Earlier today I had a reader send in a question, “How bad is 550 credit?”

I wouldn’t want to hurt anyone’s feelings with an abrupt answer, but the truth is that it’s going to be quite difficult to get loans with a credit score this low. 550 is generally on the bottom end of credit that’s ‘loanable’.

Most banks will want to see a credit score of at least 620 to provide a person with most types of loans. That said, there are always exceptions and you never know what you will be able to work out with a bank until you ask.

If you have a credit score that’s below 620, you may still be able to get loans that are backed by collateral. It’s simply a lot safer for the bank to provide loans that are collateralized. These are loans are often backed by cars. This gives the bank an asset that they can take if a person with low credit defaults on their loan payments.

Some people with a 550 credit score will still be able to get loans for cars, as long as they have a solid sum for the down payment. I wouldn’t expect for anyone to be able to get an unsecured loan from a bank if they fell into this price range.

If you have 550 credit, make sure that you do what you can to improve it. Making sure that you only use 30% of your credit is a vital factor and many people have lowered scores because they have too much credit card debt.

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