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520 Credit Score Personal Loans: Options for Borrowers with Poor Credit

Home > 520 Credit Score Personal Loans: Options for Borrowers with Poor Credit

520 Credit Score Personal Loans: Options for Borrowers with Poor Credit

If you have a credit score of 520, you may think it’s impossible to qualify for a personal loan. While a 520 credit score is considered poor, there are still options available for borrowers in this credit range. Getting approved for a 520 credit score personal loan can be challenging, but it’s not impossible if you know where to look and how to improve your chances.

In this comprehensive guide, we’ll explore everything you need to know about personal loans for 520 credit scores, including:

  • What a 520 credit score means
  • Lenders that offer loans for 520 credit scores
  • How to improve your chances of approval
  • Alternatives to consider
  • Tips for rebuilding your credit

Understanding a 520 Credit Score

520 credit score personal loan

A 520 FICO score falls into the “Very Poor” credit category. Credit scores typically range from 300-850, with higher scores indicating better creditworthiness. Here’s a general breakdown of FICO score ranges:

Credit Score Range Rating
300-579 Very Poor
580-669 Fair
670-739 Good
740-799 Very Good
800-850 Exceptional

With a 520 credit score, you’ll face significant challenges when applying for loans or credit. Most traditional lenders have minimum credit score requirements well above 520. However, some specialized lenders do offer personal loans for 520 credit scores.

Lenders That Offer 520 Credit Score Personal Loans

While options are limited, there are lenders who specialize in bad credit personal loans that may work with borrowers who have 520 credit scores. Some options to consider include:

1. OneMain Financial

OneMain Financial offers both secured and unsecured personal loans to borrowers with poor credit. They don’t have a minimum credit score requirement and consider factors beyond just credit score in their approval decisions.

  • Loan amounts: $1,500 to $20,000
  • APRs: 18.00% to 35.99%
  • Terms: 24 to 60 months

2. Avant

Avant’s minimum credit score is 580, but they may consider borrowers with scores slightly below that on a case-by-case basis.

  • Loan amounts: $2,000 to $35,000
  • APRs: 9.95% to 35.99%
  • Terms: 24 to 60 months

3. OppLoans

OppLoans specializes in loans for borrowers with bad credit. They don’t have a minimum credit score requirement and use alternative data to evaluate applications.

  • Loan amounts: $500 to $4,000
  • APRs: 59% to 160% (varies by state)
  • Terms: 9 to 18 months

It’s important to note that loans for borrowers with 520 credit scores often come with high interest rates and fees. Be sure to carefully review the terms and only borrow what you can afford to repay.

How to Improve Your Chances of Approval for a 520 Credit Score Personal Loan

While getting approved with a 520 credit score is challenging, there are steps you can take to improve your odds:

1. Apply with a co-signer

Having a co-signer with better credit can significantly boost your chances of approval and help you qualify for better rates. Just be aware that your co-signer will be equally responsible for repaying the loan.

2. Offer collateral

Some lenders offer secured personal loans that allow you to use an asset like your car or savings account as collateral. This reduces the lender’s risk and may improve your odds of approval.

3. Show proof of income

A steady income can help offset a low credit score. Be prepared to provide recent pay stubs, tax returns, or bank statements to verify your income.

4. Lower your debt-to-income ratio

Paying down existing debts before applying can improve your debt-to-income ratio, making you appear less risky to lenders.

5. Explain negative items on your credit report

If you have valid reasons for negative items on your credit report (like medical bills or job loss), include a brief explanation with your application.

Alternatives to 520 Credit Score Personal Loans

If you’re unable to qualify for a personal loan with a 520 credit score, consider these alternatives:

1. Secured credit cards

Secured credit cards require a cash deposit and can help you build credit over time. The Capital One Platinum Secured Credit Card is a good option with no annual fee.

2. Credit-builder loans

These loans are designed to help build credit. The money you borrow is held in a savings account while you make payments, then released to you at the end of the term.

3. Pawn shop loans

While not ideal, pawn shops offer short-term loans using your valuables as collateral. Interest rates are typically lower than payday loans.

4. Borrowing from family or friends

If possible, borrowing from people you know can be a low-cost option. Just be sure to treat it like a formal loan with clear repayment terms.

Tips for Rebuilding Your Credit

Improving your credit score above 520 will open up more loan options with better rates. Here are some strategies to rebuild your credit:

  • Pay all bills on time: Payment history is the most important factor in your credit score.
  • Keep credit utilization low: Try to use less than 30% of your available credit limits.
  • Become an authorized user: Ask a family member with good credit to add you as an authorized user on their credit card.
  • Use a secured credit card responsibly: Make small purchases and pay the balance in full each month.
  • Don’t close old accounts: Length of credit history matters, so keep old accounts open even if you don’t use them often.
  • Dispute any errors: Regularly check your credit reports and dispute any inaccurate information.

According to Experian, it typically takes 3-6 months of positive credit behavior to start seeing improvements in your credit score.

While getting a personal loan with a 520 credit score is challenging, it’s not impossible. By exploring lenders that cater to bad credit borrowers and taking steps to improve your financial situation, you can still secure the funds you need. Remember, these loans often come with high interest rates, so be sure to only borrow what you truly need and can afford.