A 520 credit score is on the lower end of the spectrum. This score falls well below the average credit score. Financial institutions tend to view consumers with scores in the very poor range as high risk and are wary of lending to them.
Even with this handicap, it is possible to get approved for personal loans or cards. You won’t get the best offers. Favorable terms and lucrative rewards are reserved for consumers with good credit scores, but you will be able to access financial products.
Let’s delve into what you can expect with a 520 score and how you raise it to secure the loan or card you actually want.
What credit card can I get with a 520 credit score?
Credit cards for a 520 credit score are few and far between but they do exist. There are two types of cards for this score range: subprime unsecured cards and secured cards. Both can help you boost your rating.
Secured cards are the more cost-effective option. They tend to have lower interest rates and fewer fees compared to subprime unsecured cards. True, you do have to put down a security deposit, but the cash deposit is 100% refundable – as long as you pay all your bills. If you don’t, the issue can take the money you owe from your deposit. Usually, limits are set security deposits. Put down $200 or $3,000, whatever you like.
Plenty of unsecured cards have low minimum credit score requirements making them easily accessible. These cards often come with much higher interest rates, low limits, an annual fee, and a monthly maintenance fee. The good news is there’s no deposit required in case you don’t have cash lying around for a secured card. Use them for small purchases, pay your bills on time, and your rating will rise.
Popular credit cards for a 520 credit score
Our favorite cards are easy to be approved for and some even give you cash back rewards. Take a look at the following offers and see if one looks good to you.
What are the best personal loan options for someone with a 520 credit score?
Many lenders choose not to do business with borrowers whose scores fall in the poor range. Mortgage lenders are especially wary. It will be very hard to qualify for home loans but FHA loans and auto loans may be within reach.
The best options for a 520 credit score loan are secured loans which require collateral like a house, car, or savings account. Most people don’t have these assets to put up or would rather not risk it. In that case, look into joint loans, cash advances, or conventional loans from credit unions.
Joint loans means you have a cosigner or co-borrower on your application. Adding a co-borrower or cosigner with a good rating will make it easier to secure a loan with a 520 credit score. This is because the lender can always get the money from your co-applicant. Make sure that you pay on time as any missed payments will affect their score as well as yours.
Cash advance apps send you instant cash – usually up to $500 – with no hard pull, no interest, and little to no fees. These are normally short-term loans that are due with your next paycheck. The difference from payday loans is that they have fewer fees and and no interest charges. Some do ask for a tip, but it’s up to you how much to pay.
Credit unions often provide personal loans to members with unfavorable ratings. They have more lenient lending criteria than big banks and more favorable rates and terms than payday lenders. You may even be able to get a larger loan amount. Visit your local credit union to see if you qualify.
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Get competing personal loan offers in minutes
Whenever you are in the market for a personal loan with a 520 credit score it is a very good idea to prequalify before you apply. Prequalifying will let you see your chances of being approved and compare loan offers without a hard inquiry.
Online lending platforms make this easy to do. Submit one application and you’ll be matched with lenders willing to work with you. Compare the interest rates, loan terms, loan amounts, fees, and repayment options. Then choose the lender with the most affordable loan.
What does it mean to have a 520 credit score?
Is 520 a good credit score? Not at all. If your FICO score falls between 300 and 579 it is considered poor. Any FICO score below 580 is classified as deep subprime. A poor FICO score makes it harder to borrow. Credit card applicants in the very poor range may have to pay extra fees or to put down deposits. Utility companies may require you to place security deposits on equipment or service contracts.
Lenders are less willing to approve personal loans for applicants with poor FICO scores because they are more likely to become seriously delinquent – miss a debt payment by 90 days or more. A rating of 520 indicates a poor payment history full of missed or late payments, high debt levels, accounts in collection, or even bankruptcy.
520 is a bad credit score to have. The best thing you can do with this FICO score is raise it. A higher credit score means cheaper borrowing options. It doesn’t get better than that.
Learn more about your score
There are multiple scoring models. The one most often used by lenders is FICO. FICO scores range from 300-850 with the higher being better. A FICO score above 670 is considered good, but once you reach 740 you’ll start being offered the best rates and terms.
