Can I get a loan with a 450 credit score? I’ll be straightforward: sure you can get a loan, but your 450 score is a bad place to be in if you’re looking for great and affordable rates or even hassle-free loan applications.
You’re also unlikely to qualify for most mortgage products with that score and can even get higher than usual deposit payments by companies for installment based payments.
So getting a 450 on your score is very unfavorable for you, the money lenders, and banks alike which may lead to the rejection of your personal loan application.
But don’t worry, building your score isn’t impossible. You just have to know what and how creditworthiness works and being aware of your poor creditworthiness is already a start.
What Makes a Good Credit Score?
Credit bureaus, credit-reporting agencies or here in the United States, consumer reporting agencies are agencies that research and collect individuals’ credit information.
Credit bureaus gather information such as an individual’s debt history, bill-paying habits, and an individual’s performance in their previous loan.
These gathered data are then compiled into a three-digit rating called a “credit score” which will help creditors and lenders determine the likelihood of one’s ability to pay loans in the future.
There are two credit score models commonly used in the U.S., VantageScore and FICO score.
But generally, credit scores go:
- To get a score somewhere in the range of 720 and above are excellent.
- To get a score somewhere ranging from 690 to 719 is perceived as good.
- To get a score from 630 to 689 is seen as fair.
- While getting a value of 629 and below is considered poor.
Here’s a table of the general credit score range:
|Credit Score Range|
|300 – 629||Bad|
|630 – 689||Fair|
|690 – 719||Good|
|720 – 850||Excellent|
Where to Apply For a Loan if You Have a Bad Credit?
In a perfect world, all of us will have good score and are able to pay everything on time. It’s not how the world works though. Some of us have a credit score of 450. But don’t worry, you can still apply for loans even when you have a poor creditworthiness report. After all, lenders don’t just base the decision to approve your loan on just your credit report.
1. Money Lenders
Money lenders may usually look at more than your credit report, they check out what you owe – even with a 450 credit report. Lenders calculate your DTI or debt-to-income ratio to know if you will be able to repay a loan.
2. Credit Union
A Credit Union on the other hand are known lifesavers for loans with scores of 450 in their credit report. However, to be able to get a loan from one, you first need to become a member which of course comes with a small membership fee. They may still use your credit report to determine your creditworthiness of course but they usually offer more personalized loan services that would fit your budget.
Banks may still approve your loan applications even with a 450 credit score but they banks of course have a tendency to apply higher Annual Percentage Rates. The best way to apply for a loan from a bank with poor creditworthiness is to check out different loan offers from different banks and sift through them until you find what fits your budget.
What Interest Rates Should You Expect?
Of course, having a bad credit comes with consequences. Some companies will require higher deposits due to your credit score. The worst one would be getting a personal loan rejected. But usually, lenders will accept your loan application, especially with the case of having a 450 credit score, they give higher interest rates.
Higher Annual Percentage Rates
These higher annual percentage rates are applied to loan applications by individuals who have a poor credit score as they technically pose a greater risk for lenders due to their credit history. So having a 450 credit score usually gets you higher deposits and interest rates for personal loan applications.
Take note of what we’ve mentioned above though, that lenders may still extend loans to borrowers with poor credit by looking at their current debts, income, and their ability to repay. So don’t sulk around for having a 450 credit score!
What Affects Your Credit Score?
To know what factors might change your credit score, you don’t need to have a PhD in business. Here’s a few things that will affect your score:
1. Late or Missed Payments
Being delinquent in your financial responsibilities carries a blow in your overall creditworthiness. Missing some or just being late with your payments, whether it’s for your utilities or other bills, they will all be recorded and checked by agencies.
2. Credit Utilization
We all have tons of bad ideas, one of them is maxing out your credit card. Now that’s one bad idea that will significantly hurt your value. Credit utilization constitutes 30% of your FICO credit score so you should always be mindful of your credit utilization.
