Is a Credit Score of 550 Bad?

A credit score of 550 isn’t great but it doesn’t necessarily mean you can’t get credit or loans. Learn how credit score ranges work in Canada and what a 550 credit score means. 

Key Takeaways

• A 550 credit score is considered poor, making it difficult to qualify for loans, credit cards, or favourable interest rates.
• Common causes of a low credit score include late payments, high credit utilization, limited credit history, and too many recent credit applications.
• A low credit score can lead to higher borrowing costs, difficulty securing rentals, and limited financial opportunities.
• Improving a 550 credit score takes time but can be achieved by making on-time payments, reducing debt, limiting new credit inquiries, and checking for errors on credit reports.

Building credit responsibly with a mix of different credit types and maintaining good financial habits will lead to long-term credit score improvements.

Credit Score Ranges in Canada

Credit scores in Canada range from 300 to 900, with 900 being the highest score you can achieve. A credit score of 650 is considered the middle ground. Scores are categorized into five main ranges:

• 300-559 (Poor): A score in this range makes it difficult to get approved for credit, and lenders may offer only high-interest options.
• 560-659 (Fair): You may qualify for some credit products, but interest rates will likely be higher.
• 660-724 (Good): Most lenders consider this a safe range, offering reasonable interest rates and better approval odds.
• 725-759 (Very Good): A strong score that qualifies you for better loan terms and lower interest rates.
• 760-900 (Excellent): The highest range, offering the best credit terms, lowest rates, and the most financial opportunities.

A 550 credit score falls in the “poor” category, meaning it may be challenging to secure loans, credit cards, or mortgages without high fees or strict conditions. However, improving your credit habits can help you move into higher ranges over time.

What Does A 550 Credit Score Mean?

According to Equifax Canada, a credit score range of 660 to 900 is generally considered good to excellent credit. So, is having a credit score of 550 good or bad?

Based on Equifax’s data, anything below 560 would be rated as poor credit. Having a 550 credit score means that you may have a harder time qualifying for loans, credit cards or lines of credit. If you are approved, you may pay a higher interest rate for what you borrow. 

The reason is simple. A lower credit score suggests to lenders that you’re a higher-risk borrower. To compensate for the possibility that you may not repay the loan in full, lenders may charge you more in interest. 

Factors That Contribute To A 550 Credit Score

There are several factors that influence your score and where you land in the credit score range. Those include:

• Payment history: Payment history makes up the largest portion of a credit score. Frequent late or missed payments will hurt your credit score.
• High credit utilization, or using too much of your available credit, can also lower your score. 
• Short credit history or having too few accounts reduces the data available to assess your creditworthiness. 
• Frequent hard inquiries from applying for multiple credit products in a short time can make lenders view you as a risk. 

Additionally, negative marks like bankruptcies, collections, or defaults can significantly drag down your score. Understanding these factors is the first step toward improving your credit.

Can I Get A Car Loan With A 550 Credit Score?

Yes, but it won’t be easy. Most banks and prime lenders consider a 550 credit score risky, making approval difficult. However, subprime lenders and dealerships that specialize in bad credit financing may offer loans—but with higher interest rates, larger down payments, and stricter terms.

To improve your chances:
✔ Compare lenders to find the best rates.
✔ Consider a co-signer to increase approval odds.
✔ Opt for a used car to reduce the loan amount.
✔ Work on your credit before applying to secure better terms.

Financing is possible, but higher costs are likely. Taking steps to improve your credit can save you money in the long run. Fortunately, Birchwood Credit specializes in helping Canadians get approved for car loans with bad credit.

What Else Can I Get With A 550 Credit Score?

A 550 credit score limits your options, but some financial products may still be available: 

• Secured Credit Cards are a common choice, requiring a refundable deposit that acts as your credit limit. 
• Bad Credit Loans: Some lenders offer bad credit personal loans, but these often come with high interest rates and fees. 
• Buy Now-Pay Later Financing: You may also qualify for buy now, pay later financing on certain purchases, though terms may not be ideal. 
• Co-Sign Rentals: For renting, some landlords might require a co-signer or a larger security deposit. While options exist, improving your credit will give you access to better financial products with lower costs.

How A 550 Credit Score Affects Your Financial Opportunities

A 550 credit score makes borrowing expensive and restrictive. Loans, credit cards, and mortgages come with higher interest rates, lower limits, and stricter terms—if approved at all. Renting can be tougher, as landlords may see you as a risk. Some jobs, especially in finance, do a check credit, which could impact hiring. Insurance rates may be higher, and utility companies might require deposits. A low score limits options, but improving your credit can unlock better opportunities and long-term savings.

How To Improve Your Credit Score

Raising your credit score takes time, but small, consistent changes can lead to big improvements—here’s what to focus on:

Age Of Open Accounts By Credit Score Range

The length of your credit history matters. Older accounts help build a stronger score because they show long-term responsible use. People with higher scores often have credit histories spanning several years, while those with lower scores may have newer or fewer accounts. Closing old accounts can shorten your credit age, so keeping long-standing accounts open is a smart move.

Check Your Credit Report And Understand Your Scores

Your credit report holds the key to understanding why your score is low. Review it regularly to spot errors, late payments, or high balances dragging down your score. You can request free credit reports in Canada from Equifax and TransUnion—and if you find mistakes, dispute them immediately to improve your score.

Pay Your Bills On Time

Payment history is the biggest factor in your credit score. Even one missed payment can lower your score, so setting up automatic payments or reminders can help you stay on track. Over time, consistent on-time payments will boost your creditworthiness and open doors to better financial opportunities.

Keep Your Credit Balances Low

High credit card balances hurt your score by increasing your credit utilization ratio. Aim to use less than 30% of your credit limit, and if possible, pay off your balance in full each month. Lower balances make you look like a responsible borrower and can improve your credit over time.

Why Birchwood Credit Is Different

While some lenders may not work with borrowers who have a credit score of 550, Birchwood Credit seeks to serve consumers with a variety of credit situations. We can work with you to review your credit, income and work history to find a loan solution that’s appropriate for your needs. Though it may be lower than you’d like, a 550 credit score doesn’t have to prevent you from getting a loan to purchase a new or used vehicle. 

Birchwood Credit can help customers with bad credit or no credit to meet their car-buying needs. We take your entire financial situation into account. Call today or fill out an online application to learn how we can help you purchase your next car.