How to Get a 500 Credit Score Loan?
A poor credit score makes you feel all the limits that direct lenders put on bad credit scores. At this point, you want to find a loan provider with no minimum credit score requirement, and we understand this need. You could get a 500 credit score loan in no time and solve your problems with money.
15M Finance invites you on a “credit” journey that will help you apply and qualify for a personal loan even with a less-than-stellar credit score. We will explain to you what a bad credit score is and what a regular FICO score contains.
Table of Contents
- Is 500 Considered a Bad Credit Score?
- What Does a FICO Credit Score Contain?
- What are 500 Credit Score Loans?
- Do Lenders Consider Giving Loans for Credit Score Under 500?
- What Interest Rates and Fees Will You Pay With a 500 Credit Score?
- How Can You Prequalify for a 500 Credit Score Personal Loan?
- How to Apply for Loans for 500 Credit Score?
- How Much Can I Borrow with a 500 Credit Score?
- Can I Pass a Credit Check When Getting Personal Loans for 500 Credit Score?
- Other Types of Bad Credit Loans
- How Long Does It Take to Rebuild Credit from 500?
- How Can You Improve Your 500 Credit Score?
- Bottom Line
- Frequently Asked Questions
Is 500 Considered a Bad Credit Score?
Yes! All the figures below 580 are considered poor credit ratings. Most lenders have minimum credit score requirements because they want to be sure you can manage your finances. A good credit score (from 670 to 739) shows financial institutions you are trustworthy and can afford the monthly payment.
What Does a FICO Credit Score Contain?
Before taking out a personal loan, you must know what your FICO score contains and how it’s calculated. Here are the components of a credit score:
Payment history (35%) includes the information about your monthly payments made on time or not; Amounts owed (30%) are all the outstanding personal loans you have at this moment; Length of credit history (15%) is the age of all your credit accounts; New credit (10%) shows lenders how often you take out a personal installment loan or another financial product; Credit mix (10%) is all the types of loans you have in your name (for example, two credit cards, one auto loan, and one mortgage).
What are 500 Credit Score Loans?
A 500 credit loan is also called a bad credit loan that you can borrow with the lowest FICO score. You can find it at online lenders that don’t have a minimum credit score requirement and offline financial institutions like banks or credit unions. A 500 credit score personal loan is designed to help you cover significant expenses. Usually, this credit score shows lenders that borrowers can’t manage their finances and need loans too often. However, you can get a personal loan even with a 500 credit score if you find a loan provider that works with poor credit.
Do Lenders Consider Giving Loans for Credit Score Under 500?
Of course! But there is one condition. You must find the so-called bad credit lenders. Typically, they don’t verify your credit report through major credit bureaus when you apply for a personal loan with a 500 credit score. They make only a soft credit pull that won’t affect your credit.
However, remember that loans for 500 bad credit scores will be more expensive than good credit loans or secured personal loans. As a result, the monthly payment may also increase.
What Interest Rates and Fees Will You Pay With a 500 Credit Score?
An unsecured personal loan may have a higher annual percentage rate than a loan for a good credit score, but it doesn’t exceed 36%. Some lenders may also charge an application or origination fee of $5.
How Can You Prequalify for a 500 Credit Score Personal Loan?
When you fill in the loan request, lenders will have some expectations. So here is what you need to consider when applying for bad credit personal loans:
- Be more than 18 years old and a US citizen or permanent resident;
- Have an active checking account and steady income (there are also payday loans on disability benefits);
- Use a valid phone number and email address.
Other lenders may also check your credit utilization ratio. If you have a very poor credit score, consider meeting 100% of these basic requirements.
How to Apply for Loans for 500 Credit Score?
Low credit scores aren’t a problem for getting a suitable personal loan. Before you borrow money from lenders that work with less-than-stellar credit scores, consider the following steps:
Verify all the credit requirements and other financial criteria. Search for another if a 500 credit score isn’t enough for one lender. Check the interest rates and loan payments for low credit ratings when you find them. If they are alright for you, complete the loan application form attentively and submit it. Wait for the loan approval.
How Much Can I Borrow with a 500 Credit Score?
A 500 credit score may put some limits on the loan amounts. However, you can get up to $15,000 with this credit rating. If you’re lucky enough, you’ll find a loan servicer that offers up to $35,000. It all depends on your state and its lending laws.
Can I Pass a Credit Check When Getting Personal Loans for 500 Credit Score?
