Credit scores help determine your ability to access credit and loans. The FICO® 8 scoring system uses scores between 300 and 850, and the 550 to 600 credit score range indicates poor (579 and below) or fair (580 to 669) credit.
Getting a good credit card or low-cost loan is typically quite challenging when you occupy the poor credit score range. But take heart – many lenders and credit cards serve consumers with below-average (or subprime) scores. But time and good financial behavior, including paying your bills on time and reducing your debt, can recover a good credit score.
Of course, it isn’t easy to demonstrate creditworthy behavior if you can’t qualify for credit. But loans and credit cards for a 550 to 600 credit score are indeed available – keep reading to see the best sources for subprime financing.
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Credit Cards: 550-600 Credit Score
The following card issuers recognize that folks with less-than-perfect credit scores need credit cards too. These cards may be the perfect vehicles for building credit through on-time payments. We recommend these three cards for consumers with credit scores near the 600 mark.
- No annual or hidden fees. See if you’re approved in seconds
- Be automatically considered for a higher credit line in as little as 6 months
- Help build your credit through responsible use of a card like this
- Enjoy peace of mind with $0 Fraud Liability so that you won’t be responsible for unauthorized charges
- Monitor your credit score with CreditWise from Capital One. It’s free for everyone
- Get access to your account 24 hours a day, 7 days a week with online banking from your desktop or smartphone, with Capital One’s mobile app
Average, Fair, Limited
at Aspire Card’ssecure website
- Earn 3% Cash Back Rewards* on Gas, Groceries and Utility Bill Payments
- Earn 1% Cash Back Rewards* on all other eligible purchases
- Up to $1,000 credit limit subject to credit approval
- Prequalify** without affecting your credit score
- No security deposit
- Free access to your VantageScore 4.0 score from TransUnion®†
*See Program Terms for important information about the cash back rewards program.
** Prequalify means that you authorize us to make a soft inquiry (that will not affect your credit) to create an offer. If you accept an offer a hard inquiry will be made. Final approval is not guaranteed if you do not meet all applicable criteria (including adequate proof of ability to repay). Income verification through access to your bank account information may be required.
† Your credit score will be available in your online account starting 60 days after your account is opened. (Registration required.) The free VantageScore 4.0 credit score provided by TransUnion® is for educational purposes only. This score may not be used by The Bank of Missouri (the issuer of this card) or other creditors to make credit decisions.
29.99% or 36% Fixed
As low as $85
at Celtic Bank’ssecure website
- Up to $1,000 credit limit doubles up to $2,000! (Simply make your first 6 monthly minimum payments on time)
- All credit types welcome to apply!
- Free access to your Vantage 3.0 score From Experian* (When you sign up for e-statements)
- Initial Credit Limit of $300 – $1,000* (subject to available credit)
- Monthly reporting to the three major credit bureaus
- See if you’re Pre-Qualified without impacting your credit score
See website for Details
See website for Details
29.99% APR (Variable)
See website for Details
See website for Details*
You may also want to consider a secured card if you have poor credit. Secured credit cards are the best credit cards for bad credit because they cost less, but require a cash deposit to secure the credit line and reduce the issuer’s lending risk. But many secured credit cards also offer cash back rewards and report your payments to all three credit bureaus to help those concerned with building credit faster.
By always paying your bills on time and maintaining a low credit utilization ratio, you can harness the power of credit reporting to propel your credit score higher.
Personal Loans: 550-600 Credit Score
Personal loans are a familiar type of installment loan. They are helpful when you run short of cash or face a financial emergency. You can repay a personal loan in fixed monthly installments for three months to six years.
Personal loans are less expensive and easier to budget than payday loans because you can choose a loan term that results in affordable monthly payments.
The following personal loan sources are networks that match you to direct lenders after prequalifying your loan request. Their services are free and won’t impact your credit score. The direct lenders on these networks welcome borrowers with less-than-perfect credit.
- Short-term loans up to $5,000
- 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 million customers
- Not available in NY or CT
- Personal loans from $500 to $35,000
- All credit types are considered and welcome
- Simple, no credit impact form
- Helping consumers since 2001
- 4.7 out of 5 Trustpilot rating with 2,000+ reviews!
