Where can you find a loan if you have a credit score of 500?
While many lenders require borrowers to have fair, good, or excellent credit, loan options exist for people with poor credit, which is a FICO score of 580 or less. But getting approved can be a challenge and getting a competitive rate, even harder.
We’ll cover the best loan types for bad credit with reasonable rates, plus tips to improve your chances of getting approved for a loan with bad credit.
500 credit score loan options
The lower your credit score, the fewer loan options you have. However, borrowers with 500 credit scores will have a better chance of approval with the following loan types:
- Installment loans for bad credit: Some lenders offer no-credit-check or soft credit check loans that cater to people with bad credit. These loans can have high APRs — up to 200% or higher, depending on the lender and your situation. But they can be an excellent alternative to short-term, small-amount, high-fee loans (like payday loans), especially since loan amounts are often available in the thousands and loan terms span years (which can translate to more affordable payments). Lenders offering such loans include OppLoans and NetCredit.
- Secured personal loans: Secured personal loans require you to pledge collateral, such as a vehicle, savings account, collectible, piece of jewelry, or even the fixtures in your home. If you default, the lender can take ownership of your collateral and use it to recover the amount you owe.
- Cosigned loans: A cosigned loan involves you applying with someone else who has good credit — the cosigner — who promises to pay off the loan if you can’t.
- Loans with a co-borrower: A co-borrower refers to a person who applies for a loan with you. Unlike a cosigner, co-borrowers have equal access to the loan funds.
- Payday alternative loans (PALs): PALs are small, unsecured loans offered through federal credit unions. Loan amounts range up to $2,000, have terms from 1 to 12 months, and are designed to be more affordable than payday loans.
- Credit-builder loans (CBLs): CBLs are designed to help you build credit, but don’t offer funds upfront. Instead, a lender moves your loan funds into a locked savings account. You then make installment payments over a term, often 6 to 24 months. You either receive the principal in installments every time you make a payment, or you get the entire loan amount once payments are complete. Payments are reported to the major consumer credit bureaus.
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Lenders for bad credit
When you’re looking to get a loan with bad credit, you’ll have a higher likelihood of success if you apply with lenders that cater to borrowers with low credit scores or if you apply with a cosigner with good credit or a co-borrower with good credit. To quickly find out which lenders you’re most likely to qualify with, prequalify first. You can do this on many lender websites or you can check prequalified rates below.
Prequalification doesn't hurt your credit, but it’s not a loan offer. Note that once you complete a full loan application, the lender will conduct a hard credit check, which could temporarily ding your credit score.
Here are a few lenders that might approve you with a FICO score in the mid 500s:
