Understanding Your 499 Credit Score

A 499 score indicates that a borrower has a subpar credit history. The borrower may have late payments on a credit report, excessive debt, or past bankruptcy.

Subprime borrowers typically apply for payday loans, title loans, and other predatory lending options. If you need emergency cash, compare multiple lenders to find the most affordable rates and terms.

You can improve a bad credit score over time by establishing a positive payment history, using credit-building tools, and reducing your credit card debt.

If you have too much credit card debt, you could prevent yourself from getting a higher credit score. Reducing your outstanding debt also lowers your credit utilization rate, which is a percentage that indicates how much credit you are using compared to your total credit limits. Using too much credit can signify financial hardship, which lowers your credit score and looks bad to lenders. According to USA Today, the average American household owes $7,951 in credit card debt a year.²

Here are a few strategies that can help you pay down debt:

Your existing credit accounts may actually be benefiting your credit score. However, closing an account due to inactivity could further decrease your very poor credit score and make it more challenging to improve it.

Here’s some insight into how an account closure could negatively impact you:

• Reduction in Credit Utilization Ratio: When you close a credit card, you reduce your overall available credit. If you carry balances on other cards or loans, this can increase your credit utilization ratio, which can lower your credit score.

• Shortening of Credit History: Your credit score benefits from a longer average credit history. Closing an older account can shorten your average credit history, especially if it’s one of your older credit lines.

• Change in Credit Mix: Closing a credit card might negatively affect your credit mix, particularly if you don’t have many other forms of credit.

• Shortened On-Time Payment History: If the closed account has a history of on-time payments, you might eventually lose some of that positive history when the account drops off your credit report (typically after 10 years).

One of the main reasons that borrowers have poor credit scores is late payments. A late payment on a credit report can significantly lower your credit score and continue affecting it for up to seven years. However, maintaining a positive payment history can only benefit your credit, especially if you have a long history of timely payments.

Get a personalized plan to improve your score today.