- Loans from $500 to $10,000
- All credit types accepted
- Receive a loan decision in minutes
- Get funds directly to your bank account
- Use the loan for any purpose
Installment loans cannot exceed 36% APR, but short-term payday loans can have interest rates as high as 700% in some states. Be sure to carefully read the loan agreement before choosing a lender.
Auto Loans: 550-600 Credit Score
You may be surprised to learn that subprime auto loans are relatively easy to get. By placing a lien on your vehicle, lenders know they can repossess it should you fail to make the payments. This collateral arrangement reduces the lender’s risk, making financing easier.
Car buyers benefit from this arrangement by obtaining access to personal transportation and a way to help improve their credit scores when they make payments on time. In addition, some lenders may offer cash-out refinancing, in which you take a new loan large enough to repay the existing one and provide cash funds you can use however you choose.
The following lenders welcome consumers with subprime credit:
- 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
- Purchase or refinance a new or used car.
- Their lenders have solutions for most credit situations.
- Get up to 5 offers from competing lenders!
- Complete a simple and secure online form in minutes.
- Save on your current or new monthly car payment.
- Potentially reduce your payments by hundreds of dollars
- Skip your next car payment
- Quick and easy 2-minute preapproval process
- Prequalifying does not affect your credit score
- Completely free
- No additional costs or fees
Auto loans for subprime credit typically require a downpayment to secure financing, though most lenders will accept less than 20%.
Home Loans: 550-600 Credit Score
For most consumers, their homes are the biggest and most important asset they own. A home uniquely impacts a household’s physical, emotional, and financial well-being, and owning one is a large part of the American dream.
A low credit score creates challenges for prospective homebuyers, but many lenders are ready to help you overcome the barriers to home ownership. As with auto loans, the underlying property secures mortgages and offers foreclosure as a remedy to borrower default.
But collateral alone may not justify the lending risk, so subprime borrowers must provide additional incentives. These may include down payments, escrow accounts, mortgage insurance, and federal loan guarantees.
We recommend the following mortgage lenders that are willing to work with subprime homebuyers:
10. Rocket Mortgage
- America's largest mortgage lender
- The entire process is completed online
- Options for new mortgages and refinancing existing mortgages
- Award-winning customer service and cutting-edge digital platforms
- More than 90% of clients recommend us
11. Quicken Loans
- Best for cash-out refinance
- Utilize your home equity with America's #1 lender
- eClosing allows customers to close electronically, greatly speeding the process
- A+ rating with the BBB
- Receive cash for home improvements, college tuition, or paying off debt
- 24/7 access to your loan through the Rocket Mortgage app
- Refinance loans, new home purchase, and reverse mortgages
- Compare lenders with no obligations or fees
- Simple and secure form
- Receive up to 5 free rate quotes in 2 minutes and see what you can save on your payment.
- Rates are at historic lows
Lenders also look at borrower characteristics beyond credit scores, such as employment, income, and wealth. One of their favorite tools for gauging risk is the debt-to-income ratio. Virtually all mortgage lenders require a DTI ratio below 50%, and many insist on ratios no higher than 35% to 45%.
Alternative Loan Options For 550 to 600 Credit Scores
The following alternative loan sources prove that borrowers with subprime credit can choose from a wealth of options. Consider them carefully, as each presents a unique mix of advantages and disadvantages.
Storefront Payday Loan
Payday loans were first available from neighborhood storefronts. Online payday loans are now accessible, and even though they are more convenient and safer, storefront payday lenders persist in most states.
You don’t need a credit score to get a payday loan, just a steady job. In return for a short-term paycheck advance, you’ll pay a gruesome APR of 300% to 700% (or more). You must repay the loan on your next pay date or roll it into a larger new loan with additional fees. Failure to repay on time can lead to a debt spiral and possibly bankruptcy.
Here’s a typical payday loan example:
|Finance Fees||$20 per $100 Borrowed|
|Loan Term||2 Weeks|
|Total Interest Charged||$100|
A storefront payday loan requires you to visit the location and complete some paperwork. You must provide a postdated check for the loan amount or allow the lender to access your checking account.
