By CreditNinja Reviewed by Matt Mayerle
Modified on May 15, 2024

A 520 credit score is considered a poor credit score. Having this credit score will have its challenges with finances—most apparent with your borrowing options.

However, just because you have a poor credit score, that doesn’t mean you have to stay there. There are several things you can do to improve your 520 credit score. Once you improve your credit, you’ll be able to look forward to all kinds of benefits! 

Continue reading to learn more about your 520 credit score.

Key Takeaways for a 520 Credit Score

Overview of Your
Credit Rating

A 520 credit score is a poor credit score. With this credit score, you may look like a credit risk to lenders, so improving your score should be a priority.

Borrowing Options With a
520 Credit Score

With a 520 credit score, your borrowing options will be limited; you’ll likely have to find lenders that cater to poor credit.

Improving a 520
Credit/FICO Score

Improving a 520 credit score is definitely possible! Actions like paying your bills on time, improving your credit utilization, and paying down debt can help.

Is a 520 Credit Score Good?

A 520 credit score is not considered good; it is actually in the lowest credit score range. For context, a poor credit score ranges between 300 and 579. You can get to a good credit score range, which starts at 670, by following through with specific actions like building a positive payment history, keeping your credit utilization under 30%, and having a diverse credit mix. We’ll discuss some of these strategies in additional detail later in the article.

What Can You Get Approved for With a 520 Credit Score?

Having a 520 credit score can make borrowing funds through a loan or credit card pretty difficult, but not impossible. Depending on the lender, loan type, income, and a few other factors, you may have options. 

Before we dive into a few popular loan types, we’ll go over some general characteristics that 500 credit score loans and loans similar ranges will likely have:

Characteristic

Short Description

Higher Interest Rates

Due to the higher risk perceived by lenders, loans come with increased interest rates to compensate for the potential of default.

Short Repayment Time Frame

Loans feature shorter repayment periods, leading to higher monthly payments but a quicker payoff, as a risk mitigation strategy for lenders.

Small Loan Amounts

Borrowers with lower credit scores are eligible for smaller amounts, reflecting lenders’ caution due to the borrower’s higher risk of default and financial instability.

Check out more information on a few different loan types below: 

Personal Loans

Personal loans are usually installment loans, repaid in steady monthly payments until the loan is paid back in full. They can be used for all kinds of expenses, such as medical bills, home repairs, car repairs, and more. You can find personal loans with banks, credit unions, and private lenders. With bad credit, your best bet may be online lenders. 

Bank Loans

Bank loans are any loan option that comes from a bank; these can be secured or unsecured loans. A few examples include personal loan options, home equity loans, credit cards, car loans, and mortgages. Having poor credit can make it difficult to qualify for a bank loan because they generally have strict credit score requirements. However, if you can qualify for a loan from a bank, you may be able to get really good interest rates. 

Credit Cards

Credit cards are revolving forms of credit that are really popular for all kinds of credit scores. With these, you may be able to find a small credit limit and high-interest option, which can be helpful if you need funds for an unexpected expense. However, it’s important to keep in mind that credit card debt can quickly add up and be hard to repay, even with good rates! Here are some credit card options for poor credit:

  • Chime Secured Credit Builder Visa® Credit Card
  • Discover it® Secured Credit Card
  • Self Secured Visa® Credit Card
  • Capital One Quicksilver Secured Cash Rewards Credit Card
  • Mission Lane Visa® Credit Card
  • Capital One Platinum Secured Credit Card
  • OpenSky® Plus Secured Visa® Credit Card
  • OpenSky® Secured Visa® Credit Card

Car Loans

Car loans are a type of secured lending that many people use to purchase a new or used vehicle. These loans are on this list because, like the other loans above, they are very commonly used. According to Nasdaq, 40% of Americans have a car loan that they are paying.¹ With bad credit, you can increase your down payment amount and/or look at lower-cost vehicles for the best chances for approval. 

Cash Advance Loans

Cash advance loans provide borrowers with a small amount of funds in a very short amount of time. With bad credit, you should have a few of these options. For example, payday loans can be considered cash advances; there are also credit card cash advances. While these may seem like a convenient solution, you’ll end up paying a lot in fees and interest. This, coupled with an extremely short time to repay—think around two weeks at most—can quickly lead to an unmanageable loan.

Products To Help Improve a 520 Credit Score

When starting from the lowest range of credit scores, having help to improve your credit scores can really be beneficial! Here are some products that can help you improve your credit score:

Credit Builder Loans 

Credit builder loans can be an excellent tool for building payment history! These aren’t your classic loan options. Instead of getting the funds upfront, they are put aside in an interest-bearing savings account. Once you repay your entire loan amount, those funds will be made available to you. 

So, how do these loans help your credit history and credit scores? Well, those payments are reported to one or more of the major credit bureaus. Making on-time payments can help you get a higher credit score. 

A Secured Credit Card 

A secured credit card works similarly to credit builder loans and can be another great tool to help build payment history and increase your credit scores. If you pay your secured credit card account on time, you may have access to a higher credit limit at the end. This can be even more helpful for your credit utilization ratio and your credit overall. 

