A 633 credit score is considered slightly below average and is categorized in the “fair credit score” group. Despite the fact that you are not in the poor score category, there is still so much room for growth, and you should take advantage of it. Think of your score as a stepping stone to bigger...
Did you just get an update on your financial standing and find out that you have a 500 credit score? If so, you may be worried about what this means in the grand scheme of your finances, and where you should go from here. The world of credit can be vastly confusing. And, it can also be stressful if you have poor credit and depend on an economic entity assisting you financially to achieve short-term or long-term goals. Fortunately for you, there are tons of helpful guides out there, including this one, that can help you decipher your standing and options.
Is 500 a good credit score? Not really. But, that does not mean that you are bound forever to a life of monetary misfortune. It just means that you have to educate yourself on how to improve it. The following article will walk you through what this number means, the ways that it will affect your borrowing, such as trying to get a decent 500 credit score mortgage rate, and what you can do to give yourself a little boost.
- Is 500 a Good Credit Score?
- Credit Cards for a 500 Credit Score
- Car Loan Rates for a 500 Credit Score
- Personal Loan with a 500 Credit Score
- Mortgage with a 500 Credit Score
- How to Improve a 500 Credit Score
Is 500 a Good Credit Score?
As briefly touched on above, the unfortunate answer to this question is no — it is generally considered a bad credit score. However, scores are not permanent, and you can climb up out of your situation with some effort, self-discipline, and maybe a bit of help. The numbers of scores range from a 300 on the lower end to an 850 on the upper end. If you have a credit score of 500, that puts you in the lower range. Typically, anything below a 600 is considered to be bad, and even at the 600-mark, it is sub-par.
Good numbers are considered to be those between 650 and 725, and excellent is anything above that. The good thing about having a low credit score though is that there are actions that can be taken to improve it. And, even if it is going to take you time to raise it, you will still be able to obtain the funding you need to meet your goals.
Credit Cards for a 500 Credit Score
When looking at which card may be best for you, you can choose between those that are secured and unsecured. Secured cards are backed up by an initial deposit and may offer better interest rates, whereas unsecured ones are not. Some best secured and unsecured credit cards for a 500 credit score include the following.
Citi secured MasterCard
This card was designed with those in mind who are just getting their first swiper. However, it is also one of the best credit cards for people with a 500 credit score. As the name suggests, this is a secured card. You may have to deposit anywhere from $200-$2,500 to open an account with this credit card issuer. Once you do though, you will be able to start improving your number while obtaining access to other benefits. And, it does not have an annual fee!
Opening a card while in your position is essentially the same as getting a loan with a 500 credit score. What happens is that the entity will evaluate your profile and decide if you are worthy of being lent a certain amount every month and that you will be making on-time payments.
This card is great for individuals whose account conveys a score of 500. The company says that they will let you open an account with them even if you have a prior bankruptcy! You get to choose a cute design to appear on your card, and it comes with protection from fraud. While it might have an annual fee, you do not have to put down any deposit. For all of these reasons, it’s probably the best credit card for a 500 credit score.
Applied bank unsecured classic Visa
The Applied Bank Unsecured Classic Visa is another great option for those with a 500 FICO score. While this variation is unsecured, meaning it will not require an initial deposit, you can get one that is secured as well. Like the others above, it is designed to help you build credit. You can actually get approval in under 60 seconds. There’s just an $89 sign-up fee, and then you’ll be good to go.
Car Loan Rates for a 500 Credit Score
Looking to get a car loan with a 500 credit score? You face many challenges, such as higher rates and having a few doors slammed in your face. However, it is possible! See the chart below for the different rates you may run into. It should give you a pretty good idea of where you currently are, as well as what you want to avoid, and what you can look forward to. So, if you are wondering, “can I get a car loan with a credit score of 500?” then the answer is yes, you just may end up paying a bit more in interest due to the extra risk that lenders have to take on.