Calculate your credit utilization ratio by dividing your balance with your credit limit and multiplying it by 100.
3. Credit History
The amount of time you’ve been using credit or the age of your credit card is 15% of your FICO credit score. It acts as your track record. The longer credit history you have, the higher it will pull your scores.
4. Recent Credit Application
Credit applications give your credit a ‘hard pull’ or a ‘hard inquiry’. These types of inquiry requires your consent (keep your rights reserved) and will result to a temporary dip effect in your credit report as credit inquiries constitute 10% of your FICO credit score. Don’t worry too much about these as they will return your creditworthiness report to normal as you diligently pay your dues.
5. Total Debt and Credit Mix
Believe it or not but applying for new loans such as mortgages and auto loan can improve your scores. These type of installment credits are taken into consideration by credit bureaus as they will reflect your total debt.
6. Public Information
Bankruptcies, judgement, and tax liens are often on public records. They can significantly hurt your credit report. Some states even have foreclosures and repossessions available on public records. These will surely bring your score down even further as they are considered to be serious delinquencies.
How to Improve Your Credit Score?
Of course, if we’re talking how things affect your 450 credit score, then we should also discuss how to pull your scores up a notch!
1. Negotiate Your Debt
Financial institutions offering you credit applications or providing you with their credit services can be negotiated with. Discuss your debt with finance professionals so you will be advised with feasible approaches that will help you pay your dues within your budget making you diligent with your financial responsibilities.
2. Increase Your Income
This one’s a no-brainer. Having an increased income will exponentially increase your chances of not missing and avoid being tardy with your credit payments. Consider getting another job. Be careful of switching jobs though, as it may lead your creditor to reduce your credit limit, especially if it’s a lower income job. Having a lower credit card limit will have a tendency of getting you a higher credit utilization output and we do not want that.
3. Find Ways to Build your Credit Score
Take out an auto loan. Get a credit card (but don’t max it out like we’ve said). An auto loan and a credit card are credit types that are good creditworthiness pushers as they will require you to pay for fixed monthly payments which will be taken into consideration by bureaus recording your credit history. But of course, like all other dues, you have to pay them responsibly. Don’t wait for the due date, pay your dues when you can.
Budget your finance. The easiest step in improving your 450 credit score is knowing what you can and cannot afford as overspending on things will leave your budget with holes that will be recorded by bureaus.
There are tons of ways of building your 450 credit score and knowing them is just a click away with your internet browser, do not be easily exhausted on researching about things that will help you build a better financial status.
4. Credit Cards
Credit cards are the best way to pull your creditworthiness up! If you don’t already have one then it’s probably best to open a credit card account right away!
Remember, bureaus pay close attention when it comes to dates of payment. You should time your payments right. Make sure your credit card balance is low by the end of your billing cycle.
Keep in mind that payments are key to increasing your creditworthiness. You can pay your credit cards twice a month to keep your credit utilization low.
Ask your bank card issuer to increase your card limit. Especially when you recently had an income change, your creditor would most likely be lenient in letting you increase your credit card limit. As long as you keep your credit utilization low, you’re good!
5. Paying Your Bills on Time
Time and again, paying bills on time will not only ease your mind but also build you a higher creditworthiness. Diligence is key when it comes to anything in finance.
6. Do Not Apply for Subprime Credit Cards
Subprime credit cards are credit cards offered to individuals with low scores. Keep in mind that we do not want things offered to people with bad creditworthiness because we do not plan on having bad creditworthiness for a long time. These subprime credits are designed to benefit the lenders and creditors rather than the consumer as they were made to lower the risk of lenders using high interest rates.
In conclusion, having a 450 credit score is technically bad but not that bad really, as creditworthiness can be built and improved upon over time through diligence in paying your financial responsibilities. Just keep in mind these few tips we’ve listed as being aware of one’s status is the first step to improving your life and your creditworthiness!