What your score means
For the purposes of this article, we’ll assume you’re looking at your FICO or Vantage Score (as these are the scores most commonly provided by credit cards and free-score sites).
A 555 credit score is considered a poor credit score by most lenders.
That means you will have trouble qualifying for credit products and may be eligible only for secured credit products requiring a deposit, or pricey subprime credit cards.
How your score compares
Here’s what various score ranges mean (based on definitions from Experian regarding FICO scores):
Credit-score ranges defined
|800+||Excellent||Consumers in this range can expect easy approval for credit products and the best terms.|
|740-799||Very good||Consumers in this range can expect to qualify for a wide range of products and are eligible to receive favorable terms.|
|670-739||Good||Consumers in this range may vary in their qualification for credit products. Those at the lower end may get denied for premium products, or may have less-favorable terms/lower credit limits. Still, getting approved for a card or loan is absolutely feasible.|
|580-669||Fair||Consumers in this range can expect higher interest rates and may not qualify for some credit products. Results will vary, based on whether the score is due to thin credit history or a troubled one (bankruptcies and late payments).|
|579 and lower||Poor||Consumers in this range will have trouble qualifying for most credit products.|
Your 555 score puts you in the bottom row. Simply put, lenders see you as a high risk for default.
What you’ll qualify for with a 555 score
Your options are limited, but you have nowhere to go but up. If you know you can treat a card responsibly and use it to rebuild your credit, here are your options:
- Secured cards: Here are some good options. Secured cards require you to secure your credit line with an advance deposit. Your limit will be low, and you may also have an annual fee. But, thanks to the deposit, you’re lessening the risk the lender takes and increasing the probability they’ll take a chance on you.
- Other cards for bad credit: Some cards designed for those with bad credit don’t require a security deposit. There are also products that limit your purchases to certain websites, allowing you to demonstrate your ability to pay off purchases. Review your options using this widget:
- Credit-builder loans: Some small credit unions and non-profits offer special loans designed as a leg-up for rebuilders. Some credit-builder loans require a small deposit, others involve you regularly paying a predetermined amount into an account (which gets reported to the credit bureaus).
- Get someone to add you as an authorized user: If a loved one you trust (and who trusts you) is willing, you can be added to their account as an authorized user. The payment behavior on that account will report to the bureaus and may give you a score lift. Just keep in mind: if the main accountholder is irresponsible with the account, it could hurt your score even more.
More about credit scores
There are various scoring models out there, FICO being the most commonly used by lenders, VantageScore being the most commonly provided by free scoring sites. So, to create your credit-building road map, review the factors below. We’ve listed FICO’s scoring factors in order of priority (biggest to smallest):
- Payment history (35 percent of your FICO score): Payments are made on time.
- Utilization (30 percent of your FICO score): Use up as little of your credit limits as possible. At a bare minimum, stay below 30 percent. Preferably, you’ll stay below 10 percent. Cards designed for poor credit will come with low limits – so consider making just one small purchase on them a month OR paying your balance down several times a month to keep utilization low.
- Length of credit history (15 percent of your FICO score): FICO’s algorithm rewards you for accounts that have been open a long time. Rapidly opening new accounts will decrease your average age of accounts and lower your score.
- New credit (10 percent of your FICO score): Every time you apply for a new credit product, expect a hard inquiry, which will temporarily lower your score. That’s why it’s so important to pick a product you have a good chance of qualifying for – if you shoot to high, you’ll get rejected AND get hit with a score-lowering inquiry.
- Credit mix (10 percent of your FICO score): FICO (and, by extension, lenders) want to see that you can juggle a variety of credit types. Having both installment loans and revolving credit (ie, cards) on your report will help you maximize this factor.