Is 450 a Low Credit Score? Understanding What a 450 Credit Score Means

Your credit score is one of the most important numbers in your financial life. Lenders use credit scores to evaluate how risky it might be to lend money to you. In general, the higher your credit score the better your chances of getting approved for credit at favorable interest rates. So where does a credit score of 450 fall on the spectrum? Is 450 considered a low credit score? Let’s take a closer look.

What is a Credit Score?

Before we can determine if 450 is a low credit score, it helps to understand what a credit score is in the first place.

You get three numbers that make up your credit score. They are based on information in your credit reports from the three main credit bureaus: Experian, Equifax, and TransUnion. Credit scores range from 300 to 850.

The most commonly used credit scores are FICO scores, developed by the Fair Isaac Corporation. FICO scores take into account five main factors

• Payment history – Whether you pay your bills on time. This makes up 35% of your FICO score.
• Credit utilization – How much of your available credit you are using. This accounts for 30% of your score.
• Length of credit history – How long you’ve had credit accounts open. This is 15% of your FICO score.
• New credit – How many new accounts and inquiries you have on your reports. 10% of your score.
• Credit mix – Whether you have different types of credit accounts (credit cards, loans, etc). 10% of your score.

Lenders can tell that you are likely to pay back your debts if your credit score is high. Lower scores indicate higher risk.

Credit Score Ranges

Credit scores from FICO and VantageScore, another scoring model, are broken down into different ranges or categories that show how creditworthy a person is:

FICO Score Ranges:

• 800-850: Exceptional
• 740-799: Very Good
• 670-739: Good
• 580-669: Fair
• 300-579: Very Poor

VantageScore Ranges:

• 781-850: Excellent
• 661-780: Good
• 601-660: Fair
• 501-600: Poor
• 300-500: Very Poor

So where does a credit score of 450 fall? Based on the FICO score ranges, a credit score of 450 is considered “Very Poor.” It falls in the bottom range of possible scores.

Is 450 a Low Credit Score?

Yes, 450 is generally considered a low credit score by lenders. According to myFICO, only 2% of people with FICO scores have a score below 550. A score of 450 puts you well below the average credit score of around 710.

Being turned down for new credit with a score of 450 is likely to be hard, especially for big loans like mortgages. Lenders may also charge you higher interest rates to make up for the risk they take by lending you money.

For example, according to Experian, someone with a 450 FICO score may see:

• Credit card APRs above 25%
• Personal loan rates above 36%
• Auto loan rates of 15% or higher

While not impossible to get approved with a 450 credit score, the terms definitely won’t be favorable. A poor credit score indicates to lenders that you have had issues managing credit in the past.

Why Do People Have a 450 Credit Score?

There are a few common reasons someone may have a very low 450 credit score:

Little to no credit history – People just starting to build credit can initially have low scores around 450 simply because they don’t have enough of a track record. With some time and responsible credit usage, scores can quickly improve from 450.

Late payments and collections – Payment history has the biggest impact on your credit score. If you frequently make late payments or have unpaid debts sent to collections, it can quickly drop your score down to the Very Poor range.

High credit utilization – Using too much of your available credit limits can reduce your scores. Maxing out cards leads to high utilization.

Bankruptcy – Declaring bankruptcy remains on your credit reports for 7-10 years and can greatly lower your credit scores.

Foreclosure – Going through foreclosure on a mortgage is another major derogatory mark that demolishes credit scores.

Identity theft – If someone has stolen your identity and racked up debt in your name, it can seriously damage your credit scores when that activity appears on your reports.

How to Raise a 450 Credit Score

The good news is credit scores are not set in stone. With some time and effort, you can rebuild and raise your credit from a 450 score. Here are some tips:

• Review credit reports – Check your credit reports for errors or fraudulent activity dragging down your scores. Dispute any issues with the credit bureaus.

• Pay bills on time – Payment history makes up over one third of your credit score. Setting up automatic payments can help ensure you never miss a due date.

• Lower credit utilization – Get balances well below 30% of your credit limits to avoid high utilization damaging your scores.

• Don’t close old accounts – Keeping your longest aged accounts open preserves that credit history, which helps your scores.

• Limit new credit applications – Each application causes a hard inquiry that dings your scores a bit. Only apply for what you need.

• Consider credit-builder loans – These loans report on-time payments to the credit bureaus to help build your scores.

• Become an authorized user – Ask a family member with good credit to add you as a user to help build your history.

• Give it time – Credit scores take time to rebuild. Be patient and persistently work on improving credit behaviors.

Raising your credit score from 450 to above 700 may take years depending on your unique credit situation and how diligently you work to strengthen your credit reports. But with a focused effort, you can eventually reach a score range that unlocks better credit opportunities.

The Takeaway: 450 Is Considered a Low Credit Score

A credit score of 450 falls in the Very Poor range of FICO credit scores. It is well below the average credit score. Lenders see borrowers with a 450 credit score as high-risk, making it difficult to get approved for credit or receive ideal interest rates. However, by addressing any errors or fraudulent activity on your credit reports and consistently demonstrating responsible credit behaviors – like on-time payments and low utilization – you can gradually rebuild your credit standing and raise your scores over time. With patience and perseverance, a very low 450 score doesn’t have to define your financial opportunities forever.