By CreditNinja
Published on March 22, 2024

A 508 credit score is bad. Approximately 33% of Americans have a bad FICO Score, which is any score lower than 580.¹

While a bad credit score can hinder someone in need of emergency funds, it’s still better than being credit invisible.

While a bad credit score can hinder someone in need of emergency funds, it’s still better than being credit invisible. Poor credit scores can make it challenging for consumers to get approval for loans and lines of credit. Many borrowers with poor credit settle for bad credit loans or payday loans when they need fast cash in their checking account. However, you can easily get stuck in a debt trap.

Key Takeaways for a 508 Credit Score

Overview of Your
Credit Rating

A 508 credit score is “bad” or “poor.” A 508 score means you have a Tier 4 score, which is the lowest credit tier. This credit category can make it challenging for you to get funding at reasonable rates.

Borrowing Options With a
508 Credit Score

A bad credit score may limit your financing options. If you need fast cash, you may have to apply for bad credit loans or secured loans. But you could get approved for a personal loan with a lender with flexible credit requirements.

Improving a 508
Credit/FICO Score

Borrowers with low credit can work on getting an average credit score with actions like avoiding late payments, using credit-building tools, and reducing their credit card debt.

Is a 508 Credit Score Good?

A 508 credit score is considered to be bad by FICO and VantageScore, two of the most used credit scoring models. In fact, 90% of top lenders use FICO Scores to make approval decisions. If you want a good FICO Score, you must raise your credit score by at least 162 points to reach 670.

What Can You Get Approved for With a 508 Credit Score?

Borrowers with bad credit scores may still be eligible for funding. Take a look at the loan terms you can expect with standard financing options below.

Personal Loans

You may still qualify for personal installment loans with poor credit. Many online lenders offer flexible credit requirements and work with all types of financial backgrounds. But be aware that rates and terms vary by lender, so you should compare to find the best loan offer. 

Bank Loans

Banks generally require good credit for installment and personal loan funding. While it’s not impossible to get approved for a bank loan with low credit, be prepared for an exorbitant interest rate and small loan amount. 

Credit Cards

If you have bad credit, consider applying for a secured credit card. Unsecured credit cards can be challenging to get with low credit, but secured cards generally have an easy approval process. Secured cards can help cardholders build a good credit history over time with responsible use. 

These are some of the best-secured credit cards on the market:

  • Capital One Platinum Secured Card
  • Discover it® Secured Card
  • Bank of America® Customized Cash Rewards Secured Card
  • Credit One Bank® Secured Card
  • U.S. Bank Cash+® Visa® Secured Card

Car Loans

It’s possible to be eligible for car loans if you have a 508 score, but rates will not be attractive. If you need to buy a car, remember that used cars typically have higher rates due to lower reliability.

Here are a few ways you can reduce the overall cost of a loan:



Potential Savings

Make Extra Payments

Pay more than the minimum payment or add an extra payment periodically.

Reduces principal faster, decreasing total interest paid.

Refinance at a Lower Interest Rate

Secure a loan with a lower interest rate to replace the current loan.

Lower interest rate means lower total interest over the life of the loan.

Shorten Loan Term

Opt for a shorter repayment period if possible.

Higher payments, but significantly less interest paid overall due to shorter time.

Pay Bi-weekly Instead of Monthly

Make half the monthly payment every two weeks, resulting in one extra payment per year.

Reduces the balance more quickly, saving on interest.

Round Up Payments

Round up your monthly payment to the nearest $50 or $100.

Small increases in payment can lead to significant savings on interest.

Use Windfalls to Pay Down Principal

Apply unexpected income (e.g., tax refunds, bonuses) to the loan principal.

Decreases principal balance, reducing interest accrued.

Products To Help Improve a 508 Credit Score 

Consider using these products to raise your 508 score and obtain an average credit score: 

Credit Builder Loans 

A credit builder loan can help borrowers save money and build a better credit history. Lenders usually report your monthly payments to at least one of the credit bureaus, so avoid late payments to improve your creditworthiness

Budgeting Apps

A budgeting app can make it easier for you to manage your finances and maintain good spending habits. According to Forbes, these are some of the top budgeting apps:

  • YNAB (You Need A Budget)
  • Goodbudget
  • Oportun 
  • PocketGuard
  • Stash

Automatic Payments

Signing up for automatic payments can help you avoid late payments and improve your credit history. You can typically choose between paying the minimum or a higher amount.

Benefits of Improving Your 508 Credit Score

These are a few benefits you can get by improving your credit: 

Save More Money

Higher credit scores can help you save more money through lower rates. When your rate is low, you can pay less monthly and keep more money in your bank account. 

More Financing Options

Having an average credit score can help you qualify with more lenders. However, an excellent credit score can result in limitless financing opportunities. 

Better Rewards

Credit card applicants with good credit scores can qualify for the best rewards credit cards. Rewards cards can help you earn cash back, miles, or points that you can exchange for gift cards, statement credits, and more. 

How To Improve Your 508 Credit Score

Follow these tips to start improving your credit score today:

Become an Authorized User

An authorized user is a borrower who is added to an existing credit account. If the primary borrower responsibly manages their credit card, the authorized user can benefit from their good credit history. 

Maintain a Good Payment History 

A good payment history can significantly boost your credit score. If you want to improve bad credit, ensure you continuously pay all of your monthly bills on time.  

Reduce Your Outstanding Debt 

Reducing your total credit card debt can improve your FICO Score. Credit usage significantly affects credit scores, so if you carry a lot of credit card debt, it’s important to reduce it. Paying more than the minimum every month can help you quickly chip away at the principal balance.

FAQs About 508 Credit Scores

A credit repair company can assist you by identifying and disputing errors on your credit report that may negatively affect your score. They can also provide personalized advice on improving your credit habits and potentially negotiate with creditors on your behalf to remove negative items.

While approval chances for an unsecured credit card are generally lower with a 508 credit score, some lenders may still consider your application based on other factors like income and debt-to-income ratio.

It’s a good practice to check your credit reports from all three major credit bureaus (Equifax, Experian, and TransUnion) at least once a year to monitor for inaccuracies and fraud. However, if you’re actively working on improving your credit score, checking your credit reports more frequently can be beneficial to track progress and identify any issues promptly.

Applying for multiple personal loans or credit cards within a short period can lead to various hard inquiries on your credit report, which may temporarily lower your credit score. It’s essential to be selective and apply only for credit that you genuinely need and have a reasonable chance of being approved for.

What Interest Rate Can I Get With a 508 Credit Score?

Interest rates may be high on financial products if your score is low. High rates will increase the cost of borrowing money. Unless you need emergency financial relief, it may be better to improve your credit before applying for a new loan or line of credit. 

Can I Buy a House With a 508 Credit Score?

While qualifying for a mortgage with poor credit is possible, your lending options will be limited. FHA loans are meant for borrowers with low credit scores. Still, if your score is below 580, you must provide a minimum 10% down payment and get private mortgage insurance (PMI).

Top 5 Resources for a 508 Credit Score

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