As mentioned before, a credit score of 500 isn’t exactly sparkling. It falls into the “poor” range, meaning lenders might hesitate to hand out personal loans to someone with that score. A lower credit score generally means a higher risk for lenders, who want to ensure they’ll get their money back.
While securing a personal loan with a credit score of 500 might be challenging, it’s not entirely impossible. There are lenders out there who specialize in working with consumers in less-than-perfect credit situations. They understand that credit scores can take a hit and interest rates may increase.
Lenders might require you to provide additional documentation, charge higher interest rates, or have stricter terms and conditions. So, if you find a lender willing to work with you, carefully read and understand all the details before signing on the dotted line.
Other Types of Bad Credit Loans
Besides a personal loan, you might need another loan product to cover a specific need, car payments, or some services. Check this list of available poor credit loans:
Payday Loans
You borrow a payday loan to cover short-term financial needs, like utilities, minor car repairs, or groceries. This cash advance loan is repaid with a lump sum on your next paycheck, and you can get up to $1,000 with a 30-day repayment term. If you want to prequalify for cheaper offers, get at least a fair credit score.
Auto Title Loans
A car title loan is a pledge loan that can help you access cash even with a low credit score. This secured cash loan requires you to use your vehicle as collateral. Unlike banks and credit unions, car dealers that provide such services may help you adjust monthly payments. The interest rates of a car loan don’t exceed 19.5%.
Pawnshop Loans
With a low credit score, you could try a pawn shop loan; it’s a secured loan that you borrow from a pawn shop lender. They don’t check your credit score. You just bring a valuable object (a ring, a home appliance, or a garden tool), and the lender gives you an amount by taking the object as collateral. You may redeem the object when you need it back.
FHA Loans
The FHA acronym stands for Federal Housing Administration. FHA loans are home mortgages insured by the government. Such a loan may be issued by a bank, credit union, or other mortgage lenders only if approved by this agency.
An FHA loan requires a lower minimum down payment than many traditional loans, and potential borrowers may have 500 credit scores. But these loans have two disadvantages, which are limited choices on loan amounts and mortgage insurance.
How Long Does It Take to Rebuild Credit from 500?
To go from a credit score of around 500 to a fair FICO score that ranges between 580 and 669 will take you about 12 to 18 months of prudent use of the credit limit. Once you’ve improved your credit between 670 and 739, it won’t continue rising steadily. You must monitor it every several months to see the progress while making on-time payments on your outstanding debt.
How Can You Improve Your 500 Credit Score?
If you’re looking to boost your 500 credit score, no worries! We’ve got some tips that can help you turn things around and improve that score in several months:
Pay your utility bills in a timely manner.
One of the most crucial things you can do is pay all your bills by their due dates. Late payments may damage your FICO credit score. Try setting reminders or automating payments to avoid any slip-ups.
Reduce the debt on your credit card balances.
High credit card balances can harm your score, primarily if you use a significant percentage of your available credit. Try to pay down your balances and keep them as low as possible. It shows lenders that you’re responsible for your credit.
Don’t close old credit accounts.
It might be tempting to close credit card accounts you’re not using anymore, but think twice before doing that. Keeping those old accounts open can be beneficial for your credit history.
Monitor your credit reports.
Mistakes happen, and sometimes they end up on your credit reports. Regularly review your reports from the three major credit reporting bureaus (Equifax, Experian, and TransUnion) to ensure there are no errors or inaccuracies. If you spot any, dispute them and get them corrected.
Avoid new credit applications.
While working on improving your credit score, it’s generally a good idea to hold off on applying for another $1,200 loan. Multiple credit applications within a short period can make you appear risky to lenders, and each application can result in a small decrease in your score.
Bottom Line
You must show lenders a good payment history if you want an affordable loan. But what about credit rating? Yes, it’s vital too! By lowering your debt to income ratio and the balance of your credit account, your credit score will improve if you make on-time payments for all your debts and bills.
Frequently Asked Questions
Are personal loans for a 500 credit score worth it?
Yes, if you have to cover more substantial financial needs and don’t have any savings. Also, it’s a great idea if you can’t qualify for a traditional loan or secured credit card.
Can you get a loan with a 500 credit score?
Sure thing! You just need to find a lender that won’t check your credit through major credit reporting bureaus. Remember, these loan providers will charge higher interest rates.
Where to get a loan with a 500 credit score?
You can google online payday loans for bad credit from direct lenders and see which are available in your area. Or you can apply through 15M Finance, and we will connect you with our extensive network of direct lenders ready to work with your low credit.
