A credit score of 512 is considered “poor” or “very poor” by most credit scoring companies. This is because it reflects past financial difficulties or a lack of credit history.
When you have a credit score of 512, it is difficult to get approved for loans or credit cards. However, there are still a few options to help you improve your credit score and access better loan terms.
Overview of a 512 Credit Score
Whether you’re buying your first home, refinancing your mortgage, or looking for an apartment, lenders are often going to take your credit score into account. This is because it’s one of the most important indicators of your fiscal responsibility, and can impact everything from getting a new loan to finding a job.
A 512 credit score is considered ‘poor’ or’very poor’ by most major credit scoring companies. This means that you’ll have a hard time getting approved for a mortgage, car loan, or an unsecured credit card if you’re in this range.
Depending on your other qualifications, such as income and employment, you may be able to get approved for certain types of loans. But you’ll typically pay higher fees and interest rates than borrowers with better credit scores.
Credit Card Options with a 512 Credit Score
If you have a 512 credit score, there are some credit card options available to you. But you’ll need to pay attention to the fees and terms of these cards, as well as how they compare with other unsecured credit cards.
When it comes to credit cards, look for ones that don’t charge high annual or monthly fees and have low interest rates. You should also avoid cash advance fees, as they can eat into your credit limit and lead to late payments.
If you have a 512 credit score, don’t apply for a new credit card until you’ve taken steps to boost your score. This will help you build a positive credit history, and can increase your chances of being approved for a higher-quality card in the future.
Auto Loans with a 512 Credit Score
Whether you are looking to finance a new or used car, your credit score can be an important factor in the auto loan process. Having a high credit score will improve your chances of getting approved and lower your interest rate, as long as you make all your payments on time.
As a rule, lenders aren’t very interested in borrowers with poor credit scores. They look at your other financial factors to make their decision.
But there are some options for those with a low credit score, including student loans and personal loans. You may also be able to get a better rate on an auto loan if you can demonstrate good credit habits, such as keeping your debt-to-income ratio low.
However, if you have a 512 credit score, it’s likely that you’ll face more challenges than someone with a higher credit score. You might be required to pay a larger down payment, and your interest rates could be higher than those of a borrower with a higher credit score.
Personal Loan Options with a 512 Credit Score
A 512 credit score may be a bit low to qualify for many types of personal loans. But it’s not completely impossible to get approved for one if you make an effort to improve your credit score and show lenders that you are a responsible borrower.
To improve your credit score, focus on making consistent payments toward your existing debt. This includes your credit cards, auto loan and mortgage.
You can also pay off your credit card balances in full and try to keep your credit utilization (the ratio of your total credit line versus your outstanding debt) below 30% on a monthly basis. This is a key factor in your FICO score, which can take a hit when your credit utilization increases.
The good news is that there are a number of personal lenders and lending marketplaces that specialize in helping people with bad credit, including Upstart, OneMain Financial, Avant and LendingPoint. Their loans have lower minimum credit score requirements than most, and they weigh your entire financial history when evaluating applications.
Mortgages with a 512 Credit Score
If you’re a first-time home buyer with a credit score of 512, you may have more options when it comes to mortgages. While conventional lenders will most likely decline your mortgage loan application, there are a few FHA mortgage programs for low credit scores.
In order to improve your 512 credit score, try to establish a solid credit mix that includes a blend of installment and revolving accounts. This type of mix is favored by the FICO scoring model and makes up 10% of your credit score.