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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
Yahoo
03-07-2025
- Climate
- Yahoo
A $10,000 personal loan helped this woman pay for flood damage when insurance wouldn't
Terri Graham is 5 feet, 2 inches tall, so if she stepped off her porch during the worst of the 2023 flood, water would encircle her waist. Graham's upstate New York town suffered a 1,000-year flood on July 9, 2023, and soon after, the governor declared a state of emergency. Nearly six inches of rain fell within a few hours that evening and would cause more than $1 million in property damage. 'It started in a town called Bloomfield — that's where the watershed starts,' says Graham, who works as a sales and account manager for a small business near her home in Canandaigua, New York. Unfortunately for Graham and her neighbors, her home insurance considered the extremely rare event 'an act of God' that wasn't covered by her policy. So, without insurance — and not wanting to gut her savings — Graham handled the financial aspects of her emergency the way she overcame three other surprise situations in recent years: by borrowing a personal loan. The storm was forecasted just two days before it arrived. Graham was interviewed on the local news about the run-up. 'We thought we were prepared,' she says. And while she prepared as much as she could with sandbags, it didn't stop the waters. Without a mandatory evacuation, Graham and her mother, who can't swim and was unable to board a rescue boat out of town, instead hunkered down. They went 10 days without power and 12 without clean drinking water. Perishable food in the fridge and freezer was lost. Appliances in the basement — including a water heater, furnace and electric panel — would need replacing. And Graham needed to stall mold growth with high-end humidifiers and air purification systems. 'I didn't want to run out and put them on one of my credit cards,' Graham says. Other costs, like hiring contractors, were likely to arise, and maxing out a credit card would have left her without funding. But that was for later. In the storm's immediate aftermath, Graham and her neighbors were in damage-control mode. Some were attempting to drive their cars like boats, causing wakes to push more water into homes like Graham's. She called 911, phoned the fire department and saw that everyone, from first responders to her neighbors, were 'overwhelmed.' 'So, at the beginning, I was thinking, 'Everything's going to be OK. Well, we'll be able to get through this. It's not a problem,'' Graham recalls. 'And then when insurance adjusters started coming around and giving the news that these were things that they weren't going to be able to help out with — was when I was like, 'I really need to get moving because I'm not sure how long it's going to take to get funding.'' Graham estimates that three to four days after getting the bad news from her insurance provider, she considered on borrowing a personal loan. 'Some people might've had more savings or things like that, but I didn't have that to fall back on,' Graham says. She also feared maxing out her credit card or emptying her emergency fund. Local officials had said power outages might span months. Graham went straight to online lender Best Egg. She had borrowed and repaid three personal loans from the company in the years since 2015 and appreciated its offer to amend her loan terms if she ever ran into financial difficulties. Graham's personal loan borrowing history Borrowing purpose Loan amount Divorce $6,500 Graham recalls paying $225 per hour to an attorney handling her situation, in and out of the courtroom. Credit card consolidation $4,000 Graham and her daughters took two vacations, not fully appreciating the costs upfront. 'It ended up being one of those things that was like, 'Oh, let's put it on the card. I'll put it on the card,'' Graham says. 'And then it was like, 'Oh my god, I put it on the card.'' College housing $5,000 Graham's daughter switched majors and had to enroll in summer school and needed a short-term rental. So, with the flood receding, Graham went about estimating the damage, mostly to her basement. After getting quotes for bigger-ticket items and contractors to install or repair them, she settled on $10,000, to be repaid over five years. 'I didn't want to take out too much,' Graham says. 'I didn't also want to leave myself short, and then I was going to end up having to utilize my credit cards anyway.' Related: How much of a personal loan can I get in 2025? Graham has about three years remaining on her personal loan repayment. She expresses confidence that the 2023 ordeal will end with a zero loan balance, like her past Best Egg borrowing. Graham says she's grateful that the Best Egg loans came just as she needed them, helping her to avoid higher-interest debt and credit damage. Hopefully, you can find relevant lessons from Graham's debt journey, too. Graham's answer Question for you Avoid credit card debt Graham says she might have been too cavalier about putting $4,000 in family vacations on her credit cards. 'So, I guess I wish at the beginning I had been a little bit street-smarter about that,' she adds. Are you overreliant on the plastic in your wallet to the point that you're not able to zero your balance each month? Grow your emergency fund After the flood, Graham says she was fearful of raiding her rainy day savings, lest other expenses crop up. Nowadays, she makes weekly deposits to the fund to insulate herself even more from emergency situations. Do you have three to six months or more of expenses saved in a high-yield savings account so that you can avoid a loan or reduce your loan amount in the case of an emergency? Practicing good financial habits Borrowing and paying off three previous personal loans has boosted Graham's payment history and, in turn, credit score. That helped to make up for a debt-to-income ratio dragged up by cosigning her daughters' student loans. If the time comes for borrowing, will you qualify for the best personal loan