credit card advice
Despite the fact that it’s often referred to in the singular, you actually have dozens of credit scores. That said, the most prevalent credit scoring model currently used is the FICO Score 8.
The FICO Score 8 operates on a scale of 300 to 850, with 850 being the best possible score. While this might make it seem as though a credit score of 500 to 550 puts you near the middle, the average FICO Score in the US is actually around 700 — and everything under 580 is firmly in the “bad credit” category.
Having bad credit can make finding new credit much more difficult. However, difficult doesn’t mean impossible, and there are a variety of credit options for those with scores of 500 to 550.
Credit Cards: 500-550 Credit Score
A ubiquitous part of everyday American life, credit cards not only make online shopping easier and more secure, but they can also help improve your credit when you use them responsibly.
Most credit cards available to those with low credit scores between 500 and 550 will be unsecured credit cards with low limits and high APRs, secured credit cards that require a deposit, or closed-loop store credit cards that can only be used at a specific retailer.
1. Fingerhut Credit Account
Although Fingerhut first gained popularity as a catalog merchant, the modern Fingerhut is an online retailer that boasts thousands of products from hundreds of top brands.
Unlike your typical retailer, however, Fingerhut specializes in helping people build credit while purchasing everyday necessities through its Fingerhut Credit Accounts.
at Fingerhut'ssecure website
- Easy application! Get a credit decision in seconds.
- Build your credit history – Fingerhut reports to all 3 major credit bureaus
- Use your line of credit to shop thousands of items from great brands
- Take advantage of low monthly payments if you apply and are accepted for a Fingerhut Credit Account issued by WebBank, who determines eligibility and qualifications for the terms of credit
See Issuers Website
Fingerhut offers two types of credit accounts depending on your specific credit profile. The WebBank/Fingerhut Advantage Credit Account is a closed-loop revolving credit line that can be used like a credit card to make Fingerhut.com purchases.
If your credit profile doesn’t qualify for a WebBank/Fingerhut Advantage Credit Account, you’ll be automatically considered for the WebBank/Fingerhut FreshStart Installment Loan, which allows you to finance a Fingerhut purchase of $50 or more with a $30 down payment.
You’ll need to make six to eight on-time monthly payments to pay off your WebBank/Fingerhut FreshStart Installment Loan. Your payment history will be reported to the credit bureaus, so paying on time and as agreed can help you build your credit score.
2. Capital One® Secured Mastercard®
If you’re willing to put down a deposit in exchange for lower rates and fees, then the Capital One® Secured Mastercard® may be a good credit-building option.
Depending on your specific credit profile, you’ll need to make either a $49, $99, or $200 deposit to open a Capital One® Secured Mastercard® account with an initial $200 limit. For that deposit, you’ll receive a credit card with a competitive interest rate and no annual fee.
- No annual fee, and all the credit building benefits with responsible card use
- Unlike a prepaid card, it builds credit when used responsibly, with regular reporting to the 3 major credit bureaus
- You will get an initial $200 credit line after making a security deposit of $49, $99, or $200, determined based on your creditworthiness
- Get access to a higher credit line after making your first 5 monthly payments on time with no additional deposit needed
- Easily manage your account 24/7 with online access, by phone or using our mobile app
- It's a credit card accepted at millions of locations worldwide
You can receive a credit limit increase after making your first five payments on time, so long as you make at least the minimum required payment before the due date.
Capital One will periodically check on your credit score progress and payment history to determine if you’re eligible for an upgrade to an unsecured credit card. If so, you’ll be automatically upgraded to the new product and your deposit will be refunded.
If you wish to reclaim your deposit without an upgrade, you can simply close your credit card account in good standing. Make sure you pay off your balance in full before closing your account to recover your full deposit amount.
3. Brink’s Prepaid Mastercard®
Prepaid credit cards are ideal for those consumers with poor credit who want access to digital payments but who don’t want to get their credit profile involved in the process.
With a prepaid card, you can add money to your account and use it to make purchases anywhere the card’s network (Visa, Mastercard, etc.) is accepted. The Brink’s Prepaid Mastercard® can be loaded via a bank transfer, mobile check load, or direct deposit.
at Netspend'ssecure website
- Brink's gives you the peace of mind you deserve. Securing cash and valuables since 1859.