Typical loan amounts are $100 to $1,000, which you carry out of the storefront in cash. If you think that’s a risky proposition, we agree. An online payday loan, though just as expensive, deposits the money directly into your bank account — no need to walk the streets with large sums of cash.
Credit Union Payday Alternative Loan
Payday Alternative Loans (PALs) are available from participating federal credit unions. The PAL I and PAL II versions require you to be a credit union member, but PAL I only becomes available 30 days after joining. PAL II requires no such delay.
Credit unions offer these loans to members with almost any type of credit. They have relatively low fees and interest rate charges that top out at 28%.
PAL I offers loans from $200 to $1,000, with one to six months to repay. The maximum application fee is $20. A PAL II lets you borrow up to $2,000 and charges a $40 to $50 fee. You have up to a year to repay the loan, and there is no prepayment penalty.
While visiting the credit union, you may want to ask about a credit-builder account. Regardless of your credit history, you can use a credit-builder account to establish or rebuild credit. The lender places the proceeds from a credit builder loan into escrow.
You then repay the credit builder loan in monthly installments. When you repay the loan, the lender refunds the money in your credit account. Lenders report your credit account activity to all three credit bureaus, which should help boost your credit.
Subprime borrowers can consider a car title loan if they’ve paid off their automobile loans. Many title loan lenders don’t require a credit check since you’ll use your car’s title as collateral to secure this expensive short-term loan.
Most title loans are for 25% to 50% of the car’s value, usually ranging from $100 to $5,500, although you may be able to borrow $10,000 or more from some lenders. The loan size depends on how much you need, what you can afford to repay, and the vehicle’s current value.
The lender places a lien on the automobile’s title, which allows it to repo the vehicle without court intervention if you default on the loan. That’s risky since 1 in 5 borrowers lose their car due to default. Although title loans cost as much as payday loans, you have much more to lose if you miss a payment.
Loans From Friends and Family
Many people rely on family and friends when they need a loan. These loans may be easy to obtain but can become a nuisance if you repeatedly ask for another one. Your credit history is irrelevant, and the repayment terms are usually quite lenient (often omitting interest).
While at first blush these loans seem perfect, they can lead to hurt feelings if you don’t repay. Thinking twice before approaching a loved one for money makes sense if you don’t want to risk the emotional damage these loans can cause. The Consumer Financial Protection Bureau provides a worksheet to help formalize a loan agreement between friends and family.
You can borrow money from your 401k, something you can’t do with an IRA. The loan’s availability is subject to permission from the 401k plan’s administrator. A 401k loan does not involve a credit check.
You can borrow up to half the balance or $50,000, whichever is less. But a special rule lets you borrow up to $10,000 even if it surpasses half your balance. The interest on these loans is low and goes back into your account (after the administrator deducts fees).
You usually must repay your loan, with interest, within five years, but can take longer if the loan is to buy or build your first home. A 401k loan may not be desirable (or possible) for several reasons, including:
- The IRS will treat it as a taxable withdrawal if you don’t repay the loan by the deadline
- Arranging a 401k loan can take weeks
- Most 401k loans charge a borrowing fee
- The borrowed money doesn’t benefit from interest-free growth, to the detriment of your retirement
- Some 401k plans do not permit loans
Despite these challenges, a 401k loan can provide cash to borrowers of any credit stripe who can wait a couple of weeks to get it.
Cash Advance Apps
Workers may be able to use a cash advance app as an inexpensive, short-term alternative to payday loans. Cash advance apps, such as Dave and EarnIn, can provide you with a small loan (up to $500) based on work you’ve already booked with your employer. Some charge low interest rates or fixed fees, and some are free.
Mobile cash advance apps must have access to your bank account, but many do not require a credit check. The apps transfer your repayment from your account when you receive your next paycheck.
Pawnshops provide quick cash loans backed by your property – jewelry, cameras, guns, collectibles, etc. Simply walk in, fill out some paperwork, and leave with money in your pocket. The pawnbroker asks very few questions, none of which involve your credit.
