You can get a personal loan with a credit score of 500 if you have a steady source of income, but your choices are very limited. The best way to get a personal loan with a 500 credit score is to check whether you are pre-qualified for a loan from major lenders. Checking if you’re pre-qualified won’t affect your credit score, so it’s worth checking to see if you qualify for a decent deal.
If you are a US Bank customer, you can borrow from a minimum of $1,000 to $50,000. U.S. Not a bank customer? You can borrow up to $25,000.
If you don’t pre-qualify, your best options may be to apply to a no-credit-check lender or take out a secured personal loan. Unsecured personal loans that undergo a credit check during the application process usually require a credit score of 585 to 700+ for approval. Other ways to get a personal loan with a credit score of 500 include borrowing from a friend or family member, applying for a loan with a cosigner, and exploring options from local credit unions.
Ways to get a personal loan with a 500 credit score
See if you are pre-qualified
The best way to see if you qualify for an unsecured personal loan with a 500 credit score is to do a pre-qualification check. WalletHub’s free pre-qualification tool will let you know your approval odds and potential interest rates with multiple lenders at once, without affecting your credit score.
No-Credit Check Personal Loans
This is a good option for people with a 500 credit score because the lender does not take your credit score into account when you apply. The tradeoff is that they are more expensive than personal loans with credit checks. The best no-credit check personal loan providers include OppLoans and Integra Credit.
Apply with cosigner
Some personal loans allow you to apply with a co-signer, which is someone who promises to repay the loan if you don’t. A cosigner’s credit and income have a greater impact on a lender’s decision than the primary applicant’s, so it can help people with a credit score of 500 get approved for a loan they wouldn’t normally qualify for.
Try a credit union
Credit unions usually have more generous personal loan approval requirements than banks and may be willing to consider applicants with poor credit. You can find credit unions in your area on WalletHub and consult with them to see if you’re approved.
friends and family
People with whom you have a close relationship will not care about your credit score and will be willing to lend to you. You have a better chance of getting better and more flexible terms than a traditional lender.
Secured Personal Loans
These loans are obtainable with a credit score of 500 because they require collateral that the lender can hold if you default on the loan, so there is relatively little risk for the lender. Most secured personal loans require you to use money in a bank account as collateral, but some will accept other types of collateral, such as vehicles.
Ask for a low personal loan amount
Asking for a higher amount with a lower credit score only represents more risk to the lender. From a lender’s point of view, these are indicators that you may default on repayments. Suppose you apply for a small amount of personal loan. In such cases, the lender may feel more comfortable lending to you, as it is easier to repay the lower amount.
Additional Read: Rs. Personal loans up to 40 Lakhs – only with Bajaj Finserv
Apply with a co-applicant or secure a guarantor
If you have a low CIBIL credit score, you can take a personal loan with a co-applicant or guarantor. Of course, you have to ask other applicants beforehand, as they have to complete KYC formalities and also provide signatures. The main advantage here is that if your lender finds that the co-applicant or guarantor has a stable income and a good credit score, they are more likely to grant you a personal loan.
Correct errors on your credit report
There may be errors in your CIBIL report. This is usually when the latest information is not updated on your record. Mistakes like these can affect your credit score through no fault of your own. Hence, it is essential to check your CIBIL report regularly and correct it if necessary. This will boost your credit score and make you a better candidate for a loan.