- With Brink's Direct Deposit, you can get paid faster* than a paper check.
- No late fees or interest charges because this is not a credit card.
- Use the Brink's Money Prepaid Mobile App to manage your account on the go and get text message or email alerts (Message & data rates may apply.)
- Get your tax refund direct deposited to your Card Account and no more waiting in line to cash your check!
- *Card issued by BofI Federal Bank, Member FDIC. Card may be used everywhere Mastercard Debit cards are accepted. "Apply Now" for full details.
Variable Monthly Fees
No Credit Check
Because prepaid credit cards aren’t associated with a credit line, you won’t need a credit check to open a prepaid card, and applying for a prepaid card won’t impact your credit score in any way.
At the same time, prepaid cards won’t report your payment behaviors to the credit bureaus, so they can’t be used to establish or build your credit score. If you want to improve your credit profile, you’ll need an unsecured or secured credit card instead.
4. First Progress Platinum Elite Mastercard® Secured Credit Card
The First Progress Platinum Elite Mastercard® Secured Credit Card is a solid option for consumers who may occasionally carry a balance on their credit card, as it has a low purchase APR that will help keep interest charges low (though it’s always best to pay in full each month).
The size of your deposit will determine the size of your credit line, and you can open a First Progress Platinum Elite Mastercard® Secured Credit Card account with a $200 deposit (but deposits of up to $2,000 are allowed).
at First Progress'ssecure website
- Fund your new MasterCard® secured credit card with your tax refund today!
- Receive Your Card More Quickly with New Expedited Processing Option
- No Credit History or Minimum Credit Score Required for Approval
- Good for Car Rental, Hotels; Anywhere Credit Cards are Accepted!
- Monthly Reporting to all 3 Major Credit Bureaus to Establish Credit History
- Credit Line Secured by Your Fully-Refundable Deposit of $200 - $2,000 Submitted with Application
Your secured credit card deposit is fully refundable, and you can reclaim your First Progress Platinum Elite Mastercard® Secured Credit Card deposit at any time by closing your credit card account in good standing.
Any balance you have remaining when you close your account will need to be paid in full to recover your security deposit. If left unpaid, your account could enter default, not only costing you part or all of your deposit, but also causing severe credit score damage.
If you are someone who pays off their complete credit card balance each month, the First Progress Platinum Elite Mastercard® Secured Credit Card’s annual fee may make it a less-than-ideal choice. Consider a card without an annual fee if you won’t be carrying a balance.
Personal Loans: 500-550 Credit Score
Although credit cards are typically the easiest type of credit to get with a low 500 to 550 credit score, it can also be fairly simple to obtain some small personal loans, including both short-term and installment loans.
Overall, short-term loans will have less stringent credit requirements than installment loans, but short-term loans charge much higher fees and must be repaid all at once on the due date.
Personal installment loans are designed to be long-term financing that you want to repay a little each month. Installment loans generally extend from three months up to six years and are repaid via small monthly payments that include interest and principal payments.
BadCreditLoans.com is an online lending network that connects borrowers with potential lenders from across the country with a single application. Borrowers can easily compare options from up to four lenders at a time to find the best match.
- Loan amounts range from $500 to $5,000
- Experienced provider established in 1998
- Compare quotes from a network of lenders
- Flexible credit requirements
- Easy online application & 5-minute approval
- Funding in as few as 24 hours
Although BadCreditLoans.com specializes in helping poor-credit borrowers find loans, the network’s lending partners will still set their own individual credit score and income requirements.
The maximum loan amount borrowers can receive from a BadCreditLoans.com lender is $5,000. However, according to BadCreditLoans.com’s website, those consumers with the lowest credit scores will be unlikely to receive a loan greater than $1,000.
Short-term loans are typically used by poor-credit borrowers who need quick financing, as short-term lenders tend to have very flexible credit requirements and a quick turnaround. That said, short-term loans, also called cash advance or payday loans, often charge large finance fees with three-digit APRs.
