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Can I Get A Personal Loan With A 500 Credit Score?

Being hit with an unexpected expense can be scary – especially if it seems you have no way of covering it. If you have no savings and no credit card, a personal loan might be the answer to the emergency. But what if your credit score is not great? While bad credit loans exist, are they really a good idea? And as important, can i get a personal loan with a 500 credit score? This is a complex subject, so we will walk you through it step by step. Here is what you need to know about personal loans with a low credit score.

What does it mean to have a 500 credit score?

Under the FICO scoring plan, a credit score under 580 is considered to be bad credit. However, it does not mean you are a bad person. A credit score of 500 to 550 could be the result of one or more of the following problems:

You’re just starting out: Some young people have not had the time or opportunity to build a good credit score.

You’ve had bad luck: Illness, layoff, student loans, needing to help a family member – all these things could lead to cash shortages, which in turn can lead to late payments, unpaid bills or charged off accounts. All of those can hurt your score.

You’ve made mistakes: Overspending can also lead to a poor credit score, especially if other debts keep you from making more than the minimum payment.

Can I get a personal loan with a 500 credit score?

Possibly – but the terms will not be favourable. People with higher credit scores get a much lower interest rate typically because they have proved they can pay what they owe on time. This might not seem fair if your bad credit score was the result of bad luck. However, from the lender’s point of view, your score represents a risk of late payments or defaulting.

Banks generally won’t offer personal loans to people with lower credit scores. Getting someone to co-sign the loan will improve your odds. On the other hand, credit unions are likely to to be “more flexible”.

Interest Rates

Online lenders offering 500 credit score personal loans invariably charge very high interest rates. While these lenders might post interest rates as low as 5.99% those are not for people with 500 credit scores.

So, while it is possible for you to get a personal loan with a 500 credit score it is unlikely that you will, the best thing you can do is work on improving your credit score before applying for any loans.

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