Your score falls within the range of scores, from 300 to 579, considered Very Poor. A 500 FICO® Score is significantly below the average credit score.
Due to their poor credit, many lenders decline to work with borrowers whose scores are in the Very Poor range. Applicants for credit cards in this range may be required to make deposits on their cards or pay additional fees. Utility companies may also require them to place security deposits on equipment or service contracts.
Roughly 62% of consumers with credit scores under 579 are likely to become seriously delinquent (i. e. , go more than 90 days past due on a debt payment) in the future.
Let’s face it, credit scores can be a bit of a mystery. But fret not, my friend for I’m here to break down the enigma that is the 500 out of 700 credit score. Buckle up because we’re about to embark on a journey of financial enlightenment!
Decoding the Credit Score Enigma
First things first, let’s get one thing straight: a 500 out of 700 credit score isn’t exactly something to brag about. It falls squarely in the “Very Poor” range, which means lenders might not be too keen on extending you credit. Think of it like trying to climb Mount Everest in flip-flops – not impossible, but definitely not advisable
But hey, don’t despair! Even the most seasoned credit climbers started somewhere. The good news is, there’s plenty of room for improvement. With a little bit of effort and the right guidance, you can transform that 500 into a score that’ll make lenders sing your praises.
The Road to Credit Score Redemption
So how do we get you from the “Very Poor” zone to the land of creditworthiness? Well, it all boils down to these three golden rules:
1. Pay Your Bills on Time, Every Time: This is like the holy grail of credit score improvement. Late payments are like kryptonite to your score, sending it plummeting faster than a meteor. Make it a habit to pay your bills before the due date, every single time.
2. Keep Your Credit Utilization Low: Imagine your credit card limit as a swimming pool. The more water (debt) you fill it with, the less space there is for you to splash around (spend more). Aim to keep your credit utilization below 30% to avoid drowning your credit score.
3. Build a Healthy Credit Mix: Don’t put all your eggs in one basket, as they say. Having a mix of credit accounts, like credit cards and installment loans, shows lenders you can handle different types of debt responsibly.
Bonus Tips for Credit Score Superstars
1. Become a Credit Monitoring Ninja: Knowledge is power, especially when it comes to your credit score. Regularly check your credit report for any errors or suspicious activity. You can get your free credit report from all three major credit bureaus (Experian, TransUnion, and Equifax) once a year at AnnualCreditReport.com.
2. Become BFFs with Secured Credit Cards: If you’re new to the credit game or have a rough credit history, secured credit cards can be your best friend. These cards require a security deposit, which acts as your credit limit. Use it responsibly, pay your bills on time, and watch your credit score soar.
3. Seek Expert Advice: Feeling overwhelmed? Don’t hesitate to seek help from a credit counselor or financial advisor. They can provide personalized guidance and help you develop a plan to improve your credit score.
The Takeaway: From 500 to 700 and Beyond
Listen, getting a 500 out of 700 credit score might feel like a setback, but it’s just a temporary blip on your financial radar. With the right strategies and a dash of determination, you can turn that score around and unlock a world of financial opportunities. Remember, the journey to a stellar credit score is a marathon, not a sprint. So, pace yourself, stay focused, and keep your eyes on the prize – a credit score that’ll make you the envy of all your friends (and lenders).
How to get beyond a Very Poor credit score
Very poor FICO® scores frequently indicate a history of credit errors or mishandling, including numerous late or missed payments, loans that have defaulted or been foreclosed upon, and even bankruptcy.
You can start building your credit after you are aware of the information in your credit report, how it affects your credit scores, and what it contains. As your credit behaviors improve, your credit scores will tend to follow suit.
Improving Your Credit Score
A Very Poor credit score cannot be improved quickly, and some factors that contribute to Very Poor credit scores—like bankruptcy or foreclosure—only gradually improve over time. You can begin immediately to adopt habits that favor credit score improvements. Here are some good starting points:
Consider a debt-management plan. If youre overextended and have trouble paying your bills, a debt-management plan could bring some relief. You negotiate a manageable repayment plan with a non-profit credit counseling organization, successfully closing your credit card accounts in the process. Although this can significantly lower your credit scores, it’s less harsh than filing for bankruptcy, and your scores will recover faster. Even if you determine that taking this drastic measure is not for you, speaking with a credit counselor—as opposed to a credit-repair business—may assist you in determining methods for establishing more positive credit.
Think about a credit-builder loan. These small loans, which are intended to assist borrowers in establishing or repairing their credit histories, are available in a number of forms from credit unions. One of the more common methods involves the credit union lending you the money and depositing it into an interest-bearing savings account (instead of giving you the money directly). When youve paid off the loan, you get access to the money, plus the interest it has generated. The real advantage arises when the credit union reports your payments to the national credit bureaus, even though it’s a clever savings strategy. Verify that the lender reports payments to each of the three national credit bureaus before applying for a credit builder loan. These loans have the potential to raise your credit score as long as they do and you make consistent, on-time payments.
Look into obtaining a secured credit card. Usually a few hundred dollars, you deposit the entire amount of your spending limit when you open a secured credit card account. Your FICO® Score and credit files are updated with the lender’s reports to the national credit bureaus as you use the card and make payments on time. Making timely payments and avoiding “maxing out” the card will promote improvements in your credit scores.
Pay your bills on time. Theres no better way to improve your credit score.
Avoid high credit utilization rates. Try to keep your utilization across all your accounts below about 30% to avoid lowering your score.
Try to establish a solid credit mix. Users with multiple loan accounts and a variety of loan types, such as installment loans like mortgages or auto loans and revolving credit like credit cards and some home equity loans, tend to be given preference by the FICO® credit-scoring model.
How to RAISE Your Credit Score Quickly (Guaranteed!)
FAQ
Can I go from 500 to 700 credit score?
What is a good credit score out of 700?
How much can I get approved for with a 700 credit score?
Is a credit score of 500 excellent?
Is a 500 credit score good or bad?
500 Credit Score: Is it Good or Bad? Your score falls within the range of scores, from 300 to 579, considered Very Poor. A 500 FICO ® Score is significantly below the average credit score. Many lenders choose not to do business with borrowers whose scores fall in the Very Poor range, on grounds they have unfavorable credit.
Is a 700 credit score a good credit score?
A 700 credit score is considered a good credit score by many lenders. “Good” score range identified based on 2023 Credit Karma data. A credit score is a number that lenders use to help assess how risky you might be as a borrower. Credit scores are based on credit reports, which contain information about your credit history.
What does a 500 credit score mean?
Here is a list of our partners and here’s how we make money. A 500 credit score is in the bad credit score range. Your credit score determines whether you qualify for financial products, like credit cards and car loans, and what interest rate you might pay.
Is a 700 FICO score acceptable?
A 700 FICO score is acceptable, but you won’t get the lowest interest rates when you apply for credit. FICO reports that the average FICO score in the U.S. is 716, which is unchanged from the previous year. You can improve your 700 score by paying bills on time and keeping low utilization ratios on your credit cards.