A credit score of 520 is considered poor, according to the prominent credit scoring algorithms FICO and VantageScore. With a credit score this low, you’ll likely struggle to obtain any loans or credit cards without paying exorbitant interest rates.
The good news is that you still have options. Mortgage lenders, for example, may be more willing to give you a loan than you might think.
Overview of a 520 Credit Score
A credit score is a number that helps lenders assess your risk. Lenders use a credit score to determine how much you’ll pay in interest and fees when you apply for loans, like personal loans or mortgages.
A 520 credit score is considered to be poor and could make it hard to get approved for unsecured debt, such as credit cards or auto loans. This is because borrowers with poor credit have a higher chance of defaulting on their loans.
If you want to improve your credit score, consider paying your bills on time and minimizing your debt utilization. Utilization rates contribute as much as 30% to your credit score, so it’s important to keep them low on a card-by-card basis and overall.
Credit Card Options with a 520 Credit Score
Credit cards are one of the best ways to make purchases, earn rewards and protect yourself from interest. However, if you have a credit score below 520, you’ll need to be extra careful when shopping for a card.
Fortunately, there are several credit cards available for people with bad credit scores. Ideally, you’ll want to choose a secured credit card because these offer high approval odds and low fees.
You’ll also want to avoid credit cards with large balance transfer and cash advance fees. These charges can eat into your small credit limit and be very costly.
Auto Loans with a 520 Credit Score
If you have a 520 credit score, there are plenty of auto loan options available to you. There are banks, credit unions, online lenders, loan marketplaces and car dealerships that can help you find a great rate.
However, you should note that auto lenders typically charge a higher interest rate to borrowers with poor credit than they do to those with excellent credit. This can add up to a substantial amount of money in interest over the life of the loan.
That’s why it’s important to work on boosting your credit score before you apply for a new loan. Doing so can help you avoid a lot of headache and make it easier to get approved for a low-interest car loan with reasonable terms.
Personal Loan Options with a 520 Credit Score
If you have a credit score of 520, you may have some personal loan options. These loans can help you meet your financial goals and may even improve your credit score if you pay them on time.
Personal loans come in a variety of types, including unsecured and secured. Choosing the right type for your needs is essential.
You should also be sure to read the fine print for individual lenders to make sure you understand how much you’ll be paying in interest and fees. A lower interest rate can save you money in the long run, so it’s important to shop around for a good deal.
You can apply for a loan online or in person at your local bank or credit union. Once you have an approval, add the new loan payment to your monthly budget.
Mortgages with a 520 Credit Score
Many people with a 520 credit score have difficulty getting approved for mortgages. This is because lenders view these borrowers as high-risk, and they often have to pay higher fees and interest rates than borrowers with higher credit scores.
However, there are some mortgages that are available for those with a 520 credit score, including FHA and VA loans. While FHA and VA loans don’t have minimum credit score requirements, you should still aim for a score of 620 or better to qualify.
If you want to improve your credit score, it’s important to focus on the underlying factors that make up your score. This will help you to raise your score quickly. It will also help to avoid having any derogatory marks, such as late payments or accounts in collections, on your credit report. These will typically fall off your credit report within two years, but bankruptcy can remain on your credit record for up to 10 years.