Is 540 a Good Credit Score?

By Timothy Moore

According to two widely used credit scoring models, a 540 credit score is below average. FICO®, which is used in 90% of borrowing decisions, classifies it as “poor,” while VantageScore considers it “subprime.” A credit score of 540 is also far lower than the average American’s FICO Score of 714.

While the credit score could make it more difficult to access most types of debt, all is not lost. With a solid debt strategy — and dedication to that strategy — it’s possible to get your 540 credit score into fair territory (and even higher, eventually) over the next several months.

What Does a 540 Credit Score Mean?

Your credit score is a three-digit number that ranges from 300 to 850. The higher the score, the more attractive you are to lenders.

A 540 credit score indicates to lenders that you are a high-risk borrower. Why? Your FICO Score is calculated based on certain credit score factors that help a lender understand your history with borrowing. These include:

•   Your payment history

•   How much available credit you use

•   The length of your credit history

•   The mix of credit types you have

•   How much new credit you’ve applied for recently

Forgetting to pay your credit card bill, applying for too many personal loans in a short period of time, closing an older account, or maxing out your credit cards could all have a negative impact on your credit score. This is worth noting because your credit score doesn’t just influence lending decisions. Potential landlords, employers, and insurers may also look at your credit score before approving your lease, employment, or insurance coverage application. A credit score of 540 may affect their final decision.

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How to Build Your Credit Score

If you have a 540 credit score, take heart. There are steps you can take to build your score. Actions such as paying down your debt (without taking on new debt), making on-time bill payments, getting and responsibly using a secured credit card, and becoming an authorized user on a loved one’s credit card can all help you build your credit score over time.

It’s also a good idea to check your credit report regularly and address any inaccuracies you spot.

What Can You Get With a 540 Credit Score?

Getting approved for certain types of loans can be challenging with a 540 credit score, but that doesn’t mean borrowing is impossible. Here’s a look at what you can get with a 540 credit score.

Can I Get a Credit Card With a 540 Credit Score?

You can get a credit card with a 540 credit score, though your options may be limited and could come with a high annual percentage rate (APR) and fees.

One avenue to consider is getting a secured credit card, which requires a cash deposit that is often equal to your spending limit with that card. You might also want to ask a loved one with a good credit score to add you as an authorized user on their credit card. If you make any purchases with the card, however, it’s the cardholder who must ultimately pay the bill. So it’s wise to set ground rules for when and how you can use the credit card and how you’ll pay back what you spend.

Can I Get an Auto Loan With a 540 Credit Score?

Though a 540 credit score is poor, you should be able to get an auto loan with it. In fact, people with even lower credit or no credit at all can typically find auto financing. Because there’s no set minimum credit score for buying a car, even borrowers with deep subprime credit (scores below 580) can usually qualify.

However, with a 540 credit score, you will likely be limited in how much you can borrow for a car purchase, meaning you may need to set your sights on a model that’s older or has fewer bells and whistles. Borrowers with poor credit also generally have to pay higher fees and interest rates when financing a car.

Can I Get a Mortgage With a 540 Credit Score?

Getting a mortgage with a 540 credit score is unlikely but not impossible. The credit score needed to buy a house varies by lender and the type of home loan. Here’s what’s generally expected for each major type of mortgage loan:

•   USDA loans: Borrowers generally need a 640 score. SoFi does not offer USDA loans at this time.

•   VA loans: Borrowers need a 620 credit score or greater.

•   FHA loans: Borrowers typically need a 580 score, but those who put 10% down can get by with a 500 credit score.

You may be able to find a lender offering FHA loans that is willing to accept a 540 credit score as long as you can put down at least 10%. Of course, mortgage lenders may have other criteria you’ll need to meet, such as employment and salary requirements and debt-to-income ratio limits.

Can I Get a Personal Loan With a 540 Credit Score?

Credit score requirements for personal loans vary by lender, but many set the threshold at 580 or higher. With a credit score of 540, your personal loan options will likely be limited.

That said, there are lenders who are willing to issue small loans or credit card consolidation loans to borrowers with below-average credit, though they may also charge high interest rates and fees. You can improve your chances of approval by offering collateral for your personal loan or by adding a cosigner.

You’ll also want to figure out what your monthly payments will be, based on the amount you’re planning to borrow and the interest rates you’re offered. A personal loan calculator can help you crunch the numbers.

The Takeaway

Qualifying for loans with a 540 credit score can be challenging, but there are lenders out there willing to work with borrowers with lower scores. You can set yourself up for success for future loans by focusing on building your credit score now. Making on-time payments, paying down outstanding debts, not applying for new debt, and disputing any errors on your credit report are all good ways to start building your score.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. See your rate in minutes.

SoFi's Personal Loan was named NerdWallet's 2026 Best Personal Loan for Excellent Credit.

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FAQ

What is a credit score?

A credit score is a three-digit number that represents your creditworthiness based on your borrowing and repayment history. Lenders use it to determine how likely you are to repay loans, which can influence whether you’re approved and what interest rate you’re offered.

Can I recover from a 540 credit score?

While a 540 credit score is considered below average, you can take steps to build it over time. Paying your bills on time, reducing your debt, and avoiding new borrowing can help you build your credit score. Using a secured credit responsibly or becoming an authorized user on someone else’s card may also help.

Can I get a mortgage with a 540 credit score?

It’s possible to get a mortgage with a 540 credit score, as requirements vary by lender, but your options may be limited. If you’re able to make a down payment of 10%, you’re likely to be eligible for an FHA loan.