When it comes to getting a loan with a credit score of 550, the amount you can qualify for depends on the lender. Avant is one lender that considers borrowers with a credit score of 550. You may be able to get a personal loan, but you'll have to shop around as not all lenders will offer an offer to someone with a low credit score. It's worth asking potential lenders if they originate loans insured by the Federal Housing Administration (FHA).
Loans backed by the FHA are available to any borrower with a credit score of 500 or higher. This means that if your score is 550, you can apply for an FHA loan that only requires a down payment of 10 percent of the home purchase price. You can also log into your Experian account and use the Experian CreditMatchTM tool to see if you are pre-qualified for personal loan offers from Experian partners. Before approving a borrower for a personal loan, most lenders will look for a good to excellent credit score, a stable income and employment history, and a low debt-to-income ratio.
Mortgage lenders rely heavily on your credit score to determine if they give you a mortgage loan. That said, there are some options for potential homebuyers with low credit scores, particularly if you may qualify for an FHA, VA, or USDA insured mortgage. Most credit cards available to those with low credit scores between 500 and 550 will be unsecured credit cards with low limits and high APRs, secured credit cards that require a deposit, or closed-loop store credit cards that can only be used at a retailer specific. Be sure to consider not only credit requirements, but also interest rates, payment terms, and any fees charged by the lender.
Best Egg might be more willing to work with you compared to traditional lenders if you have less-than-perfect credit. The FHA only requires a 10% down payment for borrowers under 580, but it's worth considering putting down more than this amount as it may increase your attractiveness to potential lenders and help offset some of the financial risk of having a low credit score. A credit score of 550 won't affect any lender, but it shouldn't completely prevent you from being approved for a credit card or loan. One of the most difficult types of financing to obtain with a low credit score is a mortgage loan due to its size and long-term duration.
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