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Credit: Consumer Finance Government Report
Personal Loan with a 500 Credit Score
Trying to predict what you might run into when trying to get a personal loan is a bit different from predicting car loan interest rates for a 500 credit score. This is because unlike cars, which generally fall into a specific price range, the cost of personal loans can run a lender a very wide array of costs. However, with enough research, some guidance is available. See the following chart to capture a glimpse of what types of interest you may be facing if you secure a 500 credit score personal loan.
Note that this type of loan is going to be extremely difficult to actually obtain, as many entities do not provide them for people who have a score under 599. If you cannot obtain one from a corporate lender though, you can always seek a private version. Just beware, as these situations come with many strings attached. Loans for a 500 credit score are sometimes better not taken out.
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Mortgage with a 500 Credit Score
Looking to get a 500 credit score mortgage? Again, while it is possible, it may be difficult. A mortgage is a process of financing a household so that you can obtain a loan that you might not otherwise be able to get. When you pursue this path, it means that your lender has the right to take your house from you if you fail to pay them back. Getting a mortgage with a 500 credit score is not only risky because you might end up with really high interest. If your score is this low, it likely means you have a habit of missing payments. The last thing you want is to be out on the street. Therefore, while you could obtain a home loan with a 500 credit score with rates below 10%, it’s likely not worth the risk.
How to Improve a 500 Credit Score
If you are still reading at this point, then you are likely aware of the fact that it is going to make your life significantly easier to raise your credit score from a 500 to a 700 before attempting to get any type of financing. See the below tips to learn how to make this happen!
Dispute negative marks on your report
Disputing negative marks on your credit report is also known as challenging. To engage in this process, first, obtain a copy of your report from all the major credit bureaus. Then, scan them for any negative marks that either you know to be a false representation of what happened, or you think would be unverifiable. Then, send a letter to the bureaus containing the following information:
- Your contact information;
- The marks you believe to be incorrect or unverifiable; and
- Evidence backing up your claim of falseness if you are saying something is wrong.
Then, expect to wait about one month before hearing back about whether your claim was successful. Remember that this does not work for late or missed payments that were actually your fault and that the bureaus have proof of. It only works if one of the entities made a mistake, or they are not able to find proof that a negative mark is real.
Change your behavior
Instead of asking, “can I buy a house with a 500 credit score?”, ask yourself what you can do to bump up your score so that you do not have to. Most of the time, it is not your fault that you have bad credit. The truth is that you probably hit a long rough patch and did not have generational wealth or enough support to protect you. However, if you do not learn from your mistakes and work to improve your spending habits, you are never going to improve your credit history and score.
Start by sitting down and creating a master budget for you and anyone who depends on you. Make sure that your expenses are always less than your income, and that you have money set aside for paying bills at the end of the month. It also helps to enroll in autopay, so that you never accidentally forget to pay the interest rate for a 500 credit score loan on time or miss a utilities bill. Also, make sure that you identify and pay all outstanding balances. You’d be amazed at what a great boost doing these simple things will give you!
Seek professional help
If you’re trying to get a 500 credit score auto loan, figure out the best way for you to finance a house, or even just trying to get back on the right economic track and boost your score, you can DIY. However, you may not have the time or the education. If this is the case for you, consider seeking help from a credit repair company, such as Lexington Law or The Credit People. Doing so will not only save you time but may also help you improve your situation more efficiently than you could alone. After all, professionals have the inside industry knowledge and may catch things that you wouldn’t. There are professionals for every budget and unique situation.
Whether you have a 500 credit score and want an FHA loan or other type of loan, or are stuck at 500 and have dreams of a 750 or higher, you don’t have to give up hope just get. There are plenty of ways that you can obtain the financing you need or increase your score to do so. Choose the DIY route or get professional help from credit repair services. The best time to start is right now!
Founder of Credit Repair Partner. I worked in the credit repair industry for about 10 years. I love, helping people become smarter about their credit and finances.