Generally, consumers with a 507 credit score have “very poor” credit.
According to most credit scoring models, credit scores range from 300 to 850.
All scores between 300 and 579 are usually considered to be “very bad” credit. Consumers with a 507 credit score may be new to handling their finances and therefore have little credit history, or, they may be recovering from some financial problems.
If you have a 507 credit score and are looking to improve your financial situation, you’ve come to the right place! Here, we’ll discuss what it means to have bad credit, how it affects your overall finances, and what you can do to improve your credit history and achieve a higher credit score.
Key Takeaways for a 507 Credit Score
Overview of Your
Credit Rating
507 is a very low credit score. In fact, it’s a part of the lowest credit score rating tiers, referred to as “very poor” credit.
Borrowing Options With a
507 Credit Score
Lenders may be wary to lend to someone with a 507 credit score. While secured loan options may be available, they should be used with caution.
Improving a 507
Credit/FICO Score
Consumers can start improving their financial history and boost their credit score by working on their payment history, lowering their debt-to-income ratio, and avoiding additional credit inquiries.
Is a 507 Credit Score Good?
No, 507 is not a part of the “good credit” category. Typically, credit scores range from 300 to 850. Scores between the range of 300 and 579 are a part of the lowest credit rating category, referred to as the “very poor” range.
What Can You Get Approved for?
Self
4.6 Ninja Star Rating
- Build credit and savings
- No hard credit pull
- Automatic payments
- Reports to 3 main credit bureaus
Self is a lender that offers an easy and responsible way for borrowers to establish payment history and build credit, while building savings, through a credit builder account. It’s a small installment loan, but the money is yours (minus interest and fees), and even securitized by a CD.
Start Building Your Credit Today!
*Credit Builder Accounts & Certificates of Deposit made/held by Lead Bank, Sunrise Banks, N.A., First Century Bank, N.A., each Member FDIC. Subject to credit approval.
Katapult Lending
4.4 Trustpilot Rating
- lease purchase plans
- Simple process
- No hidden fees
- No credit required
Katapult offers lease purchase plans and paths to ownership for consumers who typically don’t have many financing options. If you’re considering a large purchase but you don’t have great credit, then Katapult may be able to help. They offer solutions with no credit required, and no late fees.
No Minimum Credit Score Required
Yendo
4.4 Google Rating
- Vehicle-secured credit card
- Up to $10,000 in revolving credit
- Quick & easy pre approval
- Build credit with responsible usage
Yendo is the first vehicle secured credit card. This means you can still get approved for their credit card, even with a less-than-perfect credit score. They use the value of your car to help determine your credit limit. They offer credit limits up to $10,000 with no hard credit inquiry.
Must Meet Their Approval Criteria
Below are some common loan types and how they may work with a 507 credit score.
Personal Loans
A personal loan is a versatile type of funding that consumers can use for just about any expense. With a personal loan, borrowers apply and receive their approved funds in one lump sum payment. After about a month from receiving that payment, borrowers are responsible for repaying the balance, plus any interest and fees.
Since consumers only receive one payment, it’s important to know what you’ll be paying for with your personal loan before you apply. That way, you can make sure you apply for a sufficient amount. If you find you need more money, you’ll have to apply for a separate personal loan. If you’re in a bind, you may still be able to find loans for 500 credit score, but it will take a lot of research.
Bank Loans vs. Other Lenders
Borrowers can access personal loans via credit unions, private lenders, or other direct lenders like a bank. However, banks are some of the most strict lenders out there and usually only work with consumers who have a good credit score. So, if you are in the “very poor” credit category, you may have a better chance of approval if you apply with a lender who specializes in bad credit loans.
Credit Cards
Credit cards are revolving lines of credit, which means that, unlike a personal loan, consumers automatically receive renewed access to their original funding amount without having to reapply. But, consistently spending your credit limit without completely paying off your balance every month can lead to massive credit card debt. CNBC reports that credit card debt in America has reached an all-time high of $930 billion!1
What’s a Secured Credit Card Account?
If you still want access to a line of credit but are worried about accumulating overwhelming credit card debt, a secured credit card may be the perfect financial solution! With a secured credit card, you’ll prepay your credit limit upfront and lenders will use it as a security deposit. But, if you stay on top of repaying your balance, a secured credit card could actually help you achieve a higher credit score!
Car Loans
Car loans are secured loans used to buy a car. While it may be difficult to find a great car loan when you have a poor credit history, using a cosigner or submitting a larger down payment may help secure a better deal.
Car Title Loans
Car title loans are a type of secured loan that uses the borrower’s vehicle title as collateral. During the terms of a title loan, the lender will sign onto the borrower’s car title as a lienholder, giving them partial ownership over the vehicle. As the borrower repays their title loan, they are able to keep their car to use like normal; however, if they miss a certain amount of payments or default on the loan, the lender can repossess their vehicle.
Similar to most quick cash loans, car title loans also usually come with high interest rates and short repayment terms. Due to their high rates, short terms, and the use of the borrower’s car as collateral, title loans are often considered a very high-risk form of funding.
