According to most credit scoring models, a 565 credit score is considered a poor score.
Having a 565 credit score can cause troubles that leak into not only your financial life but your personal life as well!
Thankfully, there are steps consumers can take to start improving their credit history and boosting their credit scores right away.
To have the best shot at success, start with learning how your credit score works, what it means to have bad credit, and what you can do to start improving your score ASAP!
Key Takeaways for a 565 Credit Score
Overview of Your
Credit Rating
565 is part of the lowest credit score range, labeled as “very poor” credit. Consumers who are a part of this credit range are typically viewed as having a high lending risk.
Borrowing Options With a
565 Credit Score
While approval for no credit check loans may be possible, these loans are often considered high-risk. Instead, work on credit improvement before seeking out loans.
Improving a 565
Credit/FICO Score
Consumers with a poor credit history can improve their credit score by working on their payment history, avoiding new debts while paying off existing ones, and keeping credit utilization low.
Is a 565 Credit Score Good?
Unfortunately, 565 is not a good credit score. In fact, it’s among the lowest credit rating categories, referred to as the “very poor” range. Although there may be slight variation depending on what credit scoring model you use (for example, FICO credit scores vs. VantageScore credit scores), all credit scores between 300 and 579 are considered “very poor” credit.
What Can You Get Approved for With a 565 Credit Score?
When getting a loan with bad credit, you’ll definitely want to research your options and not just go with the first offer that comes along. You may even want to consider raising your average credit score before you take out more debt. However, financial emergencies happen, and we all need extra cash from time to time. Learn more about some of the most popular types of loans below.Personal Loans
A personal loan is usually an unsecured loan, which means lenders approve borrowers based on credit history and financial data instead of requiring physical collateral. However, there are bad credit lenders who specialize in providing personal loan funding to borrowers with lower credit scores. But remember, without a higher credit score, you will have to deal with higher interest rates and lower loan amounts.Bank Loans vs. Other Lenders
Several types of lenders offer personal loans, including banks, credit unions, online lenders, and private lenders. Since banks are typically strict and traditional lenders, they usually only work with borrowers who have a very good credit score. So, with an average credit score of 565, you may want to start your loan search off with lenders who cater to consumers with a poor credit history.Unsecured Credit Card vs. Secured Credit Card
Credit card accounts can be great because you don’t have to reapply every time you need more cash. Instead, you have access to a preset credit limit that renews at the end of each month. Approximately 82% of people in the United States have at least one credit card.1 However, credit cards, particularly unsecured credit cards, can put consumers at risk of accumulating overwhelming debt. A secured credit card may be a much more helpful tool for consumers who want access to a line of credit but are also working on improving their credit scores. With a secured credit card, you’ll prepay your credit limit upfront. That way, lenders have a security deposit to offset their potential lending risk.Car Loans vs. Auto Leases
If you need a car, you may be debating between auto loans or auto leases. While a car loan allows you to own your car outright after you repay the balance, you may have to deal with higher interest rates. On the other hand, an auto lease may come with lower payments, but it may be difficult to get approval with a poor credit score. Consider asking a cosigner to sign your loan with you or contribute a larger down payment to potentially get a better deal.No Credit Check Loans
No-credit-check loans are a type of funding in which the lender doesn’t perform a traditional credit check when assessing the borrower’s creditworthiness. Lenders usually charge higher interest rates instead of focusing on credit history to offset their lending risk. No-credit-check loans can include unsecured loans like payday loans or secured loans like car title loans.Products to Help Improve a 565 Credit Score
Below are a few products and tools to help consumers raise their FICO scores.
Budgeting Apps
If you have a lower credit score, it may be because your financial situation is a little unorganized. A budgeting app can help you keep track of your spending, upcoming payments, and financial goals all in one place!
Check out some information on a few popular budgeting apps below:
Budgeting App | How It Works | Benefits for Consumers with Bad Credit |
You Need a Budget (YNAB) | YNAB uses the zero-based budgeting system, assigning every dollar a job, whether it’s for expenses, debt payments, or savings. | Helps with precise control over where every dollar goes, encouraging debt repayment and preventing overspending. |
PocketGuard | Links to your accounts to track spending, categorize expenses, and identify recurring subscriptions and bills, with features to find savings. | Helps find extra money by identifying unnecessary subscriptions or expenses, focusing funds on debt reduction and improving credit. |
DAVE | Offers budgeting tools and advance cash up to $100 with no interest to avoid overdraft fees, alongside financial planning advice. | Prevents overdraft fees, encourages better spending habits, and provides small short-term loans which can be used to avoid late payments on bills. |
Tally | Focuses on credit card debt management by offering a line of credit to consolidate card payments under a single lower interest rate, while providing a plan to pay down debt faster. | Helps manage and reduce credit card debt, which can be a major factor in poor credit scores, by saving on interest and organizing payments. |
Empower (previously Personal Capital) | Primarily an investment tool that also offers budgeting features, including tracking spending, net worth, and investment performance. | Encourages holistic financial management, from budgeting to investing, which can support overall financial health and indirectly aid credit improvement. |
Credit Monitoring
All three major credit bureaus offer credit monitoring services that can help you monitor your recurring credit reports. While you should always take a close look at your reports on a regular basis, especially if you are trying to boost your credit scores, professional credit monitoring services may be able to catch overlooked errors or inconsistencies that could be harming your credit!
