Is 500 a Good Credit Score?
By Jackie Lam
A 500 credit score is considered “poor” and is far below the average American’s credit score of 715.
If you have a poor credit score, take note: It could negatively impact your odds of securing a loan or credit card. And the credit you are offered may come with higher interest rates and less-favorable terms.
Let’s take a closer look at how a 500 credit score can affect your borrowing power.
Key Points
• A credit score of 500 is poor, leading to higher interest rates and less favorable loan terms.
• Paying bills on time, becoming an authorized user, and using a secured credit card can improve credit.
• Secured credit cards require a deposit equal to the credit limit, helping build credit.
• Retail credit cards may have lower credit score requirements, aiding in credit establishment or rebuilding.
• Despite a poor score, options like secured and retail credit cards, and certain mortgages may still be available to borrowers.
What Does a 500 Credit Score Mean?
A credit score is a three-digit number that’s calculated using information found in your credit reports. Lenders use it to help determine your creditworthiness, or how likely you are to repay the money you borrow.
FICO® Scores, which are used in most lending decisions, are between 300 and 850. The credit score ranges are as follows:
• Poor: 300–579
• Fair: 580–669
• Good: 670–739
• Very Good: 740–799
• Excellent: 800–850
As you can see, a 500 credit score sits solidly in the “poor” category. There can be various reasons for a bad credit score, including late or missed bill payments, maxing out credit cards, and closing old accounts.
There are ways to check your credit score for free. You can ask your bank, Experian, credit card company or lender, or a credit counselor if you can view your score at no charge. You might also have access to this information if you have a money management app.
Recommended: FICO Score vs. Credit Score: What’s the Difference?
How to Build Your Credit Score
If you have a credit score of 500, you’ll likely want to work on improving your credit. Fortunately, there are several ways to do that.
A good first move is to build a positive payment history by paying your bills on time, every time. Other strategies include paying down revolving debt, becoming an authorized user on a loved one’s credit card, and applying for a secured credit card and using it responsibly.
What Else Can You Get with a 500 Credit Score?
A borrower with a credit score of 500 is usually viewed by lenders as risky. If that’s your score, you may find it challenging — but not impossible — to get approved for a loan or credit card. Let’s take a closer look at what’s required for common types of credit.
Can I Get a Credit Card with a 500 Credit Score?
The good news: There’s no minimum credit score needed to qualify for a credit score. The not-so-good news: With a 500 credit score, you may have a smaller selection of cards with heftier fees and higher interest rates.
One avenue to consider is getting a secured credit card. As the name implies, a secured card requires a security deposit, which serves as collateral until you close the account. The security deposit usually matches your credit limit. This means if your security deposit is $250, for example, so is your credit limit.
A retail credit card can also be an option if you have a 500 credit score. These cards often have lower credit score minimums and debt-to-income ratios, and if used responsibly, can help you build your credit score. However, note that retail cards can have higher interest rates and lower credit limits than a traditional credit card. And any rewards and perks are tied to the card’s retailer or brand.
Can I Get an Auto Loan with a 500 Credit Score?
You may be able to secure a car loan with a credit score of 500, but the odds aren’t in your favor. According to 2024 Experian data, only 1.9% of those with a deep subprime score (300 to 500 credit score) got an auto loan.
Typically, these loans carry higher-than-average interest rates and less-favorable terms. Experian reported that the average annual percentage rate (APR) for borrowers with a 500 credit score is 15.43%. By comparison, borrowers with a score of 781 or higher had an average APR of 5.08%.
You may find it easier to secure a car loan if you add a cosigner. You’ll both be on the hook for making payments on the money you borrow, but the cosigner doesn’t own your car.
Recommended: What Is the Responsibility of a Cosigner on a Loan?
Can I Get a Mortgage with a 500 Credit Score?
When it comes to a conventional mortgage, most lenders prefer that borrowers have a credit score of 620 or higher. That said, lending criteria varies by the type of mortgage you’re seeking:
• FHA loans: Securing a mortgage insured by the Federal Housing Administration (FHA) means you’ll need a down payment of at least 3.5% and a minimum credit score of 580. If you provide a 10% down payment or more, you can qualify for an FHA loan with a score of 500.
• VA loans: Mortgages offered by the U.S. Department of Veteran Affairs typically require a minimum credit score in the 620 to 640 range. That said, you might come across a lender that approves prospective homebuyers with a lower score.
• USDA loans: USDA loans typically require a minimum score of 640. Otherwise, you’ll need to provide a full credit review.
If you’re not in a hurry to buy a home, you might qualify for better rates if you paused and worked on raising your credit score.
Can I Get a Personal Loan with a 500 Credit Score?
Personal loans can be a good financing option because the funds can be used for nearly any purpose. They are usually unsecured, which means you don’t need to provide collateral to get approved.
While it’s possible to get a personal loan with a 500 credit score, you can expect it to come with higher interest rates and less flexible terms. (It’s worth noting that personal loans usually have lower interest rates than credit cards.) A more viable option may be a secured personal loan, which is often easier to qualify for, though it requires borrowers to put down collateral.
If you’re able to boost your credit score, you could qualify for a credit card consolidation loan, which can be useful if you want to knock down balances on high-interest credit cards. There’s no minimum score to get approved, but lenders generally want borrowers to have a score of 670 or higher.
Of course, to make the best choice for you, you’ll need to consider what types of rates, loan amounts, and terms you’ll likely qualify for. Shop around and see what makes the most financial sense. And use a personal loan calculator to figure out what your monthly payments will be based on the amount you want to borrow and the interest rates you’re offered.
The Takeaway
Wondering if a 500 credit score is good or bad? Unfortunately, it’s considered “poor” by credit scoring models, and you may find it challenging to get approved for credit cards and loans with good rates and terms.
But keep in mind that you can make moves to improve your credit profile. Paying bills on time, keeping balances low, and keeping older accounts open can all help you increase your score — and put you in a better position to get approved for a credit card or loan.
Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. Checking your rate takes just a minute.
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