If your credit score is 550, you can only qualify for a personal loan. However, it is nearly impossible to secure large loans with low credit scores. This means you need to look for alternative financial solutions or improve your credit score.
In this post, I’ll take you through various things you need to know regarding securing a loan with a 550 credit score. Let’s get straight into it.
What a Credit Score of 550 Means?
Generally, anything from 576 going down is considered a poor credit score. So, a score of 550 isn’t doing you any favour. If anything, there’s a high chance that you won’t secure good loans with reasonable interest rates and fees.
Bad credit scores can be caused by many factors such as default payments in previous loans, delinquent accounts or bankruptcy. All this gradually leads to a bad credit record, which leads to most lenders barring you from securing a loan. If they do offer you the loan, they’ll slap on huge fees and massive interest rates over a short period.
However, all is not lost as you can still secure financial help. As for unsecured and secured loans, the lender can only offer you a loan when they are sure you will pay back every penny, and that’s extremely unlikely if you have a 550 credit score.
How Do I Get a Payday Loan With a Credit Score of 550?
The fact that most lenders prefer a credit score of 600 and above instantly makes it hard for you to secure a loan with a credit score as low as 550. However, there’s hope for you as there are lending platforms such as Gday loans with lenders that will grant you a loan regardless of your credit score.
- Online lenders: A couple of online lenders don’t do massive credit score checks, and you may apply to see whether they’ll offer you the loan.
- Credit unions: Unlike traditional banks, credit unions are different as they are flexible when dealing with bad credit score borrowers. Depending on where you live, you can take up the challenge and be a member of the credit union, and hopefully, you’ll get the financial assistance you need.
- Community banks: Like credit unions, community banks require you to be a member or a regular user to secure a loan deal. In that case, you’ll have to inquire about their loan options, and if you find a community bank employee you know, they might help you secure the best deal.
- Payday loans: Payday loan lenders don’t need your credit score history for them to offer you a loan. For example, Gday Loans offers guaranteed approval loans for bad credit applications. However, such loans attract good fees and high-interest rates.
- High-interest installment loans: Some lenders provide lines of credit and installments. However, they place massive interest rates and fees that make it difficult for you to pay on time.
- Title loans: Title loans are a great way to secure loans as you get an amount based on the value of your car. Once you pay up, you get your vehicle. The best part is that you can still drive your vehicle even after securing the loan. The only problem comes when you don’t pay the loan, and the lender confiscates your vehicle.
How to Improve Your 550 Credit Score
To move your credit score up from 550 requires endurance, composure and action. It also takes persistence, as you’ll have to wait for quite some time before your credit score moves up.
Let’s look at things you can do to improve your credit score from 550:
- Settle your bills in good time: Settling your accounts in good time is by far the best thing you can do to improve your credit score. Note that once a bill is due in 30 days and you fail to repay, most creditors will report you to the credit bureaus for late payment. That’s why it’s vital to always clear all your credit bills in time. Once it’s placed in your credit history, be sure it will be there for the next seven years.
- Lower revolving account balances: If you use a revolving credit line or credit card, then paying all your balances will reduce your credit use and ultimately improve your credit score. The best part is that it’s quick and precise so that you don’t have to wait for long to see a significant improvement.
- Open new accounts only as needed: If you have a limited number of credit cards, it will be essential to leverage a credit loan or secured credit card to boost your credit score. You’ll simply have to settle the repayments in time on your new account so that a positive report is incorporated into your credit score. However, don’t take any credit card loans if you doubt your ability to repay in time.
Credit cards are also crucial in saving you insurance cash, apart from securing loans. Not paying security deposits and renting a home becomes easy as it proves you are credible and can be trusted to pay your rent in good time.
Bottom Line
Nevertheless, when you can’t secure loans, you’ll have to improve your credit score. Few things hurt as bad as being denied a loan when you’re in a financial crisis just because you can’t meet the required credit score. Luckily this post has shown you that you can get certain loans even with a low credit score.
But if boosting your credit score will take longer, and you need the money urgently, then try the Gday Loans, who’ll connect you to the best bad credit lenders in Australia.
