Can I Get a 550 Credit Score Loan?

Personal loans are a common solution when it comes to major purchases, home repairs, high medical bills, and other unexpected expenses. While individuals with good and excellent credit scores can easily get funded, those with credit below 670 often face difficulties applying for large loan amounts.

The good news is it is still possible to get an unsecured personal loan with a bad or poor credit history. We have prepared a list of the best personal loan lenders who can provide you with a 550 credit score loan.

Best Personal Loans for 550 Credit Score

Editor’s Thoughts

SoFi is a money app that offers personal loans without collateral. You’ll need decent credit to get one yourself. If your score is lower, you can add someone with excellent credit as a co-borrower. Either way, they’ll check that your income is high enough compared to your other debts. Fees aren’t required, but you might pay up to 6% of the loan amount to lower your interest rate, and SoFi takes that fee off the top before sending your money.

Editor’s Thoughts

Upstart personal loans can work for people with fair credit who need cash quickly. If your score is at least 500, you won’t have to deal with a hard check that takes forever. That’s why you might get a loan in a day or even faster. You can also get same-day loans with Upstart.

This place also works if you’re trying to combine debts and want nice monthly payments. Many personal loan companies don’t offer such plans. Unlike some other online lenders, Upstart has good minimum loan amounts, so you can plan your budget and pay back your loan on time.

Editor’s Thoughts

Upgrade is a suitable personal loan company for those who need money as soon as possible. They offer excellent loan options for people with different credit scores. You can get money fast, on the next business day. The repayment lengths and interest rates are also solid. Lower credit borrowers would like the Upgrade service. If you’ve got really good credit, you might find cheaper rates somewhere else.

Editor’s Thoughts

NetCredit is also an excellent online lender for consumers with less-than-perfect credit. Over 16,000 happy customers on Trustpilot can’t be wrong. These lenders focus on small loans up to 10 grand for borrowers other places might turn down. They have no hidden fees. But 50% interest means you pay back one and a half times what you borrow. It’s only worth it if you’ve got no other choice and need cash quickly.

Editor’s Thoughts

OneMain Financial offers personal loans to people in most states but not Alaska, Arkansas, Connecticut, Massachusetts, Rhode Island, Vermont, or Washington, D.C. They have around 1,400 physical locations in 44 states and online options.

Their rates can be high, but if your credit isn’t great and you need some flexibility, their loans might work. With good credit though, you can likely find lower rates from other places. You are advised to shop around in that case.

Editor’s Thoughts

If their loan offers have sky-high interest rates, check out some credit cards for people with not-so-perfect credit. Take a minute to compare the rates on those cards versus the loans. A card could get you a lower APR and better terms overall. Weigh the pros and cons of personal loans versus credit cards before making a final call, and either way, be sure you understand all the fees and ramifications before signing anything.

What Are Personal Loans and How They Work?

A personal loan is a form of installment credit, which means you borrow a lump sum of money and pay it back with regular payments over a set period of time. You can use a personal loan to fund a home improvement project, consolidate debt with higher interest rates, or for any other personal need.

Many personal loans are unsecured, which means they don’t require collateral. However, choosing a secured loan may help you qualify for the loan and possibly even get a lower interest rate and a more convenient loan term.

The repayment period for personal loans is typically between two to seven years and sometimes even longer. Interest rates generally start below 10% but can go as high as 36% APR, especially for borrowers with lower credit scores. Remember that some lenders may also charge an origination fee, which is taken from the loan amount you receive.

Is 550 a Good Credit Score?

No, a 550 credit score is not considered good. A 550 credit falls into what’s known as the deep subprime range. The Consumer Financial Protection Bureau classifies any score below 580 as deep subprime. Also, the Fair Isaac Corporation, a company that is widely known for its credit scoring model, classifies scores of 579 and below as poor.

In the FICO score, which is the type most commonly used by lenders, credit scores between 300 and 579 are the lowest and considered poor or bad credit.

We recommend you check the specific lender’s eligibility criteria to understand their credit score requirements and know whether you qualify for their personal loans. 

Do You Qualify for a Personal Loan with a 550 Credit Score?

Getting a personal loan with a 550 credit score is challenging but possible. In most cases, you will need credit of at least 600 to get approved. With a low credit score, you can rely on so-called bad credit loans. They usually come with higher interest and less favorable terms, which makes borrowing less advantageous. The amount you can borrow and the repayment terms can be limited compared to someone with a perfect credit score.

With a FICO credit score as low as 550, you are not able to get a personal loan through most banks. However, many online lenders can still approve you.

How to Obtain a Personal Loan Online?

To apply for a personal loan online, you need to take the following steps:

Step 1. Check your credit score

The most important thing before applying is to understand your credit score. Many lenders have minimum credit score requirements, so this step is crucial to know whether you are eligible.

Step 2. Prequalify with multiple lenders

Many online providers offer prequalification to their clients. Find out which lenders are more likely to approve you.

Step 3. Compare personal loans

Analyze personal loan offers from several financial institutions to compare them and choose one with the most favorable terms.

Step 4. Apply for a loan

After choosing a lender, start your application process. Fill out an online form on the lender’s website and submit it. Bad credit lenders usually require your basic personal information, bank account details, and proof of your income (bank statements or tax returns).

Step 5. Review your loan agreement

If you meet a minimum credit score requirement and other lender’s criteria, the provider will send you a contract. Read it carefully and ask a provider if you have any doubts to ensure you can manage their fees (origination fees, late fees, etc.), interest, and terms.