FICO scores are broken down into the following ranges:
- 800-850 Exceptional
- 740-799 Very Good
- 670-739 Good
- 580-669 Fair
- 300-579 Poor
Your three-digit rating tells lenders how likely they are to get their money back. A higher FICO score signals a lower-risk investment, while a low one tells lenders that you are more likely to default. In turn, they will add on fees and high interest rates so that they don’t lose money.
Can you get approved with a 520 credit score?
You can be approved with a poor FICO score. What you can get with a 520 credit score though is limited. Most lenders will only approve you for a secured loan or a secured credit card. Mortgage lenders will likely refuse to work with you.
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Some online lenders specialize in personal loans for low scores. These lenders put less emphasis on your rating. They consider other factors including income, employment history, and your debt to income ratio. They will likely offer a small loan amount with short repayment terms, charge high interest rates, and tack additional fees on their personal loans.
Likewise, there are unsecured cards for low scores. As can be expected, these cards come with high interest rates, low limits, and additional fees like an annual fee and/or monthly maintenance fee.
Get a credit card with a 500 score.
What affects your credit score
Ratings are determined by your financial habits. In general, establish a positive payment history – pay your bills on time and keep your debt levels down – and you’ll have a good FICO score.
Financial missteps to avoid include:
- Late or missed payments
- Excessive debt levels
- High utilization rate
- Accounts in collections
- Delinquent account
- Bankruptcy
- Closing old accounts
- Hard inquiries
Your income, employment history, age, marital status, and demographic information have no effect on your score. It’s all about if you can be trusted to repay what you borrow.
Age of open accounts by credit score range
| Score range | Average age (years) |
|---|---|
| 750-850 | 7.5 |
| 700-749 | 4.0 |
| 640-699 | 3.6 |
| 300-639 | 2.4 |
How to improve your 520 credit score
Scores change constantly based on new information. It’s pretty easy to improve your rating once you know how it’s calculated.
FICO scores are determined by weighing the following factors:
- Payment history – 35%
- Credit utilization ratio – 30%
- Length of credit history – 15%
- Types of accounts – 10%
- New inquiries – 10%
Start making timely payments and keeping your utilization rate low and you’ll see your score shoot up. Here are some good points to live by if you want to boost your rating in a few months.
Check your credit reports to understand your scores
First things first, check your credit report. Get a free copy once a year from annualcreditreport.com for all three major bureaus – Experian, Equifax, and TransUnion. It’s important to know what your score is and why it’s low. Look for mistakes that are dragging your score down. Do you have a late payment, accounts in collections, lots of hard inquiries, or is your usage too high? Identify what you need to correct.
Review your credit reports for errors
Next, check your reports for any discrepancies or errors – sometimes a low rating isn’t your fault. If you find any errors dispute them with the bureau that issued the report. Getting a negative mark wiped from your report can have an immediate effect on your rating.
Catch up on past-due payments
We know it’s easier said than done, but you need to pay your debts. Debt payment will improve your utilization rate and cost you less in interest. The lower your total debt, the better.
If you find it too hard to do, reach out to your creditors to discuss options. Creditors want to be paid. They may be willing to reduce interest rates or waive fees if it means you can pay something rather than nothing.
Pay on time
Always pay all your bills on time. This is the most important factor in calculating your rating. If you can, pay them in full. Missing even one payment can do a lot of damage to your score.
Everyone makes mistakes. Luckily technology can help you avoid a late payment. Set up autopay or payment reminders so you never miss a due date.
Consistently making payments on time is the best thing you can do for your score.
Keep your balances low
Creditors want you to use your cards but they don’t want you to be reliant on them. Experts recommend using only 30% or less of your limit and pay your balance in full every month.
Making only the minimum payment is a trap. If you only make the minimum monthly payment you will see your usage rise – bad for your score – and you will be charged interest on the remaining balance. It can be tough, but pay your bills in full. Your wallet and rating will thank you.
Bottom line
A 520 credit score is not good but it’s not a hopeless situation. It will be hard to get a loan with decent terms or a card that doesn’t require a deposit, but you can still find a lender. The best solution is to wait and raise your rating.
The higher your rating, the better the offers you’ll receive and the more money you’ll save. You have a ways to go, but a good score is within reach.
This content is general in nature and is provided for informational purposes only. MoneyFor is not a financial advisor and does not offer financial planning services. This content may contain references to products and services offered through MoneyFor marketplace.