At a Glance
Lenders can tell if you're just getting started with credit or if you've previously had payment issues if you have a 494 credit score. As a result, you can encounter difficulties obtaining acceptance for a credit card or loan without having to pay exorbitant interest rates while waiting for your credit to be repaired.
With your 494 credit score, applying for a credit card, personal loan, auto loan, or mortgage will be substantially more difficult and complicated. Your credit report's score of 494 can indicate recent financial issues or a lack of credit history. Candidates with 494 credit scores might need to make additional payments or put down deposits on their credit cards. Receiving approval for an unsecured credit card will be challenging. The "very bad" range of credit scores is where many lenders won't work with borrowers.
Now that we have discussed what can happen when your credit score dips low, let’s dig deeper.
Is 494 Credit Score Good or Bad?
Sadly, a credit score of 494 is considered to be low. The lowest credit score range includes 494, according to the prominent credit scoring algorithms FICO and VantageScore.
What Impacts your 494 Credit Score?
Numerous reasons may be at play in your credit score to be 494. Therefore, being aware of these can help you concentrate on raising your credit score. Your credit score is affected, among other things, by:
- Public information
- Credit Utilization Ratio
- Late or missed payments
- Length of credit history
- Total debt and credit mix
- Recent credit activity on your account
If your credit report reflects bankruptcies or other similar public records, your credit score can take a massive hit. A Chapter 7 bankruptcy will remain in your credit file for up to 10 years, and a Chapter 13 will stay for seven years. Even though your credit score may increase before the bankruptcy report disappears from your record, there is a high possibility that lenders might refuse to work with you because of bankruptcy filing.
Credit Utilization Ratio:
To calculate the Credit Utilization Ratio on a Credit Card, you must divide the outstanding balance by the card’s borrowing limit and multiply by 100 to get the percentage. To calculate the overall utilization ratio, calculate the balances on all your Credit Cards and divide by the sum of borrowing limits. Keeping your utilization below 30% of your available credit is usually recommended.
Late or Missed payments:
Your credit score will significantly hit if you miss your credit card payment. So if you see that your credit score has fallen to 494, you should look into how many late or missed payments have happened from your end. Paying your bills consistently is the most critical thing to do to improve your credit score, as it accounts for 35% of your FICO score.
Length of Credit History:
Along with other things, the length of your credit history is also a detriment to your credit score. The number of years you have been a credit user can influence up to 15% of your FICO score. NTC (New to Credit) users must be patient and careful to avoid destructive credit behaviors.
Total Debt and Credit mix:
The FICO credit usually favors users with multiple credit accounts and revolving and installment credit. If you have only one kind of credit account and your credit score is 494, it might help if you broaden your credit portfolio. Remember that credit mix and total debt make up 10% of your FICO score.
Recent Credit activity:
If you are someone who keeps applying for new loans and credit cards, your credit score might take a hit. Some companies trigger a check known as a hard inquiry when you apply for loans or credit cards. What happens during the hard inquiry is that the lender obtains your credit score to determine if you can get the credit line or not. Hard inquiries might drop your credit score by a few points, but it rebounds within a few months if you keep up with your credit card bills. New credit activity can account for up to 10% of your FICO scores.
What does a Credit Score of 494 mean for your Life and Finances?
Your life's financial circumstances will be impacted in various ways when you discover that your credit score has dropped to 494. Your life and money will be impacted in a number of ways by having a credit score below 494, including:
- High-interest personal loans
- High interest or no approval of unsecured loans
- Difficulty getting mobile connections, water connection
- Difficulty finding apartments
Can you get a Credit Card with a 494 Credit Score?
Yes, you can get the Azpire Credit Builder Card to build your credit score from 494. The Zolve Azpire Credit Builder card is made available to all, even people who have a credit score as low as 494 or who are NTC (new to credit). One of the best ways to rebuild your credit score is to apply for this secured credit card.
How to Improve your 494 Credit Score?
Your low credit score will gradually rise from 494 to a fair (580-669) to a good (670-739) rating. There is no quick way to raise your credit score from 494 to 700, but you can take the following steps to raise it from 494 to the fair or good credit score bucket instead:
- Paying your bills on time
- Avoiding high credit utilization
- Debt management plan
- Credit builder loan
- Use a secured credit card
- Establish a credit mix
Paying your bills on time:
The holy grail of improving your credit score is to pay your bills on time. If your credit score is 494 and you are looking for ways to increase your credit score, this is the way to go.
Avoid high credit utilization rate:
No matter how many accounts you have, try keeping your credit utilization to 30% to avoid lowering your credit score.
Debt management plan:
If you're in trouble with your credit card bills, a debt management plan can come in handy. You need to work with a non-profit credit-counseling agency to work out a manageable repayment schedule. If this sounds too extreme, you can consult a credit counselor to improve your 494 credit score.
Credit builder loan:
Multiple credit unions offer these small loans designed to help NTC users build their credit. These loans help you build credit if you maintain the stipulated payment behavior.
Apply for a secured credit card:
This typically has a low credit limit, frequently only a few hundred thousand dollars, and requires a deposit equal to the full credit limit. The lender records your use of this card and your timely, regular payments to the three major credit bureaus. Your credit files contain information about your credit conduct, which is reflected in your FICO score.
Look no further if you want to improve your 494 credit score by applying for a secured credit card.
Folks, meet the
Zolve Azpire Card
What is it?The Zolve Azpire card helps you build credit using your own money. It is a credit builder card that helps you start building your credit score from the first transaction. It is available to all, even if your credit score is as low as 494.
We record every swipe of your Zolve Azpire card, and by the month’s end, we add up all the transactions for the month and report it to the bureaus so that your credit score gets built for a better financial future.
Establish a credit mix:
The FICO scoring model favors users with multiple credit accounts, along with a mix of different types of loans, including installment loans like mortgages, car, and home equity loans.
It can be disheartening to learn that your credit score has fallen to 494, but that doesn't mean you can't fix it. You must start somewhere to improve your 494 credit score. If you boost your 494 credit score to the fair range (580–669), you might be able to access additional loans, credit options, waived fees, terms, and lower interest rates.