10 Best Bad Credit Options for 500 Credit Score Personal Loan
Writer and editor - Lauren Ward | Updated on 2019-11-06
A credit score of 500 or lower is less than stellar. According to most sources, anything under 580 is “very poor.” With a score this low, it can be difficult to obtain loans or make significant purchases, like a car. But not impossible.
To find the best loan, your best bet is to shop around. It does not hurt to have a surplus of quotes to compare and contrast when you need financing. When you reach out to multiple lenders, you will inevitably improve your odds of success. Just be wary of hard inquires from direct lenders that could potentially lower your credit score.
You’ll find many great choices in our recommended loans list.
A poor credit score isn’t the end of the world. There are several ways to improve your financial health, though no option is an immediate fix. Here are two things you should focus on to start:
Pay Your Bills on Time
Creditors and lenders want to feel confident you will pay back a 500-credit-score personal loan on time. One way they evaluate that likelihood is by looking at your bill payments. Often, paying bills on time is a reliable indicator of your future reliability. One trick is to check which companies report to credit bureaus and prioritize those bills, as not all will report a missed payment.
Pay Off Existing Credit Card Debts
If you have existing credit card debts, make a concerted effort to pay them off as quickly as possible. This strategy will improve your future financial flexibility as well as your credit utilization ratio. More importantly, it will show creditors and lenders that you can manage your credit well.
Bad Credit Personal Loans with Guaranteed Approval
There is no way to guarantee the approval of a 500-credit-score personal loan. There are several steps that you can take to increase your likelihood of approval, though. Start by employing the tips mentioned above, including paying bills on time, paying off debts, and improving your credit utilization ratio.
In addition to shopping around, you can adjust your loan requirements. For instance, when you opt for a shorter personal-loan term, lenders will see less risk and, therefore, are more likely to approve you.
The same logic follows when you shoot for loans of less than $10,000. If you need to borrow more than this, your best option is to split your funding needs into more than one loan from more than one lender.
There are different types of loans: secured and unsecured. Personal loans typically do not require collateral, which means they often have higher interest rates. If you have collateral, such as a home or a car, you can leverage that value to secure the loan and improve the terms. Secured loans have a higher chance of approval for bad-credit borrowers, in general.
Lauren Ward Writer and editor
Specializing in original, well-researched web content, including blog posts, news articles and web copy. Areas of expertise include personal finance and lending. 10 years of experience as freelance writer and working at Federal Reserve Bank of Richmond. Read more about us »
