A 580 credit score is a fair credit score.
580 is the absolute lowest score in the fair category.
The “fair” credit score category consists of scores from 580 to 669 points. If you have this score, you fall below the average score of U.S. consumers and may have difficulty qualifying for loans and credit cards.
Key Takeaways for a 580 Credit Score
Overview of Your
Credit Rating
A 580 credit score is fair. Fair credit means a borrower poses a moderate risk to the lender. However, a fair credit score is much better than a poor one. Financial experts typically advise fair credit borrowers to work on improving their score to get better rates and terms.
Borrowing Options With a
580 Credit Score
You may have difficulty qualifying for unsecured loans. If you need fast emergency cash, you may feel compelled to apply for bad credit loans or no credit loans. However, you could still get certain types of installment loans if you apply with a lender that has flexible approval requirements.
Improving a 580
Credit/FICO Score
Borrowers with a 580 score can improve it by using credit-building products, such as credit builder loans or secured credit cards. But you can also boost your score by reducing your credit card debt, paying bills on time, and limiting the number of new credit accounts you open.
Is a 580 Credit Score Good?
A 580 credit score is on the lower end of most credit scoring models. Lenders typically consider borrowers with fair credit scores to be more of a credit risk, so you may find it challenging to get loan approval. While you can find lenders that are willing to work with lower scores, you may get less-than-ideal loan terms. For this reason, it’s essential to inquire with multiple loan companies and compare loan offers.
What Can You Get Approved for with a 580 Credit Score?
As someone with a borderline bad credit score, you may worry about your eligibility for loans. However, you may still qualify for various types of subprime lending options with a fair credit score.
Personal Loans
Personal loans are typically unsecured loans that provide hundreds or even thousands of dollars. Unlike other installment loans, personal loans can be used for almost any purchase or expense. There are secured personal loans available that may be easier to qualify for, but they require a valuable asset as collateral.
The qualification requirements vary by lender, as every lender has a unique minimum credit score requirement. However, there are several online lenders that have high approval rates. If you have a reliable source of income, you could qualify for a personal loan with fair credit.
Bank Loans
It’s possible to get a bank loan with fair credit, but it may be challenging. Banks generally require good credit for approval. If you do qualify for a bank loan, borrowers with lower credit scores can typically expect to get higher interest rates and smaller loan amounts. You might have a better chance of getting approved for a secured loan, which requires collateral. Most borrowers secure funding with a car, house, or savings.
Secured Credit Cards
While you may be able to secure a credit card with fair credit, it may be better to apply for a secured credit card. A secured credit card is a credit card that requires a security deposit. The money you provide as a deposit is the credit limit you receive. Your monthly payments are reported to the three major credit bureaus, which could help you build a good credit score if you maintain a good payment history.
These are some of the best secured credit cards for consumers that have a fair credit history:
- Capital One Platinum Secured Credit Card
- Chime Credit Builder Secured Visa® Credit Card
- Credit One Bank® Secured Card
- Discover it® Secured Credit Card
- Capital One Quicksilver Secured Cash Rewards Credit Card
Auto Loans
Low-credit borrowers could get a car loan from a lender that offers flexible credit score requirements. However, interest rates may be exceptionally high to offset the risk of default. However, there are ways to save money with a high-cost auto loan. Applying with a co-signer that has good credit may help you get a lower rate. You may also provide a higher down payment to reduce the overall cost of auto loans.
Products To Help Improve a 580 Credit Score
Although a 580 score is low, rest easy knowing that it’s entirely possible to raise it and build a good credit history. If you’re looking for ways to increase credit scores quickly, keep reading to learn about products that can help you!
Credit Counseling Services
A credit counseling organization advises consumers on how they can better manage their finances. By working with a credit counselor, you can develop a debt repayment plan and budget. There are nonprofit and for-profit credit counseling organizations. If you work with a nonprofit credit counseling organization, you can get access to free educational materials and workshops.
If you’re interested in working with a credit counseling organization, you can try looking for a counselor through the Financial Counseling Association of America or the National Foundation for Credit Counseling.
Budgeting Apps
A budgeting app can help you improve a fair credit score by making it easier to track your income and expenses. Many people do not budget because they think they are successfully managing their money. However, using a budgeting app could help you clearly see all of your monthly transactions to identify spending habits and make better financial decisions.
There are a lot of budgeting apps to choose from, so you are sure to find one that works with your financial goals. If you split bills with your significant other, you can use the Honeydue app to sync bank accounts, assign bills, and set spending limits for different financial categories. If you prefer to spend every dollar wisely, you can use the YNAB app that follows the zero-based budgeting system.
Automatic Payments
One of the easiest ways to build a stronger credit score is to maintain an excellent payment history. If you have trouble keeping track of multiple due dates, consider signing up for automatic payments. Most financial institutions and businesses provide an autopay feature. Autopay automatically withdraws the monthly payment amount, so you don’t have to worry about missed deadlines. A long history of reliable payments on your credit report can boost your fair credit score and help you get better terms on a loan or credit card.
