Financial Education
Understanding Your 504 Credit Score
A credit score of 504 is considered poor under FICO and VantageScore models. Improve it by making on-time payments, avoiding new debt, and paying off existing balances. Use savings or sell unused items instead of applying for a cash advance when you need extra money.
Poor scores are typically a result of too much debt, and some American counties are more prone to financial difficulties.
According to credit data from the Urban Institute, 92 of 100 counties with the highest share of adults struggling to pay their medical debt are in the South.¹ If you currently have a lot of outstanding debt, your credit will likely be low. But there are ways to reduce your debt and improve your credit! Keep reading to learn how borrowers with 504 credit scores can start improving their creditworthiness.
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Key Takeaways for a 504 Credit Score
Overview of Your Rating
504 is a poor credit score. Poor scores indicate that borrowers may have difficulty repaying their debts and managing their finances.
Borrowing Options
Your borrowing options will be limited with a bad credit score. While it’s not impossible to qualify for funding, your terms and rates will not be ideal.
Improving Your Score
You can improve a 504 score over time by using credit-building tools, such as secured credit cards, avoiding late payments, and reducing your outstanding debt.
Is a 504 Credit Score Good?
A 504 credit score is not good, and it’s not close to the average credit score of American consumers. When it comes to checking credit scores, most lenders use the FICO or VantageScore credit scoring model. Good FICO scores start at 670, while good VantageScores start at 661. Good credit can help borrowers get a lot of benefits, such as lower rates, higher loans, better credit card rewards, and more housing options. If you have a 504 score, it’s in your best interest to work on building a stronger credit score.
Pro Tip: Many lenders look beyond just the score. Consistent income and recent payment history can still unlock opportunities.
US Population Credit Score Distribution
25
20
15
10
5
0
300-579
580-669
670-739
740-799
800-850
Check out some of our partners...
Explore financial products tailored for your current credit standing. These partners specialize in helping people rebuild.
Credit Builder Account
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No hard credit pull required to apply.
Reports to all three major credit bureaus.
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Personal Loans
Personal loans are installment loans that borrowers use for a wide variety of unexpected expenses. A personal loan can provide up to a couple of thousand dollars, but you may only qualify for a small loan amount with a bad credit score. Keep in mind that some online lenders specialize in offering bad credit loans, which may have flexible credit requirements and competitive interest rates.
Bank Loans
Banks offer a lot of different financing options. If you have a poor credit score, you may have difficulty getting approved for unsecured loans at a bank or credit union. While banks can offer decent rates and terms of loans, they are typically harder to get due to high minimum credit score requirements. You may have a better chance of qualifying for a secured loan, such as a home equity loan or line of credit.
Credit Cards
If you’re interested in improving your credit history, consider applying for a secured credit card instead of an unsecured one. Secured credit cards work just like credit cards, but you must provide a security deposit that will be your credit limit. Your financial activity on the secured credit card is reported to at least one of the major credit bureaus that update your credit reports. Keeping your credit balance low and paying your monthly bills on time can help you boost a bad credit score over time.
These are some of the best secured cards for low credit scores:
• Bank of America® Travel Rewards Secured Card
• Mission Lane Visa
• Capital One Platinum Secured Card
• Secured Chime Credit Builder Visa® Credit Card
• Self – Credit Builder Account + Secured Visa® Credit Card
• Discover it® Secured Credit Card
These are some of the best secured cards for low credit scores:
• Bank of America® Travel Rewards Secured Card
• Mission Lane Visa
• Capital One Platinum Secured Card
• Secured Chime Credit Builder Visa® Credit Card
• Self – Credit Builder Account + Secured Visa® Credit Card
• Discover it® Secured Credit Card
Action Plan
Action Plan
Action Plan
How To Improve Your 504 Credit Score
You can work on rebuilding your credit history and achieving a higher credit score by following these tips:
Avoid Late Payments
You can get an average credit score by working on improving your payment history. Late payments can decrease your credit score and remain on your credit report for up to seven years. However, a long history of timely payments can boost your bad credit over time. If you have trouble keeping track of multiple bills, consider consolidating or signing up for automatic payments.
Lower Your Credit Utilization
Your credit utilization rate is the total amount of credit card debt you have compared to your total credit limits. Using too much credit can negatively impact your credit score and look bad on a credit report. If you want to work on getting an average credit score, it’s critical to work on paying down your outstanding debt.
Here are 5 ways you can speed up debt repayment:
• Use the debt avalanche or snowball method.
• Pay more than the minimum every month.
• Make more than one monthly payment.
• Consolidate using a personal loan or balance transfer loan.
• Avoid new credit card purchases.
Here are 5 ways you can speed up debt repayment:
• Use the debt avalanche or snowball method.
• Pay more than the minimum every month.
• Make more than one monthly payment.
• Consolidate using a personal loan or balance transfer loan.
• Avoid new credit card purchases.
Monitor Your Credit Reports
The three major credit bureaus provide free credit reports every 12 months. It’s essential to monitor your credit reports at least once a year to ensure your information is accurate. Mistakes can occur, and they can decrease your credit score. If you notice an error on a credit report, you can dispute it with the credit bureau and typically have it corrected within 30 days.
Can I Buy a House With a 504 Credit Score?
It may be possible to qualify for a mortgage with a 504 credit score, but your terms and rates will not be ideal. There are government assistance loans that can help low-credit borrowers buy a home, but they have strict qualification requirements.
Here’s a table outlining some mortgage loan options that might be available for borrowers with bad credit scores:
Disclaimer: The information provided in this table is for general informational purposes only and should not be considered as financial advice. Mortgage options, terms, and eligibility requirements can vary significantly between lenders and are subject to change based on federal regulations and economic conditions.
Here’s a table outlining some mortgage loan options that might be available for borrowers with bad credit scores:
Disclaimer: The information provided in this table is for general informational purposes only and should not be considered as financial advice. Mortgage options, terms, and eligibility requirements can vary significantly between lenders and are subject to change based on federal regulations and economic conditions.
Mortgage Type
Description
Credit Score Requirements
Key Features
FHA Loan
Insured by Federal Housing Administration.
As low as 500 with 10% down.
Lower down payment requirements.
VA Loans
Backed by Dept. of Veterans Affairs.
Typically 620 (varies by lender).
No down payment required; no PMI.
USDA Loans
For homebuyers in rural/suburban areas.
640 for automatic underwriting.
No down payment required.
Disclosure: This table provides estimates; requirements and features can vary by lender and situation.
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