Most lenders think that a credit score of 580 is bad. This means you won’t have many choices when it comes to getting credit cards and loans. But there are still some things you can do to get credit and even raise your score over time.
Access High Interest Rate Credit
With a 580 credit score, you can qualify for credit cards and personal loans designed for bad credit borrowers. However, you’ll pay much higher interest rates compared to someone with good or excellent credit.
For credit cards, you may need to start with a secured card, which requires a refundable security deposit. This helps mitigate the risk for issuers. Once you use the card responsibly for several months, you can potentially graduate to an unsecured card and get your deposit back. Cards like the Discover it® Secured Credit Card and the Capital One Quicksilver Secured Cash Rewards Credit Card are good options.
Personal loans are also accessible with a 580 credit score from lenders like OneMain Financial and Avant. You’ll likely pay an APR above 25%, and you may be limited to smaller loan amounts like $2,000 – $5,000. Shop around for the best rates.
Consider A Co-Signer
Asking a friend or family member with good credit to co-sign a loan or credit card application can help you qualify for lower interest rates. Just make sure you make all your payments on time. Late payments will negatively impact both of your credit scores.
Apply For A Credit-Builder Loan
Specialty loans designed to help build your credit can be a smart move. With a credit-builder loan, the lender places the loan amount into a savings account and releases the money to you once the loan is repaid. On-time payments are reported to the credit bureaus, enabling you to build credit history.
Use Secured Cards And Loans
Credit cards and loans that are secured need a cash deposit or collateral to lower the lender’s risk. They make approval easier for people with lower scores. If you use them wisely and pay your bills on time every month, you can start building your credit.
Pay Down Balances And Maintain Low Utilization
Keep credit card balances low relative to your total credit limits and pay off balances in full each month if possible. High credit utilization (over 30%) will negatively impact your credit scores. Paying down balances can help improve this important factor.
Avoid Applying For New Credit
Each application for credit results in a hard inquiry on your credit report, which can ding your score a few points. Try not to apply for multiple credit accounts in a short period of time. Wait at least 6 months between applications for the best results.
Review Your Credit Reports For Errors
Misreported information like late payments or accounts that aren’t yours can sabotage your scores. Review your credit reports closely and dispute any inaccuracies with the bureaus. This can potentially give your credit score a boost.
Sign Up For Credit Monitoring
Credit monitoring services let you know right away when your credit changes in a way that is important to you, so you can fix the problem right away. This helps safeguard your credit standing. Many free options are available.
Build An Emergency Fund
Having cash savings to cover unexpected expenses means you won’t have to rely on credit cards or loans with high interest rates. Making contributions each month to an emergency fund should be a priority. Even small amounts add up over time.
You may not have many choices if your credit score is 580, but you can start to slowly improve it by doing good things like paying your bills on time, keeping your credit card balances low, disputing mistakes on your credit report, and using secured loans and credit cards responsibly. Stay patient and persistent.
Can I pre-qualify without hurting my credit score?
It is possible to pre-qualify for a personal loan without hurting your credit score. Do some research before you apply. Read reviews and learn what to consider before agreeing to take on a loan. When youre ready to apply, follow these steps to ensure you dont ding your score too much.
- Shop around for the best rate. If you know your credit score before you apply for a loan, you can avoid hard inquiries and get an idea of what loans you might be able to get. Many lenders will allow you to submit a prequalification form. Or, you could use a lending platform like Upstart or LendingTree to see a bunch of offers at once.
- Decide on the best offer. Pick the loan that fits your budget best in terms of fees and interest rate. Make sure you know how much the loan will cost you over the whole term and decide if it’s worth it.
- Submit a formal application. Along with your social security number, you should have proof of identity like bank statements and paystubs on hand.
- Wait for final approval. There are 10 days in which this could happen. It could take up to 10 days. To get approval faster, apply during normal business hours and send in the necessary paperwork right away.
- Get your funds. Once your loan is approved, you’ll be asked to enter information about your bank account so that the money can be sent to you. If you have a consolidation loan, you may be able to have the money sent directly to your creditors. You may also be able to ask your lender for a paper check.
Can I get a personal loan with a 500 credit score?
Even if your credit score is 500, you can still get a personal loan. But you probably won’t get good terms like a low interest rate.
Credit Scores Between 580 and 600: Explained
FAQ
What can I do with 580 credit?
If your credit score is 580, you might only be able to get cards made for people with fair credit. If you can’t qualify for one of those cards, then you may want to explore applying for a subprime credit card or a secured credit card.
How much can I borrow with a 580 credit score?
Personal Loans for Credit Scores 580 and LowerLoan FeaturesUpstartAvant Personal LoansCredit score needed300 (also accepts applicants with insufficient credit history)580Loan amounts$1,000 to $50,000$2,000 to $35,000Loan terms36 and 60 months24 to 60 monthsEarly payoff penaltyNoneNone.
How long does it take to go from 580 to 700 credit score?
The time it takes to raise your credit score from 500 to 700 can vary widely depending on your individual financial situation. On average, it may take anywhere from 12 to 24 months of responsible credit management, including timely payments and reducing debt, to see a significant improvement in your credit score.
How to fix a 580 credit score?
Improving Your Credit ScoreKeep track of your progress. Always pay bills on time. Keep credit balances low. Pay your credit cards more than once a month. Consider requesting an increase to your credit limit. Keep unused accounts open. Be careful about opening new accounts. Diversify your debt.