Credit Repair Companies
If the idea of organizing your finances and improving your credit history sounds super new and overwhelming, you may find a credit repair company helpful. Credit repair companies specialize in working with bad credit borrowers and advising them on improving their average credit score. A few well-respected companies are:
- Lexington Law
- Credit Saint
- The Credit People
- Safeport Law
- The Credit Pros
- Sky Blue
Credit Boosting Services
Credit boosting services can help track positive transactions and behaviors on multiple credit accounts. Some popular services include:
- UltraFICO: Reports on positive behaviors like consistent bank activity and positive account balances. UltraFICO is also one of the most popular credit-boosting services.
- Experian Boost: Reports payment history for subscription services and other payments that credit bureaus usually overlook.
- TurboTenant Rent Reporting: Reports rent payments to credit bureaus. Usually, only mortgage payments are reported.
Grow Credit: Reports selected monthly bills that typically don’t appear on your credit report.
Benefits of Improving a 565 Credit Score
Below are a few perks you can look forward to once you have a higher credit score:
Better Interest Rates
Once you’ve improved your average credit score, you are more likely to receive lower interest rates and better terms. Lenders will want to make their personal loan products more appealing to consumers with good credit scores, so those consumers go with them and not their competitors.More Loan Options
When you have a higher credit score, lenders will see that you can be a financially responsible borrower and are, therefore, more likely to approve you for personal loans and other loan products!Special Offers
The benefits don’t stop with just a wide variety of loans and better deals. Improving your credit history can also make you more eligible for special offers like unexpected credit limit increases on credit cards. Or, if you don’t have a credit card, you may start to receive pre-approval offers for rewards credit cards or other unique lines of credit.How to Improve Your 565 Score
Check out a few tips to help you boost your FICO scores below:
Understand How Your Credit History Works
Credit bureaus determine credit scores using a combination of factors regarding financial history. Those factors include:- Payment history (35%): How on time you are with paying bills and debts.
- Amounts owed (30%): Total amount of debt you owe across credit cards, personal loan balances, etc.
- Length of credit history (15%): How long you’ve had active financial accounts open.
- Credit mix (10%): The different types of credit accounts you have.
- Recent credit inquiries (10%): How many times you’ve applied for loans, credit cards, or other financial products.
Pay Bills on Time
After seeing how credit bureaus view information regarding your credit history, you can now understand why working on your payment history is the most significant thing you can do to improve your credit scores. Unfortunately, making payments on time seems to be a problem for many Americans. According to the New York Federal Reserve, delinquency has increased for household debts, credit card balances, auto loans, and mortgages.2 If you have trouble making your various bill and debt payments on time, consider signing up for autopay!Avoid Unnecessary Debts
When you encounter unexpected expenses, don’t just turn to the nearest loan for a solution. Applying for quick cash loans on a regular basis not only adds unnecessary credit checks to your credit report but can also make your financial situation more difficult.Watch Your Spending Habits
In addition to avoiding new loans, try to watch your unnecessary spending. If you frequently spend money on impulse purchases or takeout food, it may be time to start restricting your spending habits.Keep Credit Accounts Open
If you have multiple credit accounts you don’t use, you may think closing them will help you achieve a higher credit score. This is not the case! In fact, closing credit accounts can harm your credit utilization rate and disrupt your credit mix. Instead of closing these accounts, just don’t use them!FAQs About 565 Credit Scores
Can I become a cosigner with a 565 credit score?
Cosigning may be challenging with a 565 score, as lenders look for cosigners with higher credit to offset the primary borrower’s risk. However, individual lender policies vary.
Will securing a credit builder loan affect my 565 credit score?
Credit builder loans are designed to improve your credit score by demonstrating a history of timely payments. Starting one can positively impact your score over time.
How does a 565 credit score impact my insurance rates?
Some insurers use credit scores to determine premiums. A 565 score might lead to higher rates, but this varies by state and insurer.
What Interest Rate Can I Get With a 565 Credit Score?
Lenders typically reserve their best interest rates and terms for borrowers with higher credit scores. So, while you may be able to get approval for a few different types of loans, even with a bad credit score, you’ll most likely have to deal with higher rates, low loan amounts, and strict repayment terms. The best way to access lower interest rates is to improve your overall credit score!
Can I Buy a House With a 565 Credit Score?
Finding a mortgage loan when you have bad credit may be extremely difficult. Instead, you may want to consider working on improving your credit history before applying for a home loan. But, if you are set on buying a home now, even with a 565 credit score, an FHA loan may be a helpful financial solution.
Can I Get an FHA Loan with an Average Credit Score of 565?
The Federal Housing Administration (FHA) offers government-backed home loans. These loans are known for having low down payments, low closing costs, and easy credit qualifications. This way, consumers with poor credit scores who wouldn’t have been able to qualify for most traditional mortgage products still have a chance at buying a home. The FHA can also help bad credit consumers who are looking to purchase their first home.
If you are 62 years or older and either own your land outright or have a low mortgage balance, you may be eligible for an FHA Reverse Mortgage. Or, if you are willing to incorporate energy-efficient improvements into your home, you can qualify for funding with an FHA Energy-Efficient Mortgage. The FHA also offers special loans for mobile homes and factory-built housing.
