A credit score of 500 is regarded as very bad and the chances of being accepted for loans are almost impossible. The good news though is that all is not lost if you have to borrow some money. Although your options are very few once you get such a low score, there are some situations you can be approved for a loan.
What this low credit score means to lenders before turning to the avenue of borrowing is something that needs to be understood. FICO credit score is a score that people possess that is between 300 and 850. The credit of 500 is poor and it is far from the good credit range of 670 – 739 not to mention excellent credit which starts from 800.
A score this low proves to lenders that you have payment delays, non-payment records, repossessions, and most other bad aspects in your credit history which show that you are likely to default in repaying borrowed funds as agreed or at all. Many standard lending organizations will turn down anyone with such a score without giving it a second thought.
Paying $500+ in Car Insurance With Bad Credit
Some of the subprime lenders and credit card companies offer higher interest rates for car financing and credit cards for such a group of people with very low credit scores and these big banks or credit unions usually reject such people. Just keep these considerations in mind: Just keep these considerations in mind:
• You will be charged with much higher interest rates and this may even go beyond the 30%APR. Before agreeing to the terms offered, ensure that one reads them well and borrows modestly if credit is granted.
• Credit limits are usually smaller and generally do not exceed $1,000.
• Expect application fees. Do not consider the lenders who charge very high fees before they offer any form of credit.
• Consult with regulators such as the Consumer Financial Protection Bureau (CFPB) before implementing the changes reported in complaints about lending. Avoid predatory lenders.
Bad Credit Loan Options
If your financial situation requires new financing, research your options for borrowing money with bad credit: If your financial situation requires new financing, research your options for borrowing money with bad credit:
Payday Loans These are essentially credit facilities that are extended for a few days, supposed to enable borrowers to make it to their next paycheck. However, the fees and APRs average an astonishing 400% on these. Defaults are common. It should not be used frequently or regularly, but only in emergencies when every other form of punishment has failed.
Pawn Shop Loans You get cash for costly personal effects provided to a loan firm as security. If you cannot repay the loans, the moneylender takes away your items. This can be costly especially when one has lost things of significant value.
Peer-to-Peer (P2P) Lending Instead of banks or credit unions, borrow from other investors or people who are willing to lend their money. A lot of P2P lending sites, such as Prosper and LendingClub, offer personal installment loans starting at $2,000 and going up to $40,000 and can approve candidates with a 500 credit score. Interest rates are high, but they are still less costly compared to payday loans or credit card cash advances.
Credit Builder Loans These are the specialized loans that target at developing your credit history work by infusing the loan amount into a savings account as a security. You pay a fixed amount monthly for 1-2 years depending on the agreed repayment period. When paying as agreed the lender allows the money kept in your savings account to be used to repay the loan at the end of the agreed period.
401k / Pension Loans This is a form of credit that does not go through the credit check process if offered via your employer and by using a portion of your workplace’s retirement account. They get paid in the form of deductions from their paycheck such as 5% interest or any amount that the creditor decides. In most cases, if leaving your job, loans call for repayment within a short time in full.
How It Can Help: If your credit score falls somewhere in the below-average range like 500, then this program could be very useful to you.
As you make arrangements to fulfill the emergency funding requirements also, work on the enhancement of the credit profile in the long run. Here are the important guidelines that will help you to increase the overall test score from 500:
• Always timely pay all the present and emerging bills due each month. • Maintain low credit card balances and ensure credit card utilization should not exceed 30% of the available credit limit. • Seek to clarify late payments or other information on the credit reports that are not true • New credit applications should not be frequently sought as this also hurts your credit file.
You can get a free credit report once a year from Equifax, Experian, and Transunion, and you have to be vigilant and go through it annually, it is also recommended that one should monitor the credit more frequently using a free app. After a positive repayment record is built, created in the next 1 to 2 years; they can consolidate high interest-bearing loans at much better terms and conditions and access other low-interest-bearing loans as per the borrowing requirement.
Call now for expert credit repair services: (888) 803-7889
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