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Yahoo
09-07-2025
- Business
- Yahoo
Can I get a loan with a 550 credit score?
It's possible to qualify for a loan with a 550 credit score. However, the lower your credit score, the higher your personal loan interest rate will be. Consider using a cosigner or applying for a secured loan to increase your approval odds. If you improve your credit score before applying, you may qualify for more attractive loan terms. Compare offers from multiple lenders and prequalify if possible to find the best deal. One of the benefits of having a high credit score is that it's easier to qualify for loans— and at better terms. While it is still possible to get a loan with a 550 credit score, it's often more difficult to get approved, and you'll likely face less favorable rates and terms. Lenders use your credit score to assess your risk as a borrower. Lower scores may mean that you've missed payments or have defaulted on loans in the past, and may be less likely to repay your debt as agreed. Most lenders require a minimum credit score between 600 and 650 to minimize that risk. However, some have lower score requirements. Before you apply for a bad credit loan, consider your current financial situation, when you need the loan and the financing options you may have. Yes, you can get a loan with a low credit score. But just because you can, doesn't mean you should. 'This type of loan is a specialty for very few lenders who have forceful collection arms and a capacity for risk,' says Michael Sullivan, the director of education with nonprofit credit counseling agency Take Charge America. 'Any lender dealing in such loans expects many defaults and losses, and acts accordingly. The result is that a personal loan is almost always a bad deal for the consumer with poor credit.' Having a credit score of 550 might affect your borrowing experience in a number of ways. A higher interest rate: Your credit score is the top factor determining your interest rates with most lenders. Charging a higher APR helps lenders minimize possible losses. A smaller loan amount: Lenders think a low credit score means a borrower is more likely to fail to repay a loan. As a result, they may limit the amount you can borrow to reduce the chance that you'll stop repaying the debt. A shorter repayment term: With a low credit score, you're unlikely to qualify for a lender's maximum terms since extended repayment means more time to default. Unfortunately, a shorter repayment term means higher monthly payments, which could be harder to keep up with. Aggressive debt collection tactics: Lenders who knowingly take on higher risk may be prepared for potential consequences and may be more apt to utilize debt collection to get what's owed. Payday loans are notorious for making incessant and harrassing phone calls and threatening legal action if you fail to make your payment. Know your rights Even if you've fallen behind on payments, you still have consumer credit protection. The Fair Debt Collection Practices Act (FDCPA) specifically protects borrowers from unfair, deceptive or abusive practices by debt collectors. For example, it sets time limits on when collectors can contact you and prohibits harassing language. While it's not the worst possible credit score, 550 is not considered a good credit score. The Fair Isaac Corporation (FICO), which is one of the most widely used credit scoring models, categorizes credit scores of 579 or lower as poor and the Consumer Financial Protection Bureau (CFPB) considers a 550 FICO Score 'deep subprime' — in both cases, the lowest credit tier. If you have a low credit score, you aren't alone. According to Experian, one of the three major credit bureaus, 13.2% of consumers had a poor credit score in late 2024. Still, you'll want to do the work to repair your credit as a low score can affect your finances in several ways, including costing you more money to borrow, if you even qualify. Lenders view a lower score as a sign of risk. To offset loss from potential missed payments or a defaulted loan, they tend to charge a higher interest rate if the borrower has bad credit. Average personal loan interest rates reflect this practice, with bad credit borrowers getting rates up to 35.99 percent at many lenders — or even into the triple digits. Learn more: Today's average personal loan rates A realistic look at the cost of bad credit Suppose you need to borrow $15,000. With excellent credit, you may receive a rate of 11 percent. Over a 48-month repayment term, your monthly payments would be about $388, and you'd pay $3,608 in total interest. That same loan with bad credit is significantly more expensive. With a 550 credit score, you may receive a lender's top-end rate, which is often 35.99 percent. Your monthly payment would be $594, and you'd pay a whopping $13,492 in interest. In this example, you'd pay an additional $10,000 in interest over the life of your loan if you have bad credit. Personal loans: If you need to borrow a large sum of money, a personal loan may be the best option. While rates can be as high as 36 percent, the repayment term is typically longer than other financing options. Personal loans are available through banks, credit unions and online lenders. Secured loans: Some lenders allow you to secure your personal loan with collateral, like a house, car or other item of value. You'll generally get better loan terms, but you risk losing your asset if you default on the loan. Small loan from a credit union or bank: Some banks may offer existing members a small loan with a short term. 