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The Hidden Costs of a 549 Credit Score and How to Overcome Them.
Do you need help with a 549 credit score? You’re not alone.
A credit score of 549 could be better and can make it challenging to get approved for unsecured credit, such as personal loans, mortgages, and credit cards.
It’s a sign of past credit difficulties or a lack of credit history. But don’t worry; there’s plenty of opportunity to increase your score and rebuild your credit.
This post will explore what a 549 credit score means, why it matters, and how you can improve it.
We’ll also share tips and tricks for rebuilding your credit and getting approved for the credit you need. So, let’s dive in and take control of your credit score!
Unfortunately, a FICO® Score of 549 is considered a POOR credit score. On the other hand, VantageScore rates a 549 credit score as VERY POOR.
It means that any lender looking at your credit report will likely consider you a higher-risk borrower. That means they may not be willing to lend you money, or they may charge you a higher interest rate.
Credit Scores Range
Here are the ranges of credit scores :
According to the credit score model that was developed by Fair Isaac Corporation, also known as FICO,
- Excellent: 800 to 850
- Very Good: 740 to 799
- Good: 670 to 739
- Fair: 580 to 669
- Poor: 300 to 579
And according to the other scoring model, VantageScore,
- Excellent– 750 to 850
- Good– 700 to 749
- Fair– 650 to 699
- Poor– 550 to 649
- Very Poor– 300 to 549
So is 549 a good credit score? Using the two main credit scoring models, a credit score of 549 is a POOR or VERY POOR credit score.
What Impacts Your Credit Score?
Your 549 credit score did not just happen by itself. There are past actions that you may have done or did not do that fed your credit score.
Five main factors can affect your credit score, payment history, amounts owed, credit history length, credit mix, and new credit.
Therefore, the following common actions can hurt your credit score:
- Late or missed payments
- Accounts in collection
- Little to no credit at all
- Using too much available credit or maxing out your credit card
- Applying for a lot of credit cards in a short time
- Not having a good mix of installment loans and revolving credit
What Does Not Impact Your Credit Score?
According to Experian, the following does not affect your credit score.
- Marital status
- Race or ethnicity
- Religious beliefs or affiliations
- Political affiliations
Expired financial pieces of information are also not included.
- Chapter 7 bankruptcy: 10 years
- Chapter 13 bankruptcy: 7 years
- Collection accounts: 7 years
- Late or missed payments: 7 years
- Closed credit accounts in good standing: 10 years
How Can A Credit Score Affect You?
Mortgage, auto, and personal loans are somewhat challenging to get with a 549 credit score.
Whether you’re looking for a personal loan, mortgage, auto, or credit card, credit scores in this range can make it difficult for you to get approved for unsecured credit.
It could even prevent you from renting an apartment or landing specific jobs.
And if some lenders choose to work with you, they typically charge high fees and steep interest rates.
But don’t panic; it is not the end of the world.
Credit repair is one of the best ways to rebuild your credit score and open up more opportunities.
What Does A Credit Score Of 535 Get You?
So, what is the significance of having a credit score of 549 when it comes to taking out home loans, car loans, and credit cards?
Mortgage Or Home Loan With A 549 Credit Score
In order to get a mortgage, the average credit score usually needs to be above 620. However, some lenders may work with you if your credit score is as low as 549.
If you end up with a lender that will let you borrow money, you could end up having to pay a higher interest rate than someone with a credit score higher than 549.
So, can you buy a house with a credit score of 549? It’s possible. But is it worth the extra payment?
If you want to save money in the long run, it is best to work on repairing your credit so you can get a home loan with a lower interest rate.
Auto Or Car Loan With A 549 Credit Score
Similarly, to get an auto loan, your minimum credit score should be above 620. However, some lenders may work with you if your credit score is as low as 549.
Again, if you end up with auto lenders that will work with you, you could end up having to pay an extremely high-interest rate than someone with a higher credit score.
So, can you get an auto loan with a 549 credit score? Yes, but getting a car loan with a 549 credit score is going to cost you a lot more.
If your credit score is 549 and you’re looking for an auto loan, we recommend that you work on improving your credit score first.
Once your credit score is in the good or excellent range, you can start shopping for auto loans and compare rates from different lenders.