Products to Help Improve a 507 Credit Score
Below are a few products that may help you achieve a higher credit score:
Budgeting Apps
Budgeting apps can help you digitally manage your spending and upcoming payments, as well as help you set financial goals and track your progress. A few apps you can download today are:
- Quicken Simplifi
- Copilot Money
- Monarch Money
- YNAB (You Need a Budget)
Credit History and Report Monitoring
All three of the major credit bureaus (Experian, TransUnion, Equifax) offer free and paid credit report monitoring services. These services can help you review your credit reports and ensure everything is up-to-date and accurate. Depending on your familiarity with your credit report, these services may also help you spot inconsistencies or errors that could be unnecessarily bringing your credit scores down!
Credit Repair Companies
If you are completely new to handling your own finances, are unfamiliar with how credit scores work, or feel completely overwhelmed by your current financial situation, a credit repair company may be able to help you out.
Below is a quick review of some of the services and features credit repair companies may offer:
Feature | Description |
Dispute Handling | Manages disputes of inaccuracies on your credit reports with credit bureaus. |
Credit Counseling | Offers advice on managing your credit and improving your credit score. |
Fee Structure | Typically charges a monthly fee, sometimes with an initial setup fee. |
Typical Cost | Monthly fees can range from $50 to $130, with possible initial fees. |
Service Duration | Services are often used for a few months up to a year, depending on needs. |
Customer Support | May offer phone, email, and sometimes chat support. |
Money-back Guarantee | Some offer a money-back guarantee if no improvements are made. |
Customer Feedback Mechanism | Systems to collect and respond to customer feedback and disputes. |
Educational Resources | Provides educational materials on credit-related topics. |
Disclaimer: The data presented in this table is for general informational purposes only and is not representative of all credit repair companies. Features, costs, and services can vary significantly between different companies and may change over time. Always verify the specific terms, fees, and services directly with the credit repair company before engaging in their services. This table should not be used as the sole basis for making decisions about credit repair services.
Benefits of Improving Your 507 Credit Score
A few benefits you can enjoy once you improve your credit history are:
Easier Approval on Loans
Consumers with higher credit scores are often viewed as financially responsible borrowers. As a result, lenders are more likely to approve good-credit borrowers for loans and other financial products because they pose a low lending risk.
Better Loan Deals
Lenders will want to make their loan products more appealing to you as a borrower with a good credit score. That means you may be able to enjoy lower interest rates, better terms, higher loan amounts, and other perks!
Fewer Fees
Sometimes, if you have an exceptionally low credit score, tradesmen may charge extra fees on top of their base charge for certain equipment or service contracts. Once you achieve a higher credit score, you won’t be as likely to receive these kinds of extra fees.
Better Housing Options
Landlords and mortgage companies pay close attention to credit scores when accepting potential tenants or approving homebuyers for loans. Consumers with lower credit scores are more likely to get rejected by landlords and mortgage companies because these consumers are more likely to become delinquent on their payments. But, after you improve your average credit score and show credit bureaus you are a responsible borrower, you are more likely to receive approval for better housing opportunities.
Eligibility for Special Offers
Lenders are known to seek out consumers who meet their minimum credit score requirements and other criteria and offer them special pre-approval offers. Also, credit card issuers often reward existing customers with credit limit increases when they maintain a higher average credit score and continually pay off their balances.
How to Improve Your 507 Score
Below are a few tips that can help consumers improve their FICO credit scores:
Review Your Average Credit Score Frequently
Check your credit report often, at least once a month, while you are trying to improve your average credit score. Familiarizing yourself with the information on your credit reports can help you see how your financial habits are affecting your average credit score in real-time.
Get a Debt Payment Strategy
Payment history is the most important factor affecting your credit scores, so it’s essential to make all your due payments on time. If you have trouble remembering to manually submit your payments, try signing up for autopay. That way, your due payments will be automatically taken out of your checking account!
Keep Existing Credit Accounts Open
If you have multiple credit card accounts, you may think closing one or two of them could help you improve your credit history. This isn’t the case! In fact, you’ll want to keep any credit accounts you have open. Canceling your accounts could end up negatively affecting your credit utilization and overall credit history.
Don’t Open New Credit Accounts
While you should keep your existing credit accounts open, try not to open any additional accounts. Avoiding new credit accounts will prevent you from racking up another hard credit check on your profile and help ensure you aren’t accumulating any more debt.
FAQs About 507 Credit Scores
Can I qualify for any federal assistance programs with a 507 credit score?
Yes, a low credit score does not disqualify you from federal assistance programs. Programs like the Supplemental Nutrition Assistance Program (SNAP) or subsidized housing are based on income levels and not on credit scores. Additionally, seeking advice from a credit counselor through a nonprofit credit counseling organization can be beneficial and is often free or low-cost.
How does marital status affect my 507 credit score?
Your marital status does not directly impact your average credit score. However, joint accounts or co-signed loans with a spouse can affect your score. If both spouses manage a joint account responsibly, it can help improve both partners’ credit scores. Conversely, missed payments on joint accounts can negatively impact both scores.
What impact does a 507 credit score have on insurance premiums?
Many insurance companies use credit-based insurance scores to determine premiums for auto and homeowners insurance. A low credit score like 507 might lead to higher premiums. Improving your credit score can help lower these costs over time. It’s advisable to shop around and compare insurance options that consider other factors beyond the credit score to potentially reduce your rates.