'Often, having an existing relationship with a community institution is helpful, as they usually have more flexibility and may be willing to take a holistic look at your finances and evaluate your application based on more than just your credit score,' says debt attorney and finance expert Leslie Tayne, founder of Tayne Law Group. Joint loans: Consider using a cosigner or co-borrower with a solid credit score if you're unable to qualify on your own. 'Many lenders will provide loans if they are guaranteed by someone with good credit,' Sullivan says. Just make sure you manage the loan responsibly. If not, you'll negatively impact your cosigner's credit. Buy now pay later (BNPL): Depending on how much you need and what you're financing, you may be able to use buy now pay later, which offers short-term financing typically with no credit check or interest charged. But beware: a recent BNPL survey from Bankrate found that about half of BNPL users have experienced issues. Additionally, if you miss payments, you could be charged a late fee and be reported to the credit bureaus. Payday alternative loans (PALs): A safer option than payday loans, PALs are offered by federal credit unions and often come with high interest rates, capped at 28 percent. They typically have lower fees and longer repayment terms than payday loans, but you'll likely need to be a member of the credit union offering this option. Payday loans: With APRs that can exceed 400 percent, payday loans are dangerous. The max amount you can usually borrow from a payday loan is $500, and the balance is due in full by your next pay day. With such a short repayment term and exorbitant rate, payday loans are a risky option for any borrower. If you decide to get a personal loan, finding one with a 550 credit score will be more challenging. It's important to be thoroughly prepared to navigate the process. Do your research. Eligibility guidelines and products can vary widely by lender. It's important to research and compare personal loans and their lenders to find out which lender and loan product is best for you. Shop around and prequalify. Compare rates and terms to get the best deal for your situation. Some lenders allow you to prequalify for a personal loan, which provides you with more customized loan offers without hurting your credit score. Choose a lender and apply for your loan: Once you decide to apply, a full application will result in a hard credit check, which can temporarily drop your score. Make sure you understand the terms of the loan, as you'll likely have more limitations and higher interest rates because of your score. Make on-time payments: Consistently making on-time payments for at least the minimum amount due each month and paying down that debt can help rebuild your credit score. Remember, payment history and credit utilization are the two biggest factors in credit scoring. Bankrate tip Repaired credit doesn't happen overnight. It may take several months to see a meaningful improvement, but taking these actions may help you get speedier results: Review your credit score for errors and dispute any your find. Pay down credit balances to improve your credit utilization. Become an authorized user on a responsible person's account Use credit-building apps and services, like Experian Boost, to report on-time rent payments and utility bills Getting a personal loan with a 550 credit score is possible, but you'll need to invest time in shopping around to find lenders willing to work with you. This is time well spent, as it will also allow you to find the best personal loan interest rate possible for your situation. If you cannot get a personal loan with bad credit, consider redirecting your efforts toward improving your credit score. When your credit profile has improved, reapply for a loan. Sign in to access your portfolio
Business Wire
09-07-2025
- Business
- Business Wire
5 Lesser-Known Facts About Debt Management Plans
