494 Credit Score
Options for credit cards & loans with a 494 credit score. Learn how to fix a 494 credit score.
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A 494 credit score is a bad credit score, unfortunately, as it’s a lot closer to the lowest score possible (300) than the highest credit score (850). It indicates that you’ve had payment problems in the past, perhaps even to the extent of going through bankruptcy or having your home foreclosed. And that signals risk to potential lenders. As a result, a 494 credit score will make it difficult to qualify for a loan or unsecured credit card. And you will need to focus on rebuilding your credit reputation before trying to get a mortgage, car loan, etc.
Sure, turning a 494 credit score into a good credit score isn’t easy, considering you need a score of 700+ for that. Fair credit doesn’t even start until you reach a score of 640. But you’re neither alone nor without hope. Nearly 5% of people’s credit scores are below 500, according to WalletHub data. And there are many steps you can take – both big and small – to improve your credit score and keep it heading higher long term.
You can check your latest credit score for free on WalletHub to see exactly where you stand. WalletHub also gives you a personalized credit analysis, telling you exactly what you need to improve and exactly how to it.Check Your Latest Credit Score – 100% Free
Below, you can learn more about what a 494 credit score means for your wallet, what causes such a score, and the best ways to rebuild from credit score damage.
Credit Cards & Loans with a 494 Credit Score
You’ll find it very difficult to borrow with a 494 credit score, unless you’re looking for a student loan. Dating back to 2008, only a very small percentage of most other types of loans and lines of credit have been opened by people with credit scores below 540.
In particular, you’re unlikely to qualify for a mortgage with a 494 credit score because FHA-backed home loans require a minimum score of 500. But your odds are a bit higher with other types of loans.
Percentage of New Accounts with 300-539 Credit Score: 10-Year Average
- Credit Cards: 3.7%
- Car Loans: 6.8%
- First Mortgage: 0.7%
- Home Equity Line of Credit (HELOC): 0.3%
- Student Loans: 24.7%
Source: Q3 2017 Equifax Consumer Credit Trends
Your best bet is to place a refundable deposit on a secured credit card. Such a card won’t give you a loan, but it will help you build credit if you use it responsibly. Above all else, that means paying the bill on time every month or locking the card in a drawer and not making purchases at all.Compare Secured Credit Card Offers
Climbing into the fair credit category will finally enable you to qualify for a decent unsecured credit card, which should help you supercharge your credit building efforts – if used responsibly.
How to Fix a 494 Credit Score
If you want personalized credit-improvement advice, just sign up for a free WalletHub account and check out the credit analysis page. You’ll find grades for each part of your credit score, telling you exactly what to fix, as well as specific advice for how to improve each area.
Below, you’ll find some of the most important pointers, which typically apply to most people with a 494 credit score.
- Avoid Quick Fixes: Any company that advertises the ability to quickly “repair” or “fix” your credit is a scam. There are no fast solutions to bad credit. Recovery is a process that will likely take at least 12-18 months, just to progress to a “fair” rating.
- Review Credit Reports for Errors: Your “bad” rating may be the result, at least in part, of erroneous information on your credit reports. So check your latest credit report for things like accounts you didn’t open and on-time payments mistakenly listed as late. And dispute any inaccurate records you find.
- Catch Up on Missed Payments: If you’ve missed some monthly payments, making them up could help prevent credit score damage from worsening, assuming your account hasn’t defaulted yet. At that point, the damage from delinquency will already be done, and your top concerns will be a collections account and a lawsuit. Both are bad for your credit score, but both can be avoided by repaying amounts owed.
- Explore Debt Solutions: When you have a lot of debt, it can seem like you’re out of options. But that’s not the case. There are several avenues you can explore for some measure of relief. For example, you could try to negotiate a debt settlement agreement, whereby some of your balance will be forgiven in exchange for you repaying the rest right away. Or you could propose a new payment plan to your creditor, also known as debt management. Even something as simple as consulting a non-profit credit counselor could go a long way.So at the very least, it’s worth considering how the most popular debt solutions compare and apply to your situation.
- Get a Secured Credit Card: Unsecured credit cards for bad credit tend to be a bad deal, offering little in the way of a loan at a hefty And since a credit card is the most accessible credit-building tool available to consumers, it’s best to simply open a secured credit card. Secured cards are unique in that they require users to place a refundable security deposit, the amount of which serves as their spending limit. This protects issuers from risk, which enables them to charge minimal fees and offer nearly guaranteed acceptance.
- Always Pay on Time Moving Forward: Payment history accounts for the lion’s share of your credit score, and every month provides a new opportunity to improve in this regard. Each month you pay your credit card bill by the due date covers up previous mistakes just a bit, gradually establishing a new track record of responsibility.The best part is you don’t even need to use your credit card to benefit. If you don’t make any purchases, you’ll still be credited as paying on time when the issuer reports account information to the major credit bureaus each month. So if you don’t trust yourself to spend responsibly, remove temptation by locking your card in a drawer.
- Add to Your Deposit Over Time: The more credit extended to you, the faster your credit score will rise. And since you have control over your credit line when using a secured card, you can expedite your credit building efforts by simply depositing more money. Don’t worry, you’ll get your deposit back, minus any outstanding balances and fees (if any), when you close your account.
- Build an Emergency Fund: Setting money aside for financial emergencies won’t itself improve your credit score, but it will insulate you from the types of unforeseen events that could completely derail your credit building efforts. In fact, it’s best to begin feeding an emergency fund before focusing on getting out of debt – if you have any.
At the end of the day, you also just have to wait. Negative records in your credit report cannot be removed. They will remain for 7-10 years, depending on the offense, and the only thing you can do about it is dilute these records with positive information, such as reports of on-time payments.
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