A credit score of 580 is considered poor by most lenders. This means you’ll have limited options when it comes to getting approved for loans and credit cards. However, there are still several things you can do to access credit and even improve 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
Secured credit cards and loans require a cash deposit or collateral that minimizes the lender’s risk. They make approval easier for people with lower scores. Using them responsibly and making monthly payments on time can start rebuilding 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 alert you whenever important changes occur with your credit so you can address issues 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.
While a 580 credit score limits your options, taking positive steps like making on-time payments, keeping credit card balances low, disputing errors on your credit reports, and using secured loans and credit cards responsibly can help start to gradually improve your credit standing. 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. Avoid hard inquiries by knowing your credit score before you submit a formal application so you know what you might qualify for. Many lenders will allow you to submit a prequalification form. Or consider using a lending platform (such as Upstart or LendingTree) to view multiple offers at once.
- Decide on the best offer. Choose the loan with the best monthly payment and interest rate for your budget. Be sure to look at how much the loan will cost you over the full length of the term and decide if the cost is worth it.
- Submit a formal application. Have your social security number on hand, as well as supporting documents such as bank statements and paystubs.
- Wait for final approval. This could take just a few minutes, an hour or up to 10 days. To facilitate speedier approval, apply during normal business hours and submit the required documents right away.
- Get your funds. Once your loan is approved, youll be asked to input your bank account information so the funds are deposited into your account. You may also be able to request a paper check from your lender, or in the case of a consolidation loan, you may be able to have funds sent right to your creditors.
Can I get a personal loan with a 500 credit score?
It is possible to get a personal loan with a 500 credit score, however, youre unlikely to receive favorable terms like a low interest rate.
Credit Scores Between 580 and 600: Explained
FAQ
What can I do with 580 credit?
If you have a credit score of 580, you may only be able to qualify for cards designed for those 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?
| Loan Features | Upstart | Avant Personal Loans |
|---|---|---|
| Credit score needed | 300 (also accepts applicants with insufficient credit history) | 580 |
| Loan amounts | $1,000 to $50,000 | $2,000 to $35,000 |
| Loan terms | 36 and 60 months | 24 to 60 months |
| Early payoff penalty | None | None |
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?
- Keep 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.