3 mins read
16-Sept-2024
555 credit score - Is it good or bad?
A 555 credit score falls within the Average range of credit scores, typically between 500 to 649. With a 555 credit score, you are significantly below the national average credit score, which is around 715. A score in this range indicates to lenders that you may pose a higher credit risk, and as a result, many financial institutions may be hesitant to offer credit to individuals in this category.
Borrowers with a credit score of 555 often face challenges when applying for loans or credit cards. Lenders may impose higher fees, ask for security deposits, or offer loans with less favourable terms. In some cases, credit card issuers may require applicants to put down a deposit as collateral, particularly for secured credit cards. Additionally, utility companies might also request security deposits before starting services. These measures are taken to mitigate the perceived risk of default.
Statistics show that roughly 62% of individuals with credit scores below 579 are at risk of becoming seriously delinquent, meaning they are likely to miss payments by more than 90 days. This further discourages lenders from extending credit to individuals with low scores.
How to improve your 555 credit score?
The bad news is that a 555 credit score is considered well below average. However, the good news is that there is significant potential for improvement, and taking the right steps can lead to better creditworthiness over time.
A smart starting point for improving your credit score is to obtain your full credit score report. Along with your score, you will receive a detailed breakdown of the factors affecting your credit. These insights come directly from your credit history, helping you identify the specific areas that are dragging your score down. Armed with this information, you can focus on addressing the issues that matter most.
For example, you might find that your score is being negatively impacted by missed payments, high credit card balances, or too many hard inquiries. Addressing these issues promptly, such as making payments on time and reducing outstanding debt, can help improve your score. Additionally, limiting new credit applications and keeping credit utilisation low are practical steps toward raising your credit score.
A 555 credit score falls within the Average range of credit scores, typically between 500 to 649. With a 555 credit score, you are significantly below the national average credit score, which is around 715. A score in this range indicates to lenders that you may pose a higher credit risk, and as a result, many financial institutions may be hesitant to offer credit to individuals in this category.
Borrowers with a credit score of 555 often face challenges when applying for loans or credit cards. Lenders may impose higher fees, ask for security deposits, or offer loans with less favourable terms. In some cases, credit card issuers may require applicants to put down a deposit as collateral, particularly for secured credit cards. Additionally, utility companies might also request security deposits before starting services. These measures are taken to mitigate the perceived risk of default.
Statistics show that roughly 62% of individuals with credit scores below 579 are at risk of becoming seriously delinquent, meaning they are likely to miss payments by more than 90 days. This further discourages lenders from extending credit to individuals with low scores.
How to improve your 555 credit score?
The bad news is that a 555 credit score is considered well below average. However, the good news is that there is significant potential for improvement, and taking the right steps can lead to better creditworthiness over time.
A smart starting point for improving your credit score is to obtain your full credit score report. Along with your score, you will receive a detailed breakdown of the factors affecting your credit. These insights come directly from your credit history, helping you identify the specific areas that are dragging your score down. Armed with this information, you can focus on addressing the issues that matter most.
For example, you might find that your score is being negatively impacted by missed payments, high credit card balances, or too many hard inquiries. Addressing these issues promptly, such as making payments on time and reducing outstanding debt, can help improve your score. Additionally, limiting new credit applications and keeping credit utilisation low are practical steps toward raising your credit score.