PHOENIX--(BUSINESS WIRE)--When faced with mounting credit card debt, many Americans assume their only options are drastic: debt settlement, bankruptcy or simply ignoring the problem. But there's another path that's often overlooked — one that offers structure, support and less impact to your credit. A Debt Management Plan (DMP) could be the financial lifeline that makes it possible to tackle debt with confidence, clarity and consistent progress. 'Debt Management Plans are one of the best-kept secrets in the world of debt relief,' said Manuel Salazar, chief executive officer at Take Charge America, a national nonprofit credit counseling and debt management agency. 'They're designed to help consumers regain control of their finances without the long-term financial damage that can come with other strategies.' Salazar sheds light on five need-to-know facts about DMPs: They don't wreck your credit. Unlike bankruptcy or debt settlement often does, enrolling in a DMP won't tank your credit score. In fact, making consistent, on-time payments through a DMP can actually improve your score over time. You get free, ongoing financial guidance. A DMP is more than just a payment plan. Consumers receive personalized budgets, one-on-one support and ongoing guidance to build better long-term financial habits throughout the plan. They require one simple monthly payment. DMPs consolidate multiple credit card payments into a single monthly payment, with no new loan required. Your credit counseling agency works directly with your creditors, distributing payments on your behalf and removing the burden of managing multiple bills. Collection calls stop. Once you're enrolled in a DMP and creditors begin receiving regular payments, those stressful collection calls and letters typically come to a halt — giving you some welcomed breathing room. They're only available through nonprofits. Nonprofit credit counseling agencies are the only organizations that offer DMPs, which means the guidance and support you receive will always be focused on your best interests instead of profit margins. 'People often wait until they feel completely overwhelmed to ask for help,' Salazar said. 'But it's important to know you don't have to hit rock bottom. A DMP can be a proactive, empowering step toward financial freedom.' To start your path toward a debt-free future, work with experts to create a personalized DMP. About Take Charge America, Inc. Founded in 1987, Take Charge America, Inc. is a nonprofit agency offering financial education and counseling services including credit counseling, debt management, housing counseling and bankruptcy counseling. It has helped more than 2 million consumers nationwide manage their personal finances and debts. Learn more at or call (888) 822-9193.
Yahoo
02-07-2025
- Business
- Yahoo
7 Dangerous Assumptions You Should Not Make When Using a Credit Card
Using a credit card is something many Americans do on a regular basis. According to the latest data from the Federal Reserve, 82% of U.S. adults have a credit card, and according to FICO, nearly half the U.S. population (46%) opened at least one new account over the past year. Find Out: Read Next: Although credit card use is common, many Americans don't really know all the ins and outs of how they work. Here are some of the dangerous assumptions you should not make when using a credit card. There are many reasons you may no longer use a credit card. Perhaps you opened a store credit card and find you don't really shop there anymore, or maybe you opened a card with better perks and you no longer need your older one for everyday purchases. Your instinct might be to close your unused card out, but this is a mistake. 'Closing a credit card decreases available credit and also erases some history from your credit report,' said Michael Sullivan, a personal finance consultant at Take Charge America, a nonprofit credit counseling agency. 'Both of these harm your credit score. Unless a card has an annual fee, the best solution for an unused card is to cut it up.' Be Aware: You might assume that the due date is the best time to pay a credit card bill, but this isn't necessarily the case. 'It is never good to be late with a payment, but there are many times when it is smart to make a payment before the due date,' Sullivan said. 'Sometimes it can free up needed credit, but it always improves credit scores by lowering credit utilization.' Sullivan said that some consumers go so far as to make a payment after every use to make sure the balance doesn't grow out of control, while also maximizing their credit scores. 'They are really paying cash for each purchase while still getting the benefits of a credit card, such as warranties, the convenience of not carrying cash and credit card rewards,' he said. Not all credit card reward structures are the same, so it's worth to do some shopping around before deciding on the card that's best for you. In general, Sullivan believes you should opt for a cash-back card versus one that offers points. 'Rewards points have only the value that the credit card company assigns,' he said. 'Travel points often become devalued as airlines increase mileage or point requirements. Points also need to accumulate over time to enable major purchases or trips. In the interim, many things can happen.' Cash-back cards, on the other hand, provide more flexibility. 'Cash can be used for any trip or any purchase,' Sullivan said. 'But all cash-back cards are not created equal. Some provide a flat percentage on all purchases, while others offer more for gasoline purchases, groceries or other categories. 'A highly organized consumer can use one card for gasoline and a different card for groceries, or just use one card and plan to balance out returns,' he continued. 