By CreditNinja
Modified on May 15, 2024

A 509 credit score is considered to be a poor credit score by most lenders. 

FICO is a credit scoring model used by most lenders to determine creditworthiness.

Poor FICO credit scores range from 300 to 629 points. According to Experian, the average credit score in 2023 was 715, which marks the tenth consecutive year that average FICO Scores in the U.S. haven’t decreased.¹ Borrowers with poor credit scores generally have difficulty getting approved for new revolving credit accounts, housing, and loans. If you have a 509 credit score, keep reading to learn more about your lending options and how you can start to improve your credit history!

Key Takeaways for a 509 Credit Score

Overview of Your
Credit Rating

509 is a poor credit score that indicates the borrower has a subprime credit history. Subprime borrowers typically have financial issues and are more likely to repay their debts late.

Borrowing Options With a
509 Credit Score

Borrowers with poor credit scores generally have difficulty getting approved for unsecured loans. While loan qualification is still possible, low-credit borrowers should expect higher than average interest rates.

Improving a 509
Credit/FICO Score

If you want an average credit score, you can start improving your current score by establishing a positive payment history, reducing your credit card debt, and using credit-building tools.

Is a 509 Credit Score Good?

A 509 credit score is classified as “poor” by the FICO and VantageScore credit scoring models. Good scores are generally higher than 639 points. The average credit score of American consumers is good, which is why you should prioritize boosting your current credit score. Obtaining a higher credit score can help you get better rates and deals on loans and credit cards.

What Can You Get Approved for With a 509 Credit Score?

You may get approved for these loan options with a 509 credit score: 

Personal Loans

The qualification requirements for a personal loan vary by lender. Many online lenders that offer personal loans have flexible credit score requirements, but they still require a reliable source of income. Keep in mind that you may not get a substantial loan amount or a low annual percentage rate (APR) with a poor credit score. Make comparisons to find the best personal loan with 500 credit score

Bank Loans

Banks tend to have strict qualification requirements for installment loans. While it’s not impossible to get approved for a bank loan, your rates and terms are likely going to be very unattractive. You may get better deals on secured loans, such as home equity lines of credit or secured personal loans. 

Credit Cards

Opening new credit card accounts with poor credit scores can be challenging. Many credit card issuers require at least an average credit score to qualify. If you do get approved for a new unsecured credit card, know that your APR will most likely be very high. However, you can avoid credit card interest fees by paying your balance in full every month. 

These credit cards are meant for bad credit scores:

  • Indigo® Mastercard®
  • Store Card
  • Mission Lane Visa® Credit Card 
  • Lowe’s Advantage Card
  • TJX Rewards® Platinum Mastercard®
  • Petal 1 “No Annual Fee” Visa

Auto Loans

Borrowers with low credit scores may qualify for auto loans. Auto loans use the vehicle as collateral, which reduces the financial risk for the lender. As a result, you may be eligible for funding to buy a new or used vehicle. Your loan amount will depend on the lender and your income, but your APR will likely be high—especially if you buy a used car. 

Products To Help Improve a 509 Credit Score 

These financial products can help you improve a low credit score: 

Secured Credit Cards

A secured credit card is a financial tool that can help you get a higher credit score over time. In order to open a secured credit card account, you must provide a security deposit (typically $49 to $200) that is used as your credit limit. Your monthly payments are reported to the major credit bureaus, which means that responsible management can improve your score!

These are some of the best secured cards for credit improvement:

  • Capital One Platinum Secured Card
  • Discover it Secured® Secured Card
  • Chime Credit Builder Secured Visa® Credit Card
  • Self – Credit Account with Secured Visa® Credit Card 
  • Bank of America® Customized Cash Rewards Secured Card 

Debt Consolidation Loans

A debt consolidation loan is an installment loan that helps borrowers combine multiple debts into one new account. Consolidating debt can help borrowers better manage their finances and improve several aspects of their credit history. 

Here’s a table that explains how using a debt consolidation loan can have positive effects on your credit:



Lower Credit Utilization

Consolidating multiple debts into one loan typically results in lower overall credit utilization, which is the ratio of your credit balances to credit limits. A lower utilization rate is viewed positively by credit scoring models.

Simplified Payments

Having a single monthly payment instead of multiple payments can make it easier to manage your finances and less likely to miss payments. Timely payments account for a significant part of your credit score calculation.

Interest Rate Reduction

Debt consolidation loans often offer lower interest rates compared to high-interest credit cards. This can reduce the amount of money you pay in interest, making it easier to pay off the principal balance faster, which can positively affect your credit score over time.

