Credit cards and auto loans offer the best approval odds for someone with a 500 credit score. For example, people with credit scores below 580 take out roughly 12% of car loans versus only 6% of mortgages, according to 2017 Equifax data.
Your score falls within the range of scores, from 300 to 579, considered Very Poor. A 500 FICO® Score is significantly below the average credit score. Many lenders choose not to do business with borrowers whose scores fall in the Very Poor range, on grounds they have unfavorable credit.
Many lenders will issue government-backed FHA loans and VA loans to borrowers with credit scores as low as 580. Some even start at 500 for FHA (though these lenders are harder to find). With a credit score above 600, your options open up even more. Conventional mortgages require only a 620 score to qualify.
The Federal Housing Administration (FHA) requires a credit score of at least 500 to buy a home with an FHA loan. A minimum of 580 is needed to make the minimum down payment of 3.5%. However, some lenders require a score of 620 to 640 to qualify.
In common credit scoring models, 300 is typically the lowest possible score. However, scores that low are extremely rare. There are two major credit scoring models: FICO and VantageScore.
It's possible to get a car loan with a credit score of 500, but it'll cost you. People with credit scores of 500 or lower received an average rate of 13.97% for new-car loans and 20.67% for used-car loans in the second quarter of 2020, according to the Experian State of the Automotive Finance Market report.
You will likely need a credit score of at least 580 for a $3,000 personal loan. Most lenders that offer personal loans of $3,000 or more require bad credit or better for approval, along with enough income to afford the monthly payments.
Average Recovery Time
For instance, going from a poor credit score of around 500 to a fair credit score (in the 580-669 range) takes around 12 to 18 months of responsible credit use. Once you've made it to the good credit zone (670-739), don't expect your credit to continue rising as steadily.
Your score falls within the range of scores, from 300 to 579, considered Very Poor. A 300 FICO® Score is significantly below the average credit score. Many lenders choose not to do business with borrowers whose scores fall in the Very Poor range, on grounds they have unfavorable credit.
It is 183 points away from being a “good” credit score, which many people use as a benchmark, and 123 points from being “fair.” A 517 credit score won't knock any lenders' socks off, but it shouldn't completely prevent you from being approved for a credit card or loan, either.
“A typical down payment is usually between 10% and 20% of the total price. On a $12,000 car loan, that would be between $1,200 and $2,400. When it comes to the down payment, the more you put down, the better off you will be in the long run because this reduces the amount you will pay for the car in the end.
Trying to qualify for an auto loan with a 505 credit score is extremely expensive, if not downright impossible. There's too much risk for a car lender without charging extremely high interest rates.
According to credit reporting agency Experian, more than 21% of auto loans in the fourth quarter of 2018 were extended to borrowers with subprime (501-600) or deep subprime (500 or below) credit scores. So, the answer is yes, you can buy a car with that credit score.
You can increase your score in as little as three months by doing things like paying down debt, disputing errors on your credit report, and avoiding your credit card, you'll increase your credit score before you know it.
A conventional loan requires a credit score of at least 620, but it's ideal to have a score of 740 or above, which could allow you to make a lower down payment, get a more attractive interest rate and save on private mortgage insurance.
FICO considers a credit score to be poor if it falls below 580. According to FICO, a person with a FICO score in that range is viewed as a credit risk.