'In any case, consumers should get a cash-back card and have the rewards applied or refunded monthly.' When money is short, you might assume that credit card payments are the bills to pay late, since one missed payment does not generate much harassment. 'Credit card companies may not mind a missed payment, but it is because they collect a significant fee,' Sullivan said. 'In addition to the high interest, most companies charge $35 or more for missing a payment. In addition, they notify the credit reporting agencies of the missed payment after 30 days, and that notice will affect the consumer's credit score for 84 months.' It is often less costly to miss a payment with a lender that does not report late payments. 'Many small companies, utilities and public services do not report,' Sullivan said. When an unexpected expense pops up, you might think that using a credit card is your best bet since you don't have to pay it off right away. However, this is likely not the best option. 'While a credit card can be helpful in emergencies, this shouldn't be your go-to protection,' said Andrea Woroch, consumer finance expert and writer for 'You should have an emergency fund with three to six months of living expenses to avoid using a credit card and digging yourself into debt.' Nearly half of all American households (46%) have credit card debt, according to the latest available data from the Federal Reserve Bank of St. Louis. While having credit card debt is 'normal,' this does not mean it's OK. 'Debt is stealing from your future,' said Jay Zigmont, Ph.D., CFP, founder of Childfree Trust. 'Credit cards are some of the highest interest debt out there. If you carry a balance on your credit card, you are effectively paying 20% to 30% more each year for each thing you buy. Try to pay off your credit cards completely each month, and don't carry debt.' Some Americans believe they are using their credit cards responsibly if they are able to make the minimum monthly payment on time every month. However, you should be aiming to pay your bill in full each month. 'If you pay just the monthly minimum payments, it may take you 10 years or more to pay it off,' Zigmont said. 'In some cases you aren't even covering the interest. Credit card companies love when you make minimum payments because it maximizes how much interest they can get from you over years.' More From GOBankingRates Here's the Minimum Salary Required To Be Considered Upper Class in 2025 This article originally appeared on 7 Dangerous Assumptions You Should Not Make When Using a Credit Card Sign in to access your portfolio
Business Wire
11-06-2025
- Business
- Business Wire
Strategies for Managing Debt Amid Tariffs & Rising Costs
PHOENIX--(BUSINESS WIRE)--The threat of more tariffs is raising cost-of-living concerns among many Americans. For those living paycheck-to-paycheck, increased expenses could lead to a debt spiral. 'Credit cards often become the fallback when we can't make ends meet, as cutting entertainment and other non-essentials may not provide enough cushion,' said Manuel Salazar, chief executive officer at Take Charge America, a national nonprofit credit counseling and debt management agency. 'With interest rates between 20 and 30%, a few extra charges each month can quickly add up to unmanageable debt levels.' Salazar offers five tips for managing debt when cost of living can spike at any time: Understand Impact of Tariffs: Tariffs can lead to higher prices on everyday goods, from groceries to clothing and household items. Understanding which products could increase can help you make smarter purchasing decisions and seek lower-cost alternatives. Distinguish Needs from Wants: It's more important than ever to evaluate spending with a critical eye. Focus on covering necessities while limiting discretionary purchases. Tempting offers like 'Buy Now, Pay Later' may seem helpful, but they can lead to even more debt. Revisit Your Budget: Now is the time to reassess and refine budgets. Prices may have changed across categories, and your income or priorities may have shifted. Look for ways to cut back or reallocate funds. Build an Emergency Fund: Building or replenishing an emergency fund provides a critical safety net and peace of mind. Consider setting up an automatic transfer to a separate savings account, even if it's just $10 to $25 a week. Modest contributions add up. Seek Help Sooner Than Later: If you're struggling with credit cards and unsure which repayment path is best, seek free guidance from a credit counselor at a nonprofit agency. For additional guidance, assess whether you need a debt relief program. About Take Charge America, Inc. Founded in 1987, Take Charge America, Inc. is a nonprofit agency offering financial education and counseling services including credit counseling, debt management, housing counseling and bankruptcy counseling. It has helped more than 2 million consumers nationwide manage their personal finances and debts. Learn more at or call (888) 822-9193.
Yahoo
09-03-2025
- Business
- Yahoo
Getting a tax refund? Here are the best ways to use it.