Debt Repayment Acceleration

With lower interest rates, more of your monthly payment can go toward reducing the principal balance rather than just paying off interest. This can accelerate the debt repayment process, reducing your debt load quicker and potentially boosting your credit score.

Term Length Adjustments

You can choose a term length that suits your financial situation. A shorter term means paying off debt faster but requires higher monthly payments, while a longer term reduces monthly payments but incurs more interest over time. Managing this wisely can help maintain or improve your credit standing.

Credit Mix Improvement

Taking out a debt consolidation loan increases the variety of credit types in your credit report, known as credit mix. Having a mix of revolving accounts (like credit cards) and installment loans (like a debt consolidation loan) can positively influence your credit score.

Automatic Payments 

Late or missed payments can appear on your credit reports and negatively impact your credit. If you pay bills online, consider signing up for automatic payments to avoid late payments. Your monthly payments can be automatically deducted from your debit or credit card on file. Maintaining a long history of reliable payments can boost your low credit score over time. 

Benefits of Improving Your 509 Credit Score

If you improve your credit score, you can look forward to getting these benefits: 

Higher Credit Limits 

You could get higher credit limits with a higher credit score. If a lender sees that you are capable of responsibly managing your credit accounts, you may get automatic increases. A higher credit limit could improve your credit score by lowering your credit utilization rate. 

Better Credit Card Rewards

A good or excellent credit score can help you get better rewards on credit cards. The best rewards cards can help you get intro bonuses, cash back, travel miles, points, and other exclusive rewards. 

Lower Interest Fees

A lower interest rate can help you save a lot of money! Low rates reduce the overall cost of borrowing funds, so you can get more affordable monthly payments. When your monthly bills are lower, you can keep more money in your checking account for entertainment expenses or savings. 

How To Improve Your 509 Credit Score

You can work on improving a bad credit score by following these tips:

Reduce Your Debt

Your total credit card debt is negatively impacting your credit score. If you want to get a higher score, it’s critical to reduce the amount of debt you have. Borrowers can speed up debt repayment by paying more than the minimum every month or making bimonthly payments. 

Monitor Your Credit Reports 

It’s possible for credit reports to have incorrect information. If there’s an error on a credit report, your credit score can be negatively impacted. Make sure you are requesting your free reports from the three major credit bureaus every 12 months. 

Limit New Inquiries 

Submitting too many applications for new credit can decrease your credit score and make it much more difficult to improve your creditworthiness. Remember that credit inquiries will remain on your credit report for up to two years. It’s in your best interest to avoid having more than six inquiries on a credit report. 

FAQs About 509 Credit Scores

Having multiple credit accounts can be a double-edged sword. While diversifying your credit mix can positively impact your credit score by showing you can manage different types of credit responsibly, having too many can also lead to high credit utilization and make it harder to manage payments effectively. It’s important to balance the number and ensure you can handle the responsibility without missing payments.

A credit repair company can assist you in identifying and disputing errors or outdated information in your credit report which can improve your credit history. According to the Miami Herald, most credit repair companies charge a one-time setup fee that ranges from $19 to $99, and an ongoing monthly fee that ranges from $79.99 to $119.99.² However, remember that they cannot remove legitimate negative information. Always choose a reputable company and understand their fees and offered services before proceeding.

Applying for a personal loan with bad credit typically means higher interest rates and more restrictive terms. This can increase your overall debt burden if not managed properly. Additionally, each loan application can result in a hard inquiry on your credit report, which might temporarily lower your credit score further.

Closing unused credit accounts might seem like a good way to simplify your finances, but it can actually hurt your credit score by increasing your credit utilization ratio (the amount of credit you use compared to your total credit limit) and shortening your average account age. It’s often better to keep them open, especially if they have a good payment history and no annual fees.

If you’re considering a personal loan with a bad credit score, look for options that offer flexible terms and lower fees. Some lenders specialize in bad credit loans and may offer more favorable conditions. It’s crucial to compare different offers, looking at the APR, loan terms, and any additional fees. Also, ensure the lender reports to the credit bureaus to help you build your credit history as you make timely payments.

What Interest Rate Can I Get With a 509 Credit Score?

Interest rates for low-credit borrowers are typically always higher than average. High rates protect lenders against the risk of default, which is lower when dealing with good credit borrowers. Improving your credit history can help you get better rates in the future. 

Can I Buy a House With a 509 Credit Score?

Buying a home with low credit scores is not impossible, but it may be easier and more convenient to work on improving your credit before buying real estate. Higher credit scores can typically get higher loan amounts, competitive rates, and more financing options. Taking out a substantial loan can result in future financial issues if your rate and repayment terms are less-than-ideal. 

Top 5 Resources for a 509 Credit Score

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