A 575 credit score sits at the boundary between poor and fair credit. This score indicates to lenders that you’re a higher risk compared to borrowers with good FICO scores – anything above 670 – but they still might be willing to take a chance on you.
The personal loans and cards you’ll get with a 575 score will come with higher interest rates and less favorable terms. The best thing you can do is improve your score to qualify for better – cheaper and more rewarding – financial products
In this article, we’ll delve into what a 575 credit score truly means, what products you can access, and how to raise your rating.
Popular credit cards for a 575 credit score
Popular cards for this score range are secured cards. A secured credit card is easier to be approved for since it requires a cash deposit. The deposit is fully refundable and sets the limit. A secured card will often come with a lower APR (Annual Percentage Rate) and fewer fees than an unsecured credit card.
Unsecured credit cards for a 575 credit score often have sky high interest rates, low limits, and extra fees. Their attraction lies in the fact that you don’t have to put down a deposit.
Take a look at our favorite unsecured cards and see if there’s one for you.
Whichever card you choose, be sure to read the terms and conditions carefully. Pay close attention to fees, APRs, and make sure the issuer reports to all three bureaus. Reporting is the only way the card will help you improve your score.
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Can you get approved with a 575 credit score?
A 575 score may be poor, but you can get approved for various financial products including unsecured cards, personal loans, certain auto loans, and even some types of mortgages. Different lenders have different criteria for approval and risk assessment. Many lenders specifically cater to subprime borrowers with low minimum score requirements. The bad news is that your options will be limited and will likely come with higher interest rates, extra fees, and stricter terms to lessen the lender’s risk.
If you do secure an auto loan it will likely require a larger down payment. Home loans will be harder to come by. One possible mortgage option is an FHA loan. The problem is these can be very expensive. It may be better to try to secure a mortgage through the U.S. Department of Agriculture or the Department of Veterans Affairs. Each insure loans of their own to help eligible Americans get closer to homeownership.
The majority of lenders look at other factors beyond your rating to assess your full financial life. Demonstrating a higher income, stable employment, low debt-to-income ratio (below 35%), and a willingness to provide collateral can improve approval chances. While a poor score does limit what you can qualify for, it does not entirely close the door on all financial products.
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Personal loans with a 575 credit score
Securing a personal loan with a 575 score can be challenging, but it’s not impossible. Scores in this range are often classified as risky. Not all lenders will entertain an applicant with these ratings, and the ones that do tend to provide loans with very high interest rates and less favorable terms.
Any time you’re in the market for a loan, it pays to shop around and compare rates and terms. Try to prequalify before you apply. Online lending platforms let you see offers from multiple lenders so you can choose the best option for you – no hard inquiries involved. Prequalifying does not guarantee approval, but it does let you compare interest rates, fees, loan amounts, and repayment terms to find the best one for you.
Always read the fine print and make sure you can afford the loan before you agree to it. If you wait a few months and raise your rating, you may be able to secure a larger loan amount along with more favorable terms.
What are the best personal loan options for someone with a 575 credit score?
When you’re seeking a personal loan with a poor rating, finding the right lender and loan type is key. Here are some of the best options to consider:
Online lenders: Many online lending platforms specialize in loans for consumers with low scores. These lenders often look at more than your three-digit rating to evaluate loan eligibility, potentially improving approval chances.
Credit unions: As member-focused institutions, credit unions tend to offer financial products with lower interest rates, reduced fees, and larger loan amounts. Most require you to be a member before you apply.
Cash advances: Many cash advance apps do not consider your rating and instead base their advances on your earnings. You will likely be able to access a small amount of cash instantly with no interest and few fees.
Secured loans: Opting for a secured personal loan, which requires collateral, can increase the likelihood of approval with more favorable rates and terms.
When exploring these options, always make sure you can afford the loan and will be able to pay it back as agreed. Paying a loan back as agreed can help raise your rating so you can access better products in the future.
