According to the general FICO credit scoring model, 501 is labeled as a poor credit score.
Consumers with poor credit scores may have a hard time finding approval for loans, or may have to deal with higher interest rates or extra fees if they are approved.
Thankfully, there are plenty of actions bad credit consumers can take to work towards a good credit score. Here, you’ll learn about what it means to have a 501 credit score and how you can work towards improvement so you can reap all the benefits!
Key Takeaways for a 501 Credit Score
Overview of Your
Credit Rating
501 is a part of the lowest credit score range, including scores between 300 and 579. Scores within this range are usually labeled as bad credit scores.
Borrowing Options With a
501 Credit Score
Traditional borrowing options may be limited for consumers with lower credit scores. Bad credit loans, such as payday loans and cash advances, should be used sparingly.
Improving a 501
Credit/FICO Score
Consumers can work towards improving their credit scores by prioritizing payment history, focusing on debt, and being mindful of their credit utilization and debt-to-income ratio.
Is a 501 Credit Score Good?
Unfortunately, 501 is not considered a good credit score. In fact, 501 is part of the lowest credit score range, including scores between 300 and 579. While your specific range may vary depending on which credit scoring model you’re referencing, such as the model for VantageScore credit scores vs. FICO scores, consumer credit is typically broken down into five ranges. Excellent: 800-850 Very Good: 740-799 Good: 670-739 Fair: 580-669 Poor: 300-579
What Can You Get Approved for?
Self
4.6 Ninja Star Rating
- Build credit while building savings
- No hard credit pull
- Automatic payments
- Reports to three main credit bureaus
Self is a lender that offers an easy and responsible way for borrowers to establish payment history and build credit, while building savings, through a credit builder account. It’s a small installment loan, but the money is yours (minus interest and fees), and even securitized by a CD.
Start Building Your Credit Today!
*Credit Builder Accounts & Certificates of Deposit made/held by Lead Bank, Sunrise Banks, N.A., First Century Bank, N.A., each Member FDIC. Subject to credit approval.
Katapult Lending
4.4 Trustpilot Rating
- lease purchase plans
- Simple process
- No hidden fees
- No credit required
Katapult offers lease purchase plans and paths to ownership for consumers who typically don’t have many financing options. If you’re considering a large purchase but you don’t have great credit, then Katapult may be able to help. They offer solutions with no credit required, and no late fees.
No Minimum Credit Score Required
Yendo
4.4 Google Rating
- Vehicle-secured credit card
- Up to $10,000 in revolving credit
- Quick & easy pre approval
- Build credit with responsible usage
Yendo is the first vehicle secured credit card. This means you can still get approved for their credit card, even with a less-than-perfect credit score. They use the value of your car to help determine your credit limit. They offer credit limits up to $10,000 with no hard credit inquiry.
Must Meet Their Approval Criteria
Personal Loans
A personal loan is a type of installment loan available to borrowers of all credit types. While loan amounts, rates, and terms will vary depending on the borrower’s general credit, income, and other eligibility criteria, there are usually products available for just about anybody. If you need a 500 credit score loan, check out the rest of CreditNinja’s resources.
Bank Loans
Consumers may also access personal loans through a local or chain bank. However, bank loans are known for being quite strict and are typically only available to consumers with the best FICO credit scores. And so, consumers working on improving bad credit scores may not want to even waste their time applying for a loan from a bank. Instead, these borrowers may have a better chance of approval with a credit union or other financial institutions that cater to bad credit consumers.
Credit Card Accounts
Instead of getting a personal loan, consumers may also consider using a credit card to cover their expenses. However, credit cards can be tricky, especially for consumers struggling with credit. Since credit cards are a revolving line of credit, it’s easy to get into the habit of spending your full credit limit without fully repaying the balance every month.
A habit like this can, unfortunately, lead to massive credit card debt. According to the Federal Reserve Bank of New York, credit card debt in America is at $1.13 trillion.1 And so, if you’re going to use credit card accounts, it’s vital you make an effort to pay off your balance as often as possible.
Cash Advances
Quick cash options like cash advance loans or payday loans may be convenient in a pinch, but keep in mind that they will almost always come with extremely high interest rates. To make sure these types of loans don’t make your credit history even worse, you want to make sure you can pay off your balance in full within about two weeks or less.