Pawnshop loans charge interest that can exceed 20% per month. The pawn broker is free to sell your item if you don’t redeem your pawn ticket before it expires.
On average, a pawnshop will lend you between 25% and 60% of the item’s value. Still, pawnshops offer quick cash without credit checks when you need money immediately.
What Is a Credit Score of 550 to 600?
In the FICO and VantageScore credit scoring systems, a 550 to 600 credit score is “Fair” or “Poor,” which may make you ineligible for the most desirable credit cards and loans.
Credit cards are typically the most accessible type of credit to obtain, particularly if you have a fair credit score. But not all credit cards are the same, and you have the best approval chances by applying for cards for consumers with low credit scores.
Generally, a credit score of 600 or less means you’ll need to focus on getting a secured credit card, subprime unsecured credit card, or store card. Each has pros and cons, so consider all your options before applying for a new credit card.
For instance, the credit line for a subprime unsecured credit card will likely be only a few hundred dollars, lower than the potential credit line on a secured credit card.
Installment loans are a helpful alternative when you need more significant financing than a credit card can give you. They are ideal for larger financing projects you want to repay over a few months or years. You won’t pay the highest interest rate on personal, automobile, and home loans, but neither will you get the lowest rate available.
How Much Can I Borrow With a 600 Credit Score?
The limit on the size of a secured loan (auto, home, or secured personal loan) for a 600 credit score is the value of the collateral. As 600 is only a fair score, some lenders will probably limit their unsecured loan offers to less than $5,000, even if they advertise higher amounts. But this is by no means a universal limit, and you may be able to borrow significantly more.
Lenders look beyond your credit score at the entirety of your situation, including your credit history, income, housing costs, and current debts (including credit card debt). Many require a debt-to-income ratio below 38%, although mortgage lenders may allow a higher DTI ratio.
How Can I Use a Credit Card to Rebuild My Credit?
You can use your credit card to rebuild credit by paying your bills on time, keeping low balances, maintaining old accounts, and spacing out how often you apply for a new card.
Thirty-five percent of your FICO score comes from your payment history, making it the most critical factor contributing to your score. Late payments negatively impact your credit, especially if they occur repeatedly.
On the other hand, timely payments can slowly rebuild your credit, although it may take six to 12 months to see progress. It’s also vital to avoid other financial mistakes (e.g., defaults, collections, repos, bankruptcies, etc.) if you want to achieve a higher credit score.
FICO and VantageScore, the leading consumer credit-scoring systems, review your indebtedness when determining your score. One popular metric is the credit utilization ratio, which equals your credit card balances divided by your credit limits. FICO wants a CUR of 1% for the highest credit scores, whereas VantageScore sets a more lenient target of 30%. The bottom line is that reducing how much you owe can help you improve your credit score.
The scoring systems reward you for maintaining long-term credit relationships. That’s why it’s best not to close old credit card accounts, as this may reduce your average account age and raise your CUR.
Although occasionally applying for a new credit card has little impact on your credit score, several applications in a short period can do damage. FICO considers too many hard inquiries a sign of financial distress and marks you down accordingly. If you space your card applications out every six months, you should avoid damage to your score.
What If I’m Denied?
The law requires lenders and creditors to issue you an Adverse Action Notice when they deny your loan or credit card application. These notices contain helpful information, including:
- The reasons for your denial
- The source of information (typically, a major credit bureau) upon which the creditor relied. The information includes your credit reports and scores.
- Instructions on requesting a free copy of your credit reports
- Information on how to dispute items on your credit report you feel to be mistaken, unverifiable, or obsolete
Consider an Adverse Action Notice as a helpful tool that tells you what you must do to improve your chances for your next loan or credit card.
You Have Options For Rebuilding Your Credit
Our review of loans and credit cards for a 550 to 600 credit score reveals plenty of options despite your fair or bad credit. Whichever alternatives you pursue, ensure you understand all the associated terms and conditions since each course of action involves unique pros and cons. Many lenders and creditors report your payments to at least one major credit bureau, so use the opportunity to help rebuild your credit history by always paying your bills on time.
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