Your credit score is like a 3-digit grade that shows how reliable you are at borrowing and returning money. It goes from ‘very poor’ to ‘very good or excellent.’
What is a credit score?
In Canada, two big credit reference agencies gather information about you from public records, lenders, and other companies. They use this info to create a ‘credit score’ for you.
To decide on this score, considers certain things:
- How well someone has paid their bills in the past?
- How long you’ve had credit?
- What different types of credit do you have?
- Any recent times you’ve asked for new credit?
This number shows how good you are at repaying the money you borrow. It looks at how you’ve used credit and maintained your accounts. If the number is high, you can get approved for loans and other credits better. Your score can go up or down as your situation changes.
Is 550 credit score good or bad?
Credit scores are critical when we want to figure out how dependable someone is with their money. If your credit score is low, it can make it harder for you to get different kinds of money-related things like loans and other services.
550 credit score: Where does it fit in?
A credit score of 550 is seen as not good; it’s in the “bad” zone. People with this score might need help to get credit. It could result in higher interest rates, lower credit limits, and not-so-good loan conditions.
What is a good credit score?
Every lender that checks your credit score uses its numbers to decide how good or bad your score is. So, your score could differ depending on which CRA you ask.
What the credit scores labeled as ‘fair’, ‘good’, and ‘excellent’ look like at each of the CRA in the Canada:
| CRA | Excellent | Good | Fair |
| Equifax | 760-900 | 725-759 | 660-724 |
| TransUnion | 781-850 | 721-780 | 661-720 |
In simple terms, Equifax thinks a score above 660 is good, while TransUnion considers 721 as a good score, which is higher than its usual average of 661.
A good credit score makes it simple to borrow money for things like buying a house, getting a new or used car, or other financial needs. If you have a higher score, you may be eligible for the slightest interest, which makes your monthly payments easier on your wallet.
What impacts your 550 credit score?
When dealing with banks, credit unions, and other money-related places, you’re building a record of how you handle your finances. If you pay back loans, take a long time to repay the credit, or spend too much of your limitations, your credit score stays the same. So, having a low credit score means you need to manage your money better.
Lots of things can influence your credit score. Here are the ones that happen most often:
- How long you’ve had credit accounts for.
- Owing too much money.
- Spending more than your allowed credit amount.
- When you legally declare (Bankruptcies) that you can’t pay your debts anymore.
- Changing homes a lot, which shows you might not be very settled.
- Negative data on your credit record, like being blacklisted or having things taken away from you before.
- Not paying on time or forgetting to pay.
- Sharing an account with someone whose credit score is not good.
- Taking out money from your credit card often.
What does a credit score of 550 mean for your finances?
Why does a 550-credit score matter so much? Nowadays, many places like banks, loan companies, and even insurance companies check your credit history before doing anything. If your credit score could be better, it could slow you from getting a loan, getting hired, or even finding a place to rent.
Let’s look side effects that can happen because of a 550 score:
- Big banks and reputed lenders might see you as too risky to give you a loan or credit.
- You have to give more money for your loan. Credit cards and loans have fearfully high rates of interest.
- You might have to pay high premiums for insurance.
- It could be challenging for you to find a job. You might get fewer chances for a promising career and even be told you can’t work somewhere.
- It might take a lot of work to begin your own business. Starting your own business could be challenging.
- It becomes more challenging for you to get a place to live. Renting an apartment could be more brutal, and you might have an inconvenience getting approved.
- You might face challenges with utilities like the Internet. You could also need to pay more considerable security deposits for utilities.
- You won’t be able to get excellent rewards credit cards.
How to improve your 550 credit score?
If your credit score is 550, feel free. You can take a few steps to make it better. Resulting increases a good chance of getting suitable credit products.
Here are some ways to make your credit score better:
- Look at your credit report and ask to fix any mistakes or wrong things.
- Consider closing credit accounts that you don’t use anymore and are old.
- Ensure you only owe a little on your credit cards to keep your balances low.
- Whenever you can, try to lower the money or debts you owe.
- Try to pay off the bills you have yet to pay on time.
- Only ask for credit when you have to.
- Make sure you have different types of credit accounts that you use regularly to build up your credit record.
- Arrange for payments to auto-pay so you don’t forget or pay them after the due date!
