Having good credit makes it easier to borrow, but a high credit score isn’t always required to get approved for a personal loan. Finding a loan with a credit score of about 550 is possible, but a bad credit score such as this can make it challenging. In most cases a score below 650 starts to become more difficult to find a personal loan, and below 600 some lenders will consider your application, but your borrowing options will not be for personal loans. When looking for a loan with a 550 credit score it starts to get challenging, but options exist.
How a Credit Score Under 600 Can Affect You
Your credit score is a number between 300 and 900, with the higher the number meaning the better your score. Since 600 lands right in the middle, one might presume this is an average score. Within Canada the average credit score is 660 according to Equifax, and about 650 according to TransUnion, the two major credit bureaus in Canada.
A credit score below 600 can make it more challenging to find a lender. The next threshold below would be 580, then 560. Any credit score below 560 is considered very poor and it is likely that the only borrowing option might be an online payday loan. An expensive way to borrow, this option should only be used as a last resort. It’s best to avoid high interest loans since it’s a costly way to borrow that can create personal finance issues. As you look for options you should start to compare lenders.
When your credit score is 600 or less and looking to borrow, these are often referred to as a sort of bad credit loan and doing a comparison of your options is important. GoodCheddar can make this easier for comparing your options.
Comparing Lender Requirements
Not all lenders publish what their minimum loan requirements might be, and that can include the minimum credit score. Often the online loan requirements in Canada can include being a citizen or resident, at least 18 years of age and having an active Canadian chequing account where you receive your income via direct deposit.
Sometimes you’ll see an option with lenders to prequalify for a loan, allowing you to see the rates without a hard credit check. This can be useful when comparing lender rates and also helpful so that you can avoid taking a hit to your credit report.
How to Get a Loan with 550 Credit Score
When applying for online loans with a credit score of 550 the following suggestions may help with improving your odds of approval.
Check Your Credit Score – it’s always wise to know your score before you start comparing, so you are aware of what your loan options might be and what to expect. If time allows, you might even be able to improve your score enough to qualify for better options
Review Eligibility Requirements – comparing lenders and their requirements can save you time and even speed up your chances of being approved when you are applying with lenders where you have an actual chance of being approved.
Choose a Lender – after you have compared and possibly pre-qualified, you can choose a lender.
With GoodCheddar, we make it even easier so that you don’t have to go from one lender to the next to complete an application. We work with many lenders in Canada and one application is all it takes to find a potential match.
The First Step to Qualify for Better Loan Options
If you don’t have an urgent need to borrow, such as for repairs or something that requires immediate attention, you have an opportunity to work on improving your credit score.
Even with a more urgent need, you should still focus on improving your credit score. It’s never too early to start and will always be important. It is likely that you will need to borrow again for a variety of reasons from an installment loan, personal loan, car loan, to possibly a home loan.
The time and effort that goes towards learning and improving your credit score will pay for itself since it can have a direct impact on the rates you can qualify for in the future, which determine the cost of borrowing and how much you might pay in interest.
Your credit score is broken down into a few essential areas to be concerned with, and some have a larger impact than others on your overall score.
It’s important to also consider other aspects outside of your credit score that a potential future lender might also look at, such as your overall debt.
- Ways to Improve Your Credit Score Fast
- Challenges When You Have A Bad Credit Score
- Fast Ways to Improve Your Score You Probably Don’t Know
When it comes to credit scores, your Equifax score is more likely to be a lower number than your TransUnion score due to differences with reporting. Neither is better than the other, they’re both just different in how they work. Visit this link to check your credit score.
Comparing Loan Options
If you’re confused by the different types of loans you might qualify for and how they are different, this should help clear things up..
Personal Loans – this type of loan has better terms and interest rates, making it the preferred choice, but to qualify for the best rates you must have good to excellent credit.
Installment Loans – these are similar to a personal loan with slightly different rates and terms. The amount you can borrow is less, along with the term or loan duration, and higher rates. To qualify you will need fair to good credit.
Payday Loans – this type of loan requires fast repayment and would be a high interest loan with a short term. Often repayment is required on your next payday, this type of loan can create financial issues and best be avoided if possible.
To learn more about each type of loan and how they compare you can visit the following.
Read More on Loan Comparisons:
- Installment Loans vs Personal Loans
- Installment Loans vs Payday Loans
- Personal Loans vs Payday Loans
- When are Payday Loans a Good Idea?
With the right information available to you, it helps with choosing the right loan option that can work for your own needs and situation.