If you really need a short-term loan, using an online lending network, like MoneyMutual.com, can be an easy way to find and compare multiple loan offers at once. MoneyMutual.com has an online marketplace with dozens of lenders that can help you find the best fit.
- Short-term loans up to $2,500
- Online marketplace of lenders
- Funds available in as few as 24 hours
- Simple online form takes less than 5 minutes
- Trusted by more than 2,000,000 customers
- Not available in NY
MoneyMutual.com’s lending partners can provide short-term loans of up to $2,500 for qualified borrowers, though individual amounts will vary by lender and your specific credit profile.
While MoneyMutual.com can connect you with a lender, MoneyMutual.com doesn’t actually provide the loan itself. Instead, once you choose an offer on the MoneyMutual.com website, you’ll be directed to the lender’s independent website to complete the loan process.
Auto Loan: 500-550 Credit Score
When you’re dealing with a 500 to 550 credit score, it can be hard to find any kind of financing, let alone a big loan for a new car. That being said, auto loans are typically secured by the vehicle they finance, so they’re often less risky to the lender.
This means you may have decent luck finding a lender willing to provide you with an auto loan, particularly if you have a sizable down payment (or valuable trade in vehicle) to further reduce the overall risk to the lender.
7. Auto Credit Express
For the most part, major banks are unwilling to work with consumers with very low credit scores. For auto loans, the better bet to find financing with poor credit is usually to finance through the dealer from which you purchase your vehicle.
Given that dealer financing isn’t always the most affordable option, it’s important to compare your options. Auto Credit Express is an online dealer network that can help you find and compare auto loan quotes from dealers around the country to get the best rates.
- Dealer partner network has closed over $1 billion in auto loans
- Can help those with bad credit, no credit, bankruptcy, and repossession
- Established in 1999
- Easy, 30-second pre-qualification form
- Bad-credit applicants must have $1500/month income to qualify
While specific credit requirements will vary by dealer partner, you’ll need a monthly income of at least $1,500 to qualify for a loan through an Auto Credit Express dealer.
You can get an idea of what kind of loans you’ll qualify for by filling out the Auto Credit Express pre-qualification form. Once you’re matched with a dealer, you’ll work directly with the dealer to find a vehicle and finalize your loan.
Home Loan: 500-550 Credit Score
One of the most difficult types of financing to obtain with a low credit score is a mortgage loan, both because of the typical mortgage size and the long term length.
Although most government-insured housing programs don’t impose their own minimum credit score requirements for approval, individual lenders have full leeway to set their own requirements. This can make it difficult to find a lender even if you qualify for a particular type of mortgage.
As an online lending network, LendingTree.com can connect borrowers with dozens of lenders from around the country, increasing the chance of finding a lender with flexible credit requirements for those with poor credit.
- Find lenders for new home purchases, refinancing, home equity loans, and reverse mortgages
- Lenders compete for your business
- Offers in minutes
- Receive up to 5 loan offers and select the right one for you
- Founded in 1996
- Over $250 billion in closed loan transactions
One of the most important aspects of finding a mortgage with bad credit, especially if you wish to use an FHA-insured mortgage, is to ensure you have an adequate down payment.
While the FHA only requires a 10% down payment for sub-580 borrowers, a larger down payment will increase your attractiveness to a potential lender and can help offset some of the financial risk of having a low credit score.
Options Exist — Even With Poor Credit
Although the FICO Score 8 credit score range goes from 300 up to 850, only those in the top 25% are generally considered to have good credit. And those consumers with scores below 580 are automatically considered to have bad credit.
But while bad credit can be a hindrance to qualifying for credit cards and loans, a low score won’t always mean an instant rejection from every creditor. Options for new credit are out there, you just need to do a little research to find them.
Range of credit scores covered in this article: 500, 501, 502, 503, 504, 505, 506, 507, 508, 509, 510, 511, 512, 513, 514, 515, 516, 517, 518, 519, 520, 521, 522, 523, 524, 525, 526, 527, 528, 529, 530, 531, 532, 533, 534, 535, 536, 537, 538, 539, 540, 541, 542, 543, 544, 545, 546, 547, 548, 549, 550