Secured Loans
It’s often easier for consumers with a poor credit history to find approval for loans when they are willing to offer collateral. Secured loans, like title loans or a home equity line of credit, require the borrower to use collateral in exchange for loan funding. For title loans, borrowers use their vehicle title to secure the loan, while home equity lines of credit use the borrower’s home or real estate property. While secured loans may make it easier for bad credit borrowers to get extra cash, it’s also important to keep in mind that the borrowers may end up losing whatever they offer as collateral if they miss payments or default on their loan.
Car Loans
Since cars are such an expensive purchase, consumers typically have to take out a loan in order to purchase a vehicle. However, when you have a bad credit history, finding an affordable deal on a car loan may be difficult. Thankfully, there are a few programs designed to help consumers with bad credit scores access auto loans. Some of those programs include:
- Prestige Financial
- Autopay
- Digital Federal Credit Union
- Caravna
- Capital One Auto Finance
- Credit Acceptance Corp.
- MyAutoLoan
Products to Help Improve a 501 Credit Score
Budgeting Apps
Keeping a budget is essential if you want to improve your credit scores. To make things easier for yourself, you may want to try using a budgeting app. There are both free and paid budgeting apps that can help you track your spending, set financial goals, and even identify places where you may be able to save money! Some apps you may consider are:
- EveryDollar – those new to finances may want to utilize this app to familiarize themselves with budgeting and keeping track of spending
- PocketGuard – helpful for all consumers, especially those trying to pay off debt
- Zeta – this app may be extra helpful if you are budgeting for a family
- Wally – consumers trying to set financial goals will find this app most helpful
- Buddy – if you have roommates or split bills with multiple people, this one’s for you
- YNAB – consumers looking to try money saving techniques like zero-based budgeting may like this app the most
- Rocket Money – consumers trying to negotiate bills or debts may want to try this one
- Simplifi – this app works best for Quicken users
- Oportun – consumers looking for a hands-off approach to budgeting may want to give this app a try
- Monarch Money – this app may be a little advanced for consumers new to handling their finances, it’s better suited for financial advisors
Credit Monitoring
You can check your official credit reports via any one of the three major credit bureaus, or you can get an unofficial report via a soft credit check. Looking at your credit report regularly will allow you to monitor your credit improvement and help you identify habits or behaviors that may be preventing your score from going up.
In addition to checking your credit report on your own, it may also be helpful to use a credit monitoring service. Some credit monitoring services that may help you on your journey toward a good credit score are:
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CreditWise® from Capital One – A free service that can help you understand how your credit scores work, alert you of suspicious activity, and help monitor your personal information
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Experian credit monitoring – Gives you a free official credit report every 30 days and offers monitoring of your email, phone, and Social Security number for a fee
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IdentityForce® – A service that offers several paid plans that include services like a Social Security number tracker, alerts regarding your bank account and credit card activity, dark web monitoring, up to $1 Million Identity Theft Insurance, and monitoring for children
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Privacy Guard™ – A paid credit monitoring service that offers public and dark web scanning, lost and stolen wallet protection, and provides each user with a dedicated ID fraud resolution agent
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FICO® Advanced – While FICO offers a free credit monitoring service, they also have paid services that include $1 million identity theft insurance, identity monitoring, and credit scores specifically for your mortgage or auto loans
Credit Counseling
Need a little help organizing your finances and credit accounts? If so, a credit counselor or credit repair company may be a great help!