Step 6. Get funded

Wait for the money in your bank account on the same or the next day after approval. In some cases, the deposit time may be longer.

Pros of Bad Credit Loans

People choose bad credit personal loans due to the following benefits:

• Flexible loan usage: Poor credit personal loans can be used for any purpose, from large purchases to home renovations and financing a family vacation.
• Quick funding: Banks and credit unions can take 1 to 5 days to process traditional loans. Many online lenders process applications and deposit funds even more quickly, sometimes on the same day of approval.
• Credit builder loan: If you have poor credit, making timely payments may help rebuild it. Since payment history significantly contributes (35%) to your FICO score, regular payments can positively impact your score over time.

Cons of Bad Credit Loans

Although a bad credit loan can help you borrow money fast regardless of your credit score, you should understand several drawbacks of this financing option before applying.

• Higher annual percentage rates (APRs): Borrowers with less-than-ideal credit scores often face higher interest rates. They can be as high as 36% or even exceed this number.
• Additional fees: Low credit loans often come with higher fees to reduce the risk for lenders. This includes origination fees for processing the loan and potential penalties for late or early repayment, all contributing to a higher overall APR.
• Collateral requirements: With a poor credit score, you will often be able to apply only for secured personal loans. To lend you money, providers will ask you for collateral. This means if payments are not made as agreed, there’s a risk of losing the valuable asset.

Alternatives to a Personal Loan

While personal loans offer a variety of benefits, they won’t be right for everyone, especially those with poor credit. Here are alternative options to consider.

Loan from Family or Friends

Consider borrowing from someone you know who is more likely to provide loans than traditional lenders. Your close friends or relatives may be happy to help you overcome financial difficulties. They don’t need your credit report to decide whether to lend you money.

Although family loans allow you to avoid interest rates and fees, make sure to repay the debt within the set period. Otherwise, you may ruin your relationship with your close people.

Credit Card

If you have a credit card with available credit, this may be a better choice than a personal loan, especially if the interest rate on your card is lower than what you would qualify for with a bad credit personal loan. Be sure to compare the card interest rates and fees with those from various personal loan lenders before deciding on a course of action.

Debt Management Plan

If you’re dealing with credit card debt or owe money in another way, a nonprofit credit counseling agency can come to the rescue. In many cases, such an agency will help you negotiate a debt management plan, which can lower your interest rates and accelerate your debt repayment.

Cash Advance Apps

For small emergency cash needs that can be repaid in a short period of time, consider a fee-free cash advance app. Be sure to read all the fine print, and watch out for fast-funding fees that may increase the overall cost of a loan.

No-Credit-Check Loans

No-credit-check loans, including payday loans, may be a great way to get cash fast. However, you should be careful and use them only as a last resort. The excessive fees and rates might not be worth it. Some payday loans carry fees and rates that can add up to an aggregated 400%, as reported by the Consumer Financial Protection Bureau.

Financial Assistance Programs

If you need to take out a personal loan to afford essentials like utilities or rent, you may be able to obtain alternative assistance. Call 211, and you will be connected to local community resources that can help you through your time of financial hardship.

How to Improve Your Credit Score?

The cheapest and simplest way to qualify for a personal loan with competitive interest rates and convenient repayment terms is to work on improving your credit score. The following steps can help you achieve it:

• Review your credit reports. Understanding your current credit score situation and being sure that your credit report is free of mistakes is the first step you should take. If you notice any errors, contact one of the three major credit bureaus immediately to report the inaccuracy.
• Make timely payments. Payment history makes up 35% of your credit score, so it’s vital to pay your bills and loans on time. If you have any overdue accounts, bring them current as soon as possible and maintain a clean payment record to prevent any negative effects on your score.
• Consider a secured credit card. For those with no credit or poor credit scores, a secured credit card may be a good option. With this type of card, you provide a refundable deposit that serves as your credit line. Charge small amounts to the card each month, and pay the bill in full to help build your credit score.
• Focus on reducing debt. Work on lowering your credit utilization ratio. This parameter shows how much revolving credit you use compared to the overall credit available to you. By paying down the amount you owe, you’ll both improve this ratio and your overall credit health.
• Avoid сlosing zero-balance credit card accounts. Contrary to what you may think, closing a zero-balance, paid-off credit card can increase your credit utilization ratio and hurt your credit score. So, it is better to keep those accounts open.
• Limit hard inquiries. When a lender pulls credit reports to process a loan application, it results in what’s called a hard inquiry. These inquiries can hurt your credit score temporarily. Too many inquiries in a short period of time can be viewed as a signal of risk and can affect your credit score negatively.

The Bottom Line

While the minimum credit score requirement of many lenders is higher than 550, do not give up. There are still loan providers that accept borrowers with a bad or poor credit score. You can also consider secured loans and other alternatives to personal loans.

The first step you should take is to start improving your credit score. With good credit, you are more likely to get a personal loan. It can also help you obtain higher loan amounts and more convenient repayment terms.

How We Choose?

To create the list of the best lenders offering 550-score personal loans, experts at BadCredify have analyzed and compared more than 25 lending companies. Our specialists read numerous customer opinions about the services, filled out the application forms on their own, and determined all the pros and cons of each provider.

Focusing on such criteria as interest rates, availability, extra fees, and funding speed, we have chosen the best online lenders who can provide you with favorable loan terms despite your low credit score.

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