Personal Loan or Credit Card With A 549 Credit Score
Unfortunately, if you are looking to apply for a credit card with a credit score of 549, you will not qualify for an unsecured credit card.
Unsecured Credit Card
An unsecured credit card that is not backed by any collateral. In other words, the credit card company is trusting you to make your payments on time and in full each month.
To get an unsecured credit card with a credit score of 549, you will likely need to either find a secured credit card or become an authorized user on another person’s credit card account.
Secured Credit Card
A secured credit card is a credit card that is backed by a security deposit that you make with the credit card issuer. The credit limit on a secured credit card is usually equal to the amount of money that you deposit.
For example, if you deposit $500 with the credit card issuer, your credit limit will be $500.
The deposit that you make is held by the credit card issuer as collateral in case you default on your payments.
An authorized user is a person who is given permission to use another person’s credit card account.
The primary account holder is responsible for all of the charges that are made by the authorized user.
An authorized user usually has a credit limit that is set by the primary account holder.
If you are an authorized user of someone else’s credit card account, it can help improve your credit score.
The primary account holder’s payment history and credit utilization are reported to the credit agencies and will show up on your credit report.
If the primary account holder has a good payment history and low credit utilization, it will help improve your credit score.
However, if the primary account holder has a bad payment history or high credit utilization, it will hurt your credit score.
It is possible to get a personal loan with a FICO score of 549, although the interest rates will be very high and the loan amounts low.
You may be able to find a lender who specializes in subprime loans, but these come with their own risks. It’s always best to improve your credit score before applying for any type of loan.
How To Improve Credit Score?
If you have a credit score of 549, it means that you have a “poor” credit score.
Here are a few things you can do to improve a very poor credit score:
1| Evaluate Your Credit Report
Pull your credit reports from all major credit bureaus and dispute all negative, and get harmful items removed. Remember, you can get a free credit report from each of the three major credit bureaus once a year.
2| Get A Secured Credit Card
A secured card is one of the best ways to start rebuilding bad credit.
You place a security deposit in the total amount of your spending limit. The deposit reduces the issuer’s risk, making it possible to get approved no matter how low your score might be.
3| Pay On Time
Making timely payments and avoiding missed or late payments favor credit-score improvements.
Use automatic payments, phone alarms, and other automated tools to help you remember.
4| Avoid High Credit Utilization Rates
You can help your credit utilization rate by keeping your balances low, which is below 30% of your credit limit. If you can, pay off your balance each month.
5| Consider A Credit-Builder Loan
This type of loan is available from credit unions and comes in several forms. The most common one is where the credit union deposits the money you borrow in a savings account. Your money is inaccessible to you, but it earns interest.
You can access the funds plus the interest once you have paid off the loan. It can be a great way to build credit if you make on-time payments and if the lender reports to all three national bureaus.
6| Establish A Solid Credit Mix
Not that you want to be in more debt, but a mix of revolving credit and installment debt can help boost your credit score.
7| Pay Down Your Debt
Create a debt payoff plan and start paying it off if you have outstanding debt. Lowering your debt-to-income ratio can have a significant impact on your credit score.
According to Investopedia, lenders prefer a debt-to-income ratio lower than 36%, with no more than 28% of that debt going towards servicing a mortgage or rent payment.
7| Reduce Hard Credit Inquiries
Although it causes a short-term negative effect on your score, new-credit activity can still contribute up to 10% of your overall credit score. Keep hard credit inquiries to less than 3 in 24 months if you can.
8| Give It Time
Your credit score does not improve overnight. Be patient. The items that are suppressing your score need time to fall off.
Hard inquiries fall off in two years, while missed payments of collection accounts in 7 years. Bankruptcies can take up to 10 years.
Doing all these by yourself can be challenging and time-consuming. But it will be all worth it. However, if you need help with repairing your credit, seek the assistance of a professional credit counseling or credit repair company.
So, Is 549 A Terrible Credit Score?
A 549 credit score can be intimidating, but it doesn’t have to stay that way.
By understanding what this number means and taking the steps necessary to improve your credit score, you can get back on track with your finances.
With some dedication and hard work, you may find yourself in an excellent financial position!
Whether you choose to take advantage of professional services or go at it alone using our tips above, you’ll be well on your way to improving your score and getting back in the good graces of lenders.
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