Credit cards and car loans are the best options for someone with a credit score of 500. People with credit scores below 580 have a 0.35% chance of approval. The best personal loans for a 500 credit score are from OppLoans and Integra Credit, which specialize in lending to people with bad credit and don't even do a credit check when you apply. Getting a personal loan with a credit score of 500 is possible, but it can be difficult.
Short-term and installment loans are the most accessible options, but they come with higher interest rates. FHA loans (mortgages backed by the Federal Housing Administration) have the lowest credit rating requirements of any major mortgage loan program, and those with lower credit (500-570) may still qualify. However, you'd have to put at least a 10% down payment, and it may be harder to find lenders that allow a minimum credit score of 500. Another attractive quality of an FHA loan is that unlike conventional loans, FHA-backed mortgages do not have risk-based pricing. VA Loans are another option for those with lower credit scores.
Like FHA Loans, VA Loans Do Not Have Risk-Based Price Adjustments. Low-scoring applicants can often get rates similar to those of high-credit borrowers. A USDA loan won't work if you make too much money either; your household income cannot be more than 115 percent of the median household income in your area. Conventional loans are available to lower-credit applicants, but their fees often mean that FHA loans cost less for borrowers with poor credit ratings. There is no direct correlation between lower credit scores and higher closing costs, but taking out a bad credit loan does limit your borrowing options, which can increase borrowing costs. Qualifying for a personal loan with 500-year credit scores can be difficult or expensive.
However, some alternative lenders, such as payday lenders, may not consider your credit score at all, but may charge very high fees and interest rates. Prepaid credit cards are ideal for consumers with little credit who want access to digital payments but don't want their credit profile to be involved in the process. Secured cards are available to people with any credit rating, and interest rates are usually relatively lower than comparable unsecured cards. If you want to refinance your home and qualify for an FHA loan, the FHA Rate Guide provides a valuable directory of lenders who can accommodate you. A co-signer or co-borrower could help you get approved for a mortgage with bad credit if the lender is willing to average both scores. The amount you can borrow is equal to the equity you have in your car, which is the difference between the value of the car and the current balance of the loan.
If your credit score is in the 500 to 550 range, qualifying for a credit card is easier said than done. Risk-based pricing is a charge applied to loan applications with lower credit scores or other features less.