This is the time of year when millions of Americans receive their biggest annual financial windfall. It's not a winning lottery ticket or a favorable bet on March Madness but, rather, a federal income-tax refund, and possibly a state refund, too. Nearly two in three taxpayers got a federal refund for 2023, averaging $3,167. Many of these households also are living hand to mouth, suggesting that they haven't put refunds from past years to good use. Here are some suggestions for making the most of this financial opportunity. If there's one recommendation on which advisers nearly universally agree, it's this one. 'It's an immediate return on investment by reducing interest costs and improving financial stability while also providing peace of mind and a sense of relief from financial stress,' said Sam Swift, a certified financial planner and CEO of TCI Wealth Advisors in Tucson. Tackling high-cost debt is imperative given that credit cards can carry interest charges of 22% or higher, noted Michael Sullivan, a personal finance consultant at Take Charge America, a credit-counseling and debt-management company in Phoenix. "Payday-loan interest rates or auto title debt can be much higher,' he added. 'These are the first debts to be attacked, with all available funds directed at the highest-interest debt.' It's not especially difficult to put aside money in an account devoted to meeting unexpected obligations, yet many Americans haven't done it. Saving even modest amounts of money can be difficult. Nearly half of Americans are stressed in this area, according to a February survey by that found 13% of respondents have no such savings at all, while another 33% have some savings — but even higher credit-card balances. Sullivan considers $1,000 the minimum target for which you should aim. "If there is less than $1,000, (it's not) an emergency fund at all because even one accident or illness with a trip to the emergency room can easily cost more than $1,000,' he said. 'Without (adequate) savings, emergencies turn into high-interest debt.' Steven Conners of Conners Wealth Management in Scottsdale considers emergency funds to be more important now than in recent years because of all the turmoil and uncertainty in the economy, such as tariffs and ongoing layoffs of federal workers. 'Be more conservative than you'd normally be,' he suggests. Savers should strive to find accounts yielding at least 4%, he said. You can earn that on money market mutual funds and some bank and credit union vehicles, especially if you ask for better deals, he added. Assuming your short-term needs are covered with an emergency fund and you are paring you credit-card debts, you can turn your attention to longer-term goals. Retirement accounts such as Individual Retirement Accounts or 401(k)-style plans fit the bill, providing tax incentives. With traditional IRAs or 401(k) plans, you generally can reduce your taxable income by the amount of your contributions. With Roth versions of these accounts, you don't get a front-end benefit, but the money comes out tax-free years later, when you withdraw it. Thus, you sacrifice some near-term tax help for benefits down the road. Swift considers retirement vehicles, especially Roth accounts, to be good choices for tax refunds if you can afford to fund them. 'Even small contributions can grow significantly over time, helping you build wealth tax-free for your future,' he said. If your employer offers matching funds on contributions to a 401(k) account, you can stretch your tax refunds even further. 'Always at least contribute up to the amount your company is matching — (it's) free money," Swift said. And there are other considerations when it comes to tax refunds. If you get a large amount, Sullivan suggests changing your withholding percentage by filling out a new W-4 form through your human-resources department. Why do this? Because refunds represent money that you essentially have loaned, interest-free, to the Internal Revenue Service and perhaps a state tax agency. To complete the picture, he suggests taking the dollar amount by which your future paychecks increase through lowered withholding, then depositing that money automatically into a high-interest savings account. It's a move that essentially spreads out your refund, gives it to you earlier and allows you to earn interest sooner. But the strategy would backfire if you spend, rather than save, the incremental amounts. Excessive spending is the root of the problem for most anyone with high debts or low savings. Solving this issue requires discipline, which isn't easy. But there are ways to add guardrails, such as delaying certain purchases to wring some emotions out of the decision. If there's something you really want to buy like new golf clubs, consider a cooling-off period of perhaps a week or 10 days, Connors suggested. Chances are, you will abandon certain purchases. But if you really want to buy something after after that time, "You will at least know your emotions are less involved,' he said. Reach the writer at This article originally appeared on USA TODAY: Here are the best ways to use your tax refund money.
