Credit Builder Account

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Lease-to-Own Solution

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Personal Loans

A personal loan is a type of installment loan that consumers can use for just about any expense. However, if you have a lower credit score, it will be important to research lenders and compare offers to make sure you find the best deal. This is because personal loan lenders usually reserve the best interest rates, terms, and loan amounts for borrowers with higher credit scores. But that doesn’t mean you can’t find a loan with bad credit, you’ll just have to look around.

There are also personal installment loans specifically designed for consumers with poor or even no credit. Funding like bad credit loans or a credit builder loan usually have easy approval requirements, allowing borrowers with just about any type of credit background to receive approval. These loans can even help consumers improve their credit history and credit scores over time when used responsibly.

Bank Loans

Bank loans are a type of loan distributed directly from a local or chain bank. Usually, bank loans are used for major life purchases, investing, home renovations, debt consolidation, or personal business ventures.

Unfortunately, borrowers with poor credit scores may not be able to get approved for a traditional bank loan. They may have a much easier time finding loans for 500 credit score from another direct lender who specializes in working with consumers who are struggling with their credit history.

Credit Cards

As a loan alternative, you may also consider using a credit card to cover your expenses. With unsecured credit cards, borrowers have access to a predetermined credit limit every month. At the end of each month, the amount the borrower spent is added to their overall balance, and their credit limit renews. Credit card applicants with poor credit are more likely to get approved for a low credit limit, but they can work their way up as they improve their credit history and earn a higher credit score.

While a revolving line of credit can be extremely convenient because you can have access to extra funds every month without having to apply or reapply for a loan, it also puts consumers at risk of accumulating unaffordable credit card debt. So, if you choose to use an unsecured credit card, it’s important to make it a priority to pay off your balance as often as you can.
Woman reviewing her borrowing options at home
Action Plan
Action Plan
Action Plan

How To Improve Your 555 Credit Score

How Can I Make Sure I Don’t Have a Missed Payment?

According to FICO, more than 15% of Americans have had a missed payment of at least 30 days in the past year.2 If you have trouble remembering to pay your bills and loans on time, consider signing up for autopay. With autopay, your due payments will be taken directly out of your checking account, so you never have to remember to manually submit a payment!

Prioritize Debt

After payment history, the amount of debt owed is the next largest factor that makes up consumer credit scores; it makes up 30%. Therefore, being efficient about paying off your loans and other debts will be vital in going from a poor to an average credit score and beyond. To keep things organized, you can try the debt avalanche or debt snowball repayment methods. Or, you can incorporate habits like paying more than your minimum amount due each month to speed up the repayment process on some of your loans/balances.

Work on Establishing a Positive Payment History

Ultimately, the most important thing anyone can do to improve their credit score is to make consistent timely payments on all their bills. Unfortunately, late or missed payments can negatively affect your credit history for up to seven years! On the other hand, having a pristine payment history can help boost your credit significantly! Making up approximately 35% of your overall credit score, payment history is the most impactful factor on your credit report.

Try Credit Boosting Programs

Over the years, credit bureaus and other financial institutions have curated programs specifically designed to help consumers achieve a higher credit score. Below are some of the most helpful ones.

Experian Boost

Experian Boost is a program that monitors and helps boost consumer credit. Essentially, this program allows consumers to benefit from making payments on things they are already committed to, such as:

• Utility bills

• Rent payments

• Cell phone bills

• Streaming services (like Netflix or Hulu)

Typically, credit reporting agencies don’t look at these types of payments when compiling data for credit reports, but with Experian Boost, they will!

Can I Buy a House With a 555 Credit Score?

It may be exceedingly difficult to get approval for a mortgage when you have a low credit score. However, everybody deserves a place to live. And so, if you are trying to buy a house but are going through some credit challenges, you may try:
Mortgage Type
Description
Credit Score Requirements
Key Features
FHA Loan
Insured by Federal Housing Administration.
As low as 500 with 10% down.
Lower down payment requirements.
VA Loans
Backed by Dept. of Veterans Affairs.
Typically 620 (varies by lender).
No down payment required; no PMI.
USDA Loans
For homebuyers in rural/suburban areas.
640 for automatic underwriting.
No down payment required.
Disclosure: This table provides estimates; requirements and features can vary by lender and situation.

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