A 530 credit score is considered poor and is often the result of a limited credit history or past financial mistakes. 530 falls significantly below the national average FICO score of 716 making it difficult to borrow.
Most lenders will not accept applicants with such low scores. If they do, they’ll charge much higher interest rates and extra fees like origination fees. The good news is anyone can rise above a poor rating.
Keep reading to learn how a FICO score of 530 compares, what personal loans you can get, and how you can improve it.
How does this score compare to others?
Is 530 a good credit score? No, it is not. A 530 FICO score falls into the very poor range. 16% of consumers have poor FICO scores of 300-579. Borrowers in this range have a 61% delinquency rate while borrowers with excellent scores (800-850) have a mere 1% delinquency rate.
Generally speaking, lenders prefer borrowers with scores above 600. Scores above 670 are classified as good while anything below 580 is deep subprime.
Read more about your credit score!
Number of open accounts by credit score range
| Score Range | Average Number of Open Accounts |
|---|---|
| 750-850 | 3 |
| 700-749 | 4 |
| 640-699 | 4 |
| 300-639 | 4 |
Borrowing with poor credit scores
Borrowers with less-than-ideal scores can still get approved for financing but with less favorable terms. Card applicants may be required to pay extra fees or put down a security deposit for a secured credit card.
Loan applicants will find it hard to qualify for an unsecured loan. If they do qualify it will be for a small loan amount and the loan terms may be harsh. It is possible to get an auto loan with a rating in the 500 range but the vast majority of mortgage lenders prefer applicants with a minimum score of 620.
Personal loans with a 530 credit score
Securing personal loans or auto loans with a low score is tough but not entirely impossible. Subprime lenders specialize in working with individuals in this score range. These lenders have lower minimum score requirements and more flexible criteria.
A 530 credit score loan typically comes with higher interest rates, additional fees like origination fees, and stricter loan terms. The extra costs act as insurance in case the borrower defaults.
Anytime you’re shopping for a loan it’s important to compare multiple lenders and consider the total cost. Look at the loan amount, interest rate, fees, and make sure you can afford the monthly payments.
Most mortgage lenders will not approve an applicant with a score this low. However, there are still mortgage lenders who will accept applicants with a 530 score. For instance, the U.S. Department of Veterans Affairs does not have minimum score requirements, so you may receive home financing through a VA loan.
What are the best personal loan options for someone with a 530 credit score?
The best options for a 530 FICO score personal loan are secured loans, cash advances, personal loans from credit unions, or adding a cosigner.
Get a secured loan
The best personal loans for a 530 score are secured loans. A secured loan requires an asset like a vehicle, property, or savings account to qualify. The asset reduces the risk for the lender as they can sell it to cover any overdue payments. As a result, it’s easier to be approved for secured loans with good loan terms and larger loan amounts.
Try a cash advance app
Cash advance apps provide a small loan amounts with no hard pull, no interest, and few to no fees. Most of the apps advance you a portion of your paycheck, which is then deducted on payday. They can be a lot cheaper than traditional personal loans but beware of tipping and do not rely on them.
Add a cosigner
If you don’t have an asset and want a larger amount than a cash advance, try to add a cosigner. A cosigner with a good score and a stable income adds a layer of security for lenders making them more likely to approve personal loans with favorable loan terms. You may even be able to secure a 530 credit score auto loan with a cosigner.
Visit a credit union
Credit unions offer traditional unsecured loans with more flexible lending criteria than big banks. You typically have to be a member to qualify but can get personal loans with lower interest rates, fewer fees, and possibly a larger loan amount.
What score is required to get a card?
Get competing personal loan offers in minutes
Online lending platforms make finding personal loans both quick and convenient. You can submit one application and receive multiple loan offers from various lenders in mere minutes, all without damaging your rating.
These platforms work by conducting a soft pull to understand your financial standing. Based on this information, they match you with multiple lenders in their network who offer loans to consumers in your FICO score range. This process allows you to compare loan offers: interest rate, loan term, fee, loan amount, and other factors side by side to find the best loan for you.
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What are the advantages of a 530 credit score personal loan?
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There are a few advantages to personal loans for a poor FICO score. Firstly, they provide immediate financial relief to cover unexpected expenses. Secondly, they can help raise your rating. If you’ve only had a card, a loan will increase your credit mix. Next, pay all your bills on time to show you’re responsible. You’ll only see a boost if you make timely payments and the lender reports to all three major credit bureaus.
What happens to your score if you don’t pay your loan?
What do lenders consider when evaluating a potential borrower with a 530 credit score?
Lenders take into account a variety of factors beyond your rating. Looking past your three-digit number gives lenders a fuller picture of your financial life and helps them asses how likely you are to repay the loan.
Other factors they consider are:
- Income level
- Employment history and stability
- Debt-to-income ratio (DTI)
- Type and amount of debt
- Payment history
Loans that do not consider your rating at all typically come with higher interest rates to protect the lender from potential defaults.
You can still qualify for a card with a lower score!
How to get beyond a Very Poor credit score
Moving out of the very poor range is completely doable. As more and more consumers pay attention to their ratings, the average FICO score is increasing.
Check your credit report
Start by obtaining your reports from the three major bureaus: Equifax, Experian, and TransUnion. Review your reports carefully for inaccuracies and dispute any errors that could be negatively affecting your rating.
Next, pinpoint past mistakes. How is your payment history? Any late or missed payments? Accounts in collections? Or perhaps an old bankruptcy? Once you know what you’ve done wrong in the past you’ll know how to correct it in the future.
Get the tools you need to boost your score from our Credit Score Builder articles!
How to improve your 530 Credit Score
There are multiple ways to move your FICO score out of the very poor range. We’ll go over the big ones and offer a few tips to get you started.
Firstly, scores are calculated by looking at the following factors:
- Payment history
- Amount used
- Length of time you’ve had accounts
- Mix of account types
- New inquiries
Don’t let your credit card balances balloon
Aim to pay off your balances in full each month. Ideally, your utilization rate will be below 30% of your limit.
Pay down debt
Debt payment can raise your rating.
Prioritize paying off higher interest debts first. You’ll lower your credit utilization rate, save on interest costs, and free up more money to pay down other debts.
Pay your bills on time
Your payment history is important so making timely payments is essential. Late payments can really hurt your score. Set up reminders or automatic payments to ensure you never miss a due date. Timely payments are the best way to improve your rating.
Think carefully before closing old credit card accounts
Closing old credit accounts seems like a good idea but doing so can actually hurt your rating. Closing accounts increases your usage and shortens the amount of time you’ve had accounts. Unless the card has a lot of fees, keep it open and active.
Don’t apply for too many new credit cards at the same time
New applications trigger hard inquiries, which can temporarily lower your score. One application won’t have much of an impact, but applying for multiple cards in a short period can do damage and signals to lenders that you’re a high-risk borrower.
Get help building credit
Secured cards, credit-builder loans, and even unsecured cards can all help raise your rating. Another option is to report rent, utility, and subscription payments.
Is a poor score holding you back?
Bottom line
A 530 score is far from good in the very poor range. It makes it challenging to get a loan or card without a security deposit, but not impossible. If your FICO score falls into the poor range, you can find financing options, they just may cost you.
The better solution is to raise your rating so you can qualify for cheaper financial products in the future. To do this establish a positive payment history by making timely payments and keep your usage low. Boosting your rating won’t happen overnight, but a higher score is within your 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.