Get Alternative Payments Reported 

Many of us pay all kinds of bills each month, such as rent, phone, and utility bills. Unfortunately, many of these bills have no record with your credit history; however, there are services that can get those payments reported to the three major credit bureaus for you. These services are another way to help build your payment history. 

Here are some options to look into:

  1. Experian Boost: This service adds utility and telecom bill payments to your Experian credit report, potentially increasing your credit score.
  2. RentTrack: Reports rent payments to all three major credit bureaus, helping renters build credit history.
  3. LevelCredit: Allows for rent and utility payment reporting to credit bureaus to aid in credit building.
  4. PayYourRent: Offers rent payment reporting to credit bureaus for both renters and property managers.
  5. eCredable Lift: Links utility accounts for reporting to TransUnion, aiming to improve credit scores with regular bill payments.

Becoming an Authorized User 

An authorized user is someone who is essentially a secondary account holder on a credit account, usually with credit cards. After you become an authorized user, the account will show up on your credit report and be a part of your credit history. Any actions, good or bad, will also be a part of that. If you can find someone who has good financial habits, then you can look forward to positive actions reflected on your credit report, which can help your average credit score.

Benefits of Improving Your 520 Credit Score

There are lots of benefits that can come if you are able to improve your credit score; here are some to look forward to:

Lower Interest Rates and APRS

The most apparent benefit of improving your credit score is going to be lower costs when borrowing funds through a loan or credit card. You’ll save a lot of money on interest rates and APRs, which can be extremely convenient when you need to borrow funds. 

Choices With Loans and Credit Cards 

With higher credit scores/FICO credit scores, you can look forward to many more choices in terms of all loan and credit card options. This can really help you find the best fit for you, which is especially important when dealing with long-term loans. 

Lower Insurance Costs 

A benefit that may not be commonly known is that you could save on insurance rates with higher credit, specifically auto insurance and home or renter’s insurance. 

The Ability to Build Wealth 

With a higher credit score, you will be able to finance assets such as a car, home, boat, etc. These things can help you build wealth, which is essential if you want to diversify your financial portfolio and investments. 

How To Improve Your 520 Credit Score

Here are some things you can do to improve your credit score:

Keep Your Debt Low

Debt can impact several factors that make up your credit score. You can pay down debt with simple budgeting strategies, or you can go into a more throughout debt management plan or strategy. Either way, getting your debt lower will likely help your credit score. 

Be Strategic With Your Debt 

Your credit mix is the diversity of your credit accounts and does impact your credit. And so, if you do have to borrow money, it’s important to be strategic about the kinds of credit accounts you add to your credit history. You’ll want a mix of different types of credit accounts rather than just one kind. 

Keep Your Paid-Off Credit Accounts Open 

Some accounts, like credit cards, remain open after you pay them off. It’s important to keep these kinds of credit accounts open, as closing them can hurt your credit scores. This is because doing so increases your credit utilization. 

Keep Your Credit Utilization Under 30%

Speaking of credit utilization, it will be important to ensure that you keep this ratio under 30%. Going above this percentage can hurt you. Balance your credit utilization rate by keeping debt low while still having available credit. 

FAQs About 520 Credit Scores

Obtaining a personal loan and making timely payments can positively affect your credit history. This action demonstrates to lenders your ability to manage and repay debt, which can help improve your credit score over time.

Many lenders have minimum credit score requirements for personal loans, often around 600-640. However, some lenders offer personal loans specifically designed for individuals with lower scores, including those with a 520 credit score, though these loans may come with higher interest rates.

Yes, a secured personal loan, which requires collateral, can be a viable option for someone with a 520 credit score. Secured loan options may have more favorable terms, such as lower interest rates, because the lender has less risk, thanks to the collateral.

Repaying a personal loan on time is crucial as it gets reported to the credit bureaus and positively impacts your credit reports. This consistent repayment history can help improve your credit score, reflecting your reliability as a borrower.

Yes, it’s possible to obtain a personal loan with a 520 credit score, even if you don’t meet the typical credit score requirements. Some lenders specialize in loans for individuals with lower credit scores, understanding that everyone’s financial situation is unique.

What Interest Rate Can I Get With a 520 Credit Score?

With poor credit, the interest rates you will get will likely be on the higher end. This may not seem like a huge deal when it comes to smaller loans, but it can be when it comes to larger, more long-term loans. 

Can I Buy a House With a 520 Credit Score?

Buying a home may be possible with a 520 credit score, with alternative mortgage types such as an FHA loan. However, even if you are able to qualify for a mortgage with a poor score, it will be in your best interest to improve your score as much as possible before applying. 

A mortgage is likely the longest credit commitment that you’ll ever make, and going into it with your best foot forward will save you money and time as well as give you the most options. The last thing you want to do is rush into a mortgage agreement that isn’t right for you simply because of ease of accessibility.

Top 5 Resources for a 520 Credit Score

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