rates and terms? Shop around for the lowest-rate loan When her neighborhood flooding caused so much damage, Graham didn't have the time for an expansive shopping around process. She secured a 15.25 percent rate from Best Egg, far lower than the rates of her past personal loans — but she might have nabbed an even lower interest rate elsewhere. Do you know how to shop for a personal loan, including with banks, credit unions, online lenders and marketplaces? Choose a lender that offers what you (might) need Graham values the repayment flexibility that Best Egg offers. The lender works with borrowers on adjusting payment amounts and due dates for those suddenly unable to afford their monthly dues. If you need to borrow, what loan features would matter most to you? Set yourself up for success in repayment Graham uses a budget, plus Best Egg tools to understand her cash flow and feel more ready to repay her debt. Do you have a strong grasp of how much of your money comes in and goes out each month, and how it could impact your potential loan repayment? If you're considering a personal loan, whether for an unforeseen or planned expense, consider Graham's experiences and lessons. They can help you avoid common personal loan mistakes. Also, if your finances aren't in ideal shape, perhaps because you've had a run of bad luck, don't forget to be your own biggest cheerleader. As Graham says: 'Just because you're financially stressed or you're maybe really feeling the pinch, you can start over anytime. Make a positive change and keep moving forward, but give yourself a little bit of grace.' Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
01-07-2025
- Business
- Yahoo
4 Ways Personal Loans Can Fast-Track Your Dream Home Purchase
When most people are looking to buy a home, they think of what's required to get a mortgage, and how much they'll pay each month. A personal loan typically isn't used to buy a home, as the maximum amount is typically around $100,000 to $200,000. Explore More: Check Out: But, there are some creative ways that a personal loan can help you on the homebuying journey. Here's what experts had to say. If you're looking to buy a home in the next few years, but you have debt, there is a way personal loans can help. Robert Gabriel, a financial expert and CEO of Vosita, suggested grouping high-interest debt into a personal loan to improve your debt-to-income ratio and credit utilization. 'That can boost your credit score — and lower scores mean lower mortgage rates,' Gabriel said. Read Next: A personal loan won't cover the entire cost of a house, but it definitely could cover the down payment. Sergio Aguinaga, owner and founder of Michigan Houses For Cash, suggested using a personal loan for home buyers who need a little extra cash. '[Personal loans] can help first-time buyers who have steady income but not a lot of savings to get over that final hump,' he said. Gabriel agreed. 'If you're short $5,000 on a 20% down payment, a personal loan will get you there faster, and you can avoid private mortgage insurance (PMI), which costs 0.5% to 1.5% of the loan amount every year,' he added. Aguinaga cautioned that a personal loan adds another monthly payment, so home buyers should make sure to factor that into their budget before opting for one. 'You want to be sure the monthly payment won't stretch your budget too far,' he said. 'But for the right buyer with a smart plan, it can be a powerful tool to close the deal and make the numbers work.' Some first-time home buyers might be at the end of the deal and think they have everything paid for, then they realize they have to pay closing costs. Closing costs are typically between 2% and 5% of the total home price. Gabriel said this is another way personal loans can help. 'If you're buying a $300,000 house, that's $6,000 to $15,000. A personal loan can cover these initial fees without tapping into your emergency fund,' Gabriel added. Aguinaga said a personal loan can help you make home repairs, especially if you need them immediately. 'If you're buying a fixer-upper, that's priced right but won't pass inspection without updates, a personal loan can help you act fast and handle those repairs upfront,' Aguinaga noted. Eli Pasternak, the founder of Liberty House Buying Group agreed, saying using a personal loan to make improvements will serve you in the long run. 'I think you should borrow money to paint, update fixtures and stage properly however because these changes can add $20,000 in value while only costing $8,000 to complete,' Pasternak added. More From GOBankingRates 10 Genius Things Warren Buffett Says To Do With Your Money This article originally appeared on 4 Ways Personal Loans Can Fast-Track Your Dream Home Purchase
Yahoo
27-06-2025
- Business
- Yahoo
5 Reasons Retirees Should Consider Taking Out a Personal Loan
Retirement often comes with a fixed income, but that doesn't mean unexpected expenses disappear. From rising healthcare costs to home repairs and lingering debt, retirees may face financial gaps that savings alone can't cover. Read Next: Check Out: In the right circumstances, a personal loan can be a smart, strategic tool to manage those challenges. While borrowing in retirement requires careful consideration, here are five reasons retirees could consider taking out a personal loan. Withdrawing from retirement accounts prematurely can trigger taxes or penalties. A short-term personal loan may offer a buffer, giving investments more time to grow or delaying taxable withdrawals. 'Retirees and those nearing retirement tend to be super cautious about loans, and part of the reason for this is that they believe that by the time they are retired, they should have completely fulfilled their debt obligations,' said Aaron Razon, a personal finance expert at Couponsnake. 