Almost 20% of Americans don’t have a credit score. And for those who do, over half of them have a subpar rating.
Maybe you’ve requested your credit score recently and found out you have a rating of 500. But you have no clue what it means.
Is 500 a bad credit score? What even is the full range of possible credit scores?
Read on to find out the answer to these questions and more.
Is 500 a Bad Credit Score?
First things first: what is a bad credit score exactly?
To understand the answer to this question, you should know that credit scores can range from 300 to 850. As you can see, 500 lies in the low-middle range. For most lenders, they consider anything under a 670 as “poor.”
So as you can see, 500 is generally considered a bad credit score. But not all hope is lost, as your credit score isn’t a static thing.
In addition, just because you have a bad credit score doesn’t mean you’ll be automatically rejected for any credit line applications. For example, there are loans with guaranteed approval, even for people with poor credit scores.
Do note that with a lower barrier to entry comes some downsides. For example, you’ll usually have to pay higher interest rates. But if you’re able to pay off your balance every month, this shouldn’t be an issue.
How to Fix Your Credit Score
Obviously, you want to aim for the highest possible credit score. This will unlock new credit opportunities and better interest rates.
But how do you make your score go up and not down? Here are a few things to try.
Make Payments on Time
One easy method is to keep making payments on time. Make sure you pay off at least the minimum amount asked for. Over time, you’ll see your credit score improve.
If you miss just one payment, this can have severe consequences. Not only will your APR go up, but your credit score will also take a big hit.
Pay off as Much Debt as Possible
In general, the more debt you have, the lower your credit score will be. If you can set aside some money from every paycheck to make extra payments toward your credit cards and other credit lines, this will reduce your overall debt.
Leave Credit Card Accounts Open
You may have heard the advice to close credit card accounts you don’t use so you’re not tempted to use them. But the reality is, when you close lines of credit, this hurts your credit score.
If you feel like you have no willpower, you can try (literally) freezing your credit card or just cutting it up completely.
You Don’t Have to Live With Bad Credit
So is 500 a bad credit score? To be honest, it is. However, you don’t have to live with bad credit.
While you can certainly still get loans and other lines of credit with a score of 500, it’s better if you take the proper steps to improve this number. Only then will you enjoy the best loan options possible!
Would you like to learn more about credit scores? Then take a look at our other blog articles now!