Benefits of Improving Your 580 Credit Score
These are some of the benefits you can expect from improving a lower credit score:
Credit Understanding
Although your 580 score is lower than most people’s, the good news is that you are aware of your credit rating! This may surprise you, but 23% of Americans don’t know their credit score!¹ Knowing your credit score is critically important because it directly affects your life. Credit scores affect your eligibility for credit products, housing options, insurance rates, and more. If you know your current FICO score, you can better understand your credit position.
Opportunity to Grow
Having a 580 score gives you the opportunity to develop better financial habits that affect the rest of your life. If you are looking to grow your credit, you may already be looking for ways to increase your financial literacy. Expanding your financial knowledge can help you make the most of your money and set yourself up for future financial success.
How To Improve Your 580 Credit Score
There are various ways to improve fair credit scores. If you want to obtain a higher credit rating, consider implementing some of these financial tips:
Limit Your Credit Inquiries
Applying for too many loans or credit cards can prevent you from improving your credit scores. Submitting a loan application requires a hard credit check, which can deduct as much as 10 points from your score. Too many inquiries for new credit accounts can significantly affect your credit and make lenders wary of working with you.
Monitor Your Credit Reports
Your credit report has a lot of critical financial information on it. Many people do not check their credit reports, but it’s essential to monitor your credit reports for errors. An error on your credit report, no matter how small, can hurt your credit score and negatively affect your life.
Suppose you have been working on improving your payment history, but one of the credit bureaus mistakenly lists a loan payment as late. That error could result in a decreased credit score that hurts your chances of qualifying for a loan or renting an apartment.
Make sure you check your credit reports annually to spot any of these common mistakes:
Mistake Type | Description | Potential Impact | How to Fix |
Identity Errors | Wrong name, phone number, or address; accounts belonging to someone with a similar name. | May mix your credit file with another person’s, affecting your score. | Dispute with the credit bureau; provide correct identification information. |
Incorrect Account Status | Accounts mistakenly reported as late or closed, incorrect date of last payment, or wrong opening date. | Can lower your credit score due to perceived increased risk. | Contact the credit bureau and creditor to correct the status. |
Balance Errors | Outdated balance information or incorrect credit limit reported. | Affects credit utilization ratio, potentially lowering credit scores. | Dispute with both the credit bureau and the creditor to update the information. |
Duplicate Accounts | The same debt listed more than once, possibly under different creditors. | Inflates your debt, negatively impacting your credit score. | Dispute duplicates with the credit bureau, asking for removal of incorrect entries. |
Fraudulent Accounts | Accounts that you did not open, indicating identity theft. | Significantly harms your credit score and poses a risk of further fraud. | Report to the credit bureau, place a fraud alert or credit freeze, and inform the creditor of the fraud. |
Data Management Errors | Reinsertion of incorrect information after it was previously corrected or removed. | Incorrectly lowers your credit score again after you’ve taken steps to correct it. | Dispute the reinsertion with the credit bureau, citing previous correction. |
Inaccurate Payment History | Payments reported as missed or late when they were made on time. | Directly impacts your payment history, lowering your credit score. | Provide proof of on-time payments to the credit bureau and creditor for correction. |
Reduce Your Credit Card Balances
One way to improve your credit history is to reduce the amount of outstanding debt you have. Your credit limit is the maximum amount you can spend using your credit card, but using more than 30% of that limit can negatively affect your credit. You can improve your 580 score by reducing your outstanding debt. The debt snowball and debt avalanche strategies can help you tackle large amounts of debt and improve your credit.
FAQs About 580 Credit Scores
Can improving my 580 credit score increase my chances of getting a personal loan with better terms?
Absolutely! Elevating your credit score from 580 can significantly enhance your likelihood of not only qualifying for a personal loan but also securing it with more favorable terms. A higher credit score signals to lenders that you’re a lower-risk borrower, which can lead to lower interest rates and better loan conditions.
How quickly can I raise my 580 score to qualify for a personal loan with competitive interest rates?
Improving your credit score is a process that requires patience and consistent effort. While the time it takes can vary based on your specific financial situation and actions, generally, you might start seeing improvements within a few months of adopting healthier credit habits.
If I have fair credit, should I apply for a personal loan alone or consider a co-signer?
Applying for a personal loan with a co-signer who has a higher credit score can significantly improve your chances of approval and potentially secure you a loan with better terms. Lenders view co-signers as an additional layer of security, which can be particularly beneficial if your credit score is on the lower side. However, it’s important to have a clear agreement with your co-signer regarding the repayment responsibilities to maintain healthy relationships and financial stability.
What Interest Rate Can I Get with a 580 Credit Score?
Interest rates vary depending on the type of loan you want, the lender, and your credit rating. As someone with a 580 credit score, you are deemed a subprime borrower. Subprime borrowers are considered risky and may face higher interest rates than borrowers with good or excellent credit scores.
Can I Buy a House with a 580 Credit Score?
An FHA loan is one of your best bets for obtaining a mortgage with a 580 credit score. An FHA loan is a mortgage loan backed by the United States Federal Housing Administration. Eligible borrowers can generally provide a down payment as low as 3.5% of the purchase price.²
Interest rates for FHA loans are generally lower than conventional loans, but expect them to be higher than the lowest advertised rates, which are usually reserved for borrowers with credit scores above 740. But remember that qualification and loan terms depend on lender specifics and market conditions.