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Percentage of generation with 300–639 credit scores
| Generation | Percentage |
|---|---|
| Generation Z (18-23) | 37.7% |
| Millennial (24-39) | 41.2% |
| Generation X (40-55) | 40.3% |
| Baby Boomers (56-74) | 25.1% |
| Silent Generation (75+) | 17.8% |
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What does it mean to have a 575 credit score?
575 is not a good credit score. FICO scores from 300 to 579 are deemed poor. Any score below 670 is considered bad and will make it harder to get loans or cards without a security deposit or putting up collateral. If your FICO score falls in this range you likely have a history of late or missed payments, a high debt level, or even defaults.
For lenders, ratings in this range signal a higher risk, making them more cautious about what products they’ll approve you for. You may find it challenging to qualify for unsecured cards, low-interest loans, car loans, or favorable mortgage rates. Instead, you’ll be subject to higher interest rates and additional fees – think an annual fee for cards or an origination fee on loans. The extra costs reflect the increased risk the lender is taking working with you.
The good news is, it’s not all doom and gloom. You are right at the cusp of the fair range – one step below a good score. Boosting your score into the good category can make a big difference in the cost of loan or card. Start making timely payments and reducing your debt levels and you can raise your rating. It’s a gradual process but one that it will worth it.
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What makes an impact on your credit scores
Your FICO score is calculated based on your financial habits. A higher rating signals that you are responsible and will repay what you owe as agreed. A lower rates designates you as unreliable. The FICO credit scoring model – developed by the Fair Isaac Corporation – takes the following factors into consideration:
- Payment history – 35%
- Amount used – 30%
- Length of credit history – 15%
- Mix of account types – 10%
- New applications – 10%
Your payment history has enormous weight on your score. Negative items, such as late payments, defaults, or accounts sent to collections, can significantly hurt your score. Late or missed payments typically stay on your credit report for up to seven years – Chapter 7 bankruptcy will remain for ten years. Over time their impact will lessen.
Factors that do not affect scores include:
- Income
- Bank balances
- Employment status
- Checking your own report
- Age, gender, and marital status
Understanding what factors influence your FICO score lets you know how to improve your financial health.
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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 |
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How to get beyond a Poor credit score
As a 575 credit score is bad the most strategic thing you can do is improve it. The average credit score is 716 according to FICO. That’s a long way off, but you’re not that far from a fair score. Here’s how you can get started.
Check your credit reports to understand your scores
Begin by obtaining your reports from the three major credit bureaus: Equifax, Experian, and TransUnion. You’re entitled to a free report from each bureau once every 12 months through AnnualCreditReport.com.
Review your reports in detail to understand what factors are affecting your score negatively. Look for any inaccuracies or errors, such as incorrect late payments or accounts that aren’t yours. These negative marks can lower your score and be a sign of fraud. Dispute any errors you find. Getting negative items off your reports can give an immediate boost to your rating.
Build better credit habits
Now that you know why you’re in the poor range, it’s time to fix it. It’s not that hard but does require you to be consistently responsible with your finances. The general principles to focus on are:
- Make payments on time: One late payment can have a significant negative impact on your rating. Set up reminders or automatic payments to ensure you never miss a due date.
- Lower utilization: Try to keep your utilization below 30% of your limit. This may involve paying down balances and not maxing out cards.
- Avoid opening new accounts too frequently: Each new application can result in a hard inquiry, which may temporarily lower your rating. Only apply for new cards or loans when absolutely necessary.
- Diversify your credit: Having a mix of accounts, cards and installment loans, can positively affect your rating over time.
Moving out of the poor range requires patience and consistent effort to establish a positive payment history. Remember you’re just a few points shy of 580 and a fair score.
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Bottom line
A score of 575 is bad but it could be worse; at least you’re almost out of the poor range. Improve your rating by a few points and you’ll be able to qualify for better financial products. Continue to work on your score, and you’ll be able to secure cards with rewards and loans for larger amounts.
If you can’t wait, there are lenders who offer products for borrowers in your score range. You will likely have to pay higher APRs and additional fees but cards and loans are not out of 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.