550 Credit Score: Bad No Matter How You Look At It

550 credit score

550 Credit Scores Are Common

It has been over a month since we’ve looked at a particular credit score to determine whether it’s good news, bad news, or not even newsworthy.

That said, let’s look at a “550 credit score,” which at first glance doesn’t look too hot.

As always, we’ve got to be sure we are talking about the proper credit score, as there a number of scores out there.

But we’ll only focus on the two most common credit scores, including the almighty Fico score and the lesser known, but emerging VantageScore.

[Credit scores vs. Fico scores]

550 Fico Score Is Bad Credit

There’s no way around this one. A 550 Fico score is a bad credit score. I’m sorry if you’ve got a score this low, but it is what it is. I’m not going to sugarcoat it.

The average Fico score is somewhere just above 700, so clearly a 550 Fico score falls way short.

It’s not horrendous, since you’ve still got another 250 points to fall before hitting rock bottom. But it’s also 300 points shy of perfection.

That lands you nearly smack in the middle of Fico’s credit score scale (300-850), but because most credit scores tend to wind up north of 650, you’ve got problems.

If your Fico score is this low, you more than likely have derogatory accounts on your credit report. In other words, you’ve probably missed a payment once or twice (or three times).

And it’s very possible that you’ve got something worse, such as a collection, charge-off, or a short sale or foreclosure on your credit report.

[Foreclosure vs. short sale on credit report]

In any case, it would be very wise to order a free credit report ASAP to figure out what went wrong so you can make corrections.

A credit score monitoring program may also be a good buy to keep track of changes as they happen.

With a 550 Fico score, you’ll have a great deal of difficulty getting approved for credit cards, auto loans, and mortgages, which could make your life a lot harder (and more expensive) than it needs to be.

550 VantageScore Is a “Fail”

Assuming we’re talking about VantageScore, a 550 credit score would put you just inches above the bottom of their scoring scale.

VantageScores range from 501-990, so clearly you’d be in serious trouble here. In fact, you’d be in their “F” credit grade bucket, which is undoubtedly a “fail.”

If your credit score is this low, you’ve probably done everything wrong since your credit history began.

We’re talking missed payments galore, collections, charge-offs, maxed out lines of credit, and perhaps even a bankruptcy for good measure.

Someone with a VantageScore this low probably already knows they have bad credit.

And hopefully they’re already taking measures to rectify the situation, because if they aren’t, they will have a very difficult time obtaining credit any time in the near future.

A credit score monitoring program is highly recommended, as is getting your hands on a credit report immediately to start addressing the countless missteps you’ll find.

There’s still hope, it just may take several years to get back on track. But the sooner you start, the better off you’ll be.

Tip: With credit scores this low, it is advised that you check your credit report for errors as well to ensure nothing is reporting incorrectly.

(photo: saguayo)