'They, however, forget to factor that in a significant way, loans are leverages, opportunities to tap into financial resources that can enhance retirement security.' Be Aware: Some retirees carry credit cards or other high-interest debt into retirement. A LendingTree analysis found that over 97% of U.S. retirees have non-mortgage debt. Among retirees in the country's largest cities, the median non-mortgage debt is $11,349. Using a personal loan to consolidate balances can lower interest rates, reduce monthly payments and simplify finances. 'A 67-year-old retiree needs $20,000 to pay off an existing high-interest debt that has been a major strain on her monthly budget causing her to fall behind on other bills and accumulate late fees as a result,' Razon said. 'So she takes out a personal loan with a 10% interest rate and a three-year repayment term to consolidate her debt into a single manageable monthly payment, which allows her to reduce her financial stress and save on interest charges.' Even with Medicare, out-of-pocket costs and uncovered procedures can quickly add up. According to the latest data from the Consumer Financial Protection Bureau (CFPB), around 4 million older adults reported having unpaid medical bills. And that's despite the fact that nearly all of them (98%) had health insurance. CFPB researchers found that much of the unpaid medical bills were due to billing inaccuracies. 'CFPB findings suggest that providers are billing older dual beneficiaries for amounts they don't owe,' CFPB researchers said. While a personal loan can't resolve billing inaccuracies, it can tide retirees over until billing disputes are resolved without draining savings or disrupting investments. Whether it's relocating to a retirement community, helping a grandchild with college or downsizing, a personal loan can offer short-term liquidity for big life changes. Razon said personal loans offer fixed interest rates and predictable payments, making them a budget-friendly option for retirees on a fixed income. 'In a personal loan, retirees should look for competitive interest rates, and flexible repayment terms, and make sure to borrow an amount that is sufficient for their needs without overburdening themselves,' Razon said. 'They should also look for a repayment schedule that fits their income and expense cycle and verify the lender's reputation.' Even in retirement, unexpected financial hiccups can occur. A delay in Social Security payments, pension distribution delays or the sale of an asset can create a short-term income gap, putting a strain on daily living expenses. Rather than turning to high-interest credit cards or withdrawing funds from retirement accounts, which could trigger taxes or penalties, a personal loan can provide quick and predictable funding. With fixed payments and a clear payoff timeline, it can provide a manageable solution that avoids long-term financial disruption. 'A personal loan is like fire,' said Stoy Hall, CFP, CEO and founder of Black Mammoth, a wealth management company. 'Used right, it can warm your house or cook your food. Used wrong, it burns your whole financial future down.' More From GOBankingRates The 5 Car Brands Named the Least Reliable of 2025 This article originally appeared on 5 Reasons Retirees Should Consider Taking Out a Personal Loan Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
23-06-2025
- Business
- Yahoo
3 Ways Personal Loans Are Helping People Reach Their Financial Goals in 2025
The words 'personal loan' might sound scary to you, as they can frequently be frowned upon as a last resort when you need money. In 2025, the script has flipped, and people are using personal loans to reach financial milestones, having the monetary flexibility to cross off some goals that might have been sitting on their list for years. Read Next: Consider This: GOBankingRates reached out to lending expert Kyle Enright, president of lending at Achieve, a digital personal finance company based in San Mateo, California, to get his take on three ways personal loans are helping people reach their financial goals in 2025. A big goal for many is to finally get out of debt and stay out for good. With a personal loan, lots of people are doing just that for the first time in their lives. 'Interest rates on personal loans can vary widely (from around 8% to 35% or even higher, depending on credit score), but are usually lower than credit card rates, which are averaging more than 20%,' explained Enright. If you can qualify for a personal loan at a rate lower than that on your credit card(s), Enright pointed out that you can use the personal loan proceeds to pay off the higher-rate credit card debt, then be left with just the one personal loan payment at the lower rate. 'This should make it faster and less expensive to pay off the debt,' said Enright. Explore More: 'You can use a personal loan for almost anything, and one of the most popular uses (after debt consolidation and payoff) is for the home,' said Enright. According to Enright, taking care of needed maintenance and repair items before they become major problems will save money in the long run and provide a safer, more functional, and more enjoyable living environment. 'With more homeowners planning to stay in their homes for longer — whether because of high interest rates making it harder and more expensive to sell and buy, or to age in place– they can use a personal loan to help them achieve these goals,' Enright added. The ability to budget for upcoming goals, as well as achieve financial resolutions, might come in many shapes and sizes, with a personal loan being one of them this year. 'A budget is intended to be a spending tool so that you can set life goals (short- and long-term) and then plan how and when you can achieve those,' Enright said. 'If personal loan payments fit into your budget, you may be able to achieve a goal you set for this year. 'Similarly, many people set financial resolutions at New Year's. This is a good time to review those, see where you're at, and make plans to make those resolutions [a] reality this year.' More From GOBankingRates Mark Cuban Says Trump's Executive Order To Lower Medication Costs Has a 'Real Shot' -- Here's Why This article originally appeared on 3 Ways Personal Loans Are Helping People Reach Their Financial Goals in 2025