Some organizations that offer credit repair and counseling services are:
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National Foundation for Credit Counseling (NFCC) – Offers mortgage, student loan, and bankruptcy counseling for a fee. They also have a certification program that requires strict guidelines and regular audits for credit counselors
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Financial Counseling Association of America – Offers free debt and credit counseling to consumers across all 50 states
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American Consumer Credit Counseling – Offers free credit and budget counseling and paid services for debt management plans (DMPs)
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GreenPath Financial Wellness – Offers free credit and budgeting counseling, as paid services for bankruptcy counseling DMPs
- Money Management International – Offers free credit counseling online or over the phone, available 24/7 to consumers nationwide, as well as paid DMP services
Benefits of Improving Your 501 Credit Score
There are plenty of benefits consumers can enjoy when they have a higher credit score. Some of these benefits include:- More financial products available
- Higher loan amounts
- Lower interest rates
- More convenient repayment terms
- Special perks like credit limit increases or pre-approval offers
How to Improve Your 501 Score
Understand How Credit Bureaus Compile Your Credit Report
Each month, lenders and creditors on your various loans and bills will report your activity to one or all of the three major credit bureaus. This activity will include behavior like your payment history, account openings and closings, and any changes in your credit utilization, income, or amount of debts owed. Collectively, this information makes up your credit history. When you practice positive behaviors, like making payments on time and reducing your debt, you’ll see this activity reflected on your credit reports.Work On Payment History
When it comes to the activity reported on your credit reports, your payment history is by far the most important. If you want to achieve a good credit score, keeping up with your due payments is going to be vital. To avoid submitting late payments, consider setting up reminders on your phone or computer, or sign up for automatic payments!Improve Your Debt-to-Income Ratio
The more debt you have reported in your credit file, the more your credit scores will suffer. After perfecting your payment history, reducing your debts is going to be the next most important thing you can do to improve your credit score. If you feel overwhelmed by the amount of debt you have, know that you’re not alone! According to Experian, consumer debt is at $17.1 trillion!2Consider Your Credit Utilization Ratio
Did you know you can increase the amount of available credit you have without applying for additional loans? By increasing your available credit without increasing your debts, you’ll see an improvement in your credit utilization ratio which is reported as positive behavior on your credit reports. Some ways to increase your credit utilization without acquiring additional loans are:- Getting a secured credit card account – Secured credit card allows consumers access to a credit limit without the risk of accumulating a balance.
- Become an authorized user on a credit card – Credit card companies may be reluctant to approve bad credit borrowers on their own. By being an authorized user, you’ll have access to a credit limit without having to worry about repaying the balance.
Hold Off On Applying for New Credit Accounts
Try not to apply for new loans or credit cards while you work on improving your credit. While you won’t be able to diversify your credit mix just yet, you’ll save yourself from having to go through a hard credit check and accruing more debtFAQs About 650 Credit Scores
Can my 501 credit score impact my job search or employment opportunities?
Yes, in some industries, especially those that involve financial responsibilities or security clearances, employers may conduct credit checks as part of the background investigation process. A low credit score could potentially impact your job prospects in these fields. It’s important to be transparent with potential employers and be prepared to explain the circumstances that led to your current credit situation.
What strategies can I use to manage high-interest rates on loans if I have a 501 credit score but need to borrow money for essential expenses?
If you’re facing high-interest rates due to a low credit score but need to take out a loan for essential expenses, consider exploring secured loan options where you can use an asset as collateral. This might help you qualify for a slightly lower interest rate. Additionally, look into local credit unions or community banks as they often offer more favorable terms to members or residents. Always plan a clear repayment strategy to avoid further debt accumulation.
How can I protect myself from scams targeting individuals with bad credit scores?
Individuals with low credit scores are often targets for scams promising quick fixes to credit issues. Protect yourself by being wary of any service that requires upfront payment for credit repair or guarantees a dramatic increase in your credit score overnight. Legitimate credit counseling agencies are typically non-profit and offer services through certified counselors. Always research and verify the credibility of any organization before engaging with them or providing personal information.
What Interest Rate Can I Get With a 501 Credit Score?
Since consumers with poor credit scores are often considered very high lending risks, it’s usually difficult for bad credit borrowers to find low interest rates on loans or lines of credit. Some tips that may help borrowers with a bad credit score get more affordable interest rates on a loan are:
- Using a co-signer
- Being a co-borrower on a loan with someone who has a better credit history
- Asking for a lower loan amount
While these tips may help you get a lower interest rate, the most effective method for finding the best interest rates on loans and credit cards is going to be to improve your credit score and credit history.
Can I Buy a House With a 501 Credit Score?
Without a higher credit score, mortgage lenders may be reluctant to approve you for a home loan. Your best bet is to work on improving your credit history so you can achieve an average credit score. At that point, you may be more likely to receive approval for an FHA loan. FHA loans were designed specifically to help borrowers with a lower credit score buy a home. However, you’ll usually need a credit score of at least 580 to take advantage of this financial option.
