520 Credit Score: Good or Bad, Loan Options & Tips (2024)

A 520 credit score is classified as "bad" on the standard 300-to-850 scale. It is 180 points away from being a “good” credit score, which many people use as a benchmark, and 120 points from being “fair.” A 520 credit score won’t knock any lenders’ socks off, but it shouldn’t completely prevent you from being approved for a credit card or loan, either. For example, roughly 1 in 10 new credit card accounts are opened by someone with a credit score below 580, according to Equifax data.

Key Things to Know About a 520 Credit Score

• Credit Rating: 520 is considered a bad credit score.
• Borrowing Options: Most borrowing options are available, but the terms are unlikely to be attractive. For example, you could borrow a small amount with certain unsecured credit cards or a personal loan with no credit check, but the interest rate is likely to be high.
• Best Way to Improve a 520 Credit Score: Apply for a secured credit card and pay the bill on time every month.

Below, you can learn more about what a 520 credit score can get you and, even more importantly, how you can get a higher credit score. To that end, you can also check out your personalized credit analysis to see where you need to improve and exactly how to do it.

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What Does a 520 Credit Score Get You?

Note: It may be possible to qualify for an unsecured credit card, personal loan or auto loan in some cases, but the terms are unlikely to be attractive. If you apply for the average offer, you’re more likely to be rejected than approved.

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Credit Cards with a 520 Credit Score

The best type of credit card for a 520 credit score is a secured credit card. Secured cards give people with bad credit high approval odds and have low fees because cardholders are required to place a refundable security deposit. The amount you put down usually becomes your credit limit.

Popular Credit Cards for a 520 Credit Score

Even if you don’t use it to make purchases, a credit card can help improve your score by adding positive info to credit report on a monthly basis. A secured card won’t give you an emergency loan, though. For that, you’ll need an unsecured credit card for bad credit. Such cards aren’t ideal, as they charge high rates and fees while allowing you to borrow very little. But they might be your only option.

Car Loans with a 520 Credit Score

People with credit scores below 540 receive less than 7% of all auto loans. As a result, your odds of getting approved for a decent car loan are slim. You will need to compare your options carefully and consider either placing a bigger down payment or purchasing a vehicle that’s less expensive.

Mortgages with a 520 Credit Score

Around 3% to 6% of first mortgages go to borrowers with credit scores below 620, depending on the year. Working to improve your credit score before you apply will make it much easier to get approved and will save you a lot of money. For example, a credit score of 580 or higher qualifies you for a lower down payment (3.5% vs. 10%) on an FHA home loan.

Student Loans with a 520 Credit Score

Student loans are some of the easiest loans to get with a 520 credit score, seeing as nearly 25% of them are given to applicants with a credit score below 540. A new degree may also make it easier to repay the loan if it leads to more income.

Note: Borrower percentages above reflect Q3 2017 Equifax data.

How to Improve a 520 Credit Score

1. Catch Up on Past-Due Payments

   If you have not yet defaulted on a delinquent account, making up the payments you’ve missed is your best option. Having your account default will cause your credit score to fall further, possibly leading to collections and even a lawsuit, both of which could add to the credit damage. Each missed payment you make up will reduce your delinquency level, so you don’t have to pay the total amount due all at once. You can also explore debt management and debt settlement.

   The impact of a serious delinquency is obvious from the manner in which credit scores rebound when it’s gone. Roughly 11% of people who fall 90 days behind on a loan or line of credit see their credit scores rise by at least 50 points when that record comes off their credit reports, according to FICO research. And nearly half see an increase of up to 29 points.

   If you have defaulted, your next steps in terms of any amounts owed will depend on whether your account is taken to collections and what your state’s statute of limitations is. As far as your credit goes, a steady dose of on-time credit card payments is the best recipe.

2. Review Your Credit Reports for Errors

   Your “bad” rating may be the result, at least in part, of erroneous information on your credit reports. So check your latest credit report for things like accounts you didn’t open and on-time payments mistakenly listed as late. And dispute any inaccurate records you find.

3. Be Patient After Foreclosure/Repossession

   Having a home foreclosed or other property repossessed to cover unpaid balances on underlying loans can take your credit score from excellent to bad. For example, someone with a credit score of 780 could expect to see his or her score fall to 620-640, according to FICO. And an individual with a 720 credit score would likely see that score fall to 570-590.

   Repossession and foreclosure are unlikely to be the lone negative marks on your credit report, considering they come after numerous missed payments and may be accompanied by collections accounts. And all of that negative information won’t fall off your credit report for seven years. So there’s no quick fix.

   Rather, you need to slowly rebuild your credit reputation by establishing a pattern of on-time payments on any loans or lines of credit you have open. You should at least have one credit card account, for the chance to add positive information to your credit reports every month.

4. Open a Secured Credit Card Account

   Secured cards offer the highest approval odds of any credit card because you have to place a refundable security deposit, the amount of which becomes your spending limit. And they report account information to the major credit bureaus on a monthly basis, just like any other credit card.

   So each month your card’s issuer reports your account as being in good standing, a bit of positive information will be added to your credit reports to help cover up previous mistakes. There are two ways to ensure the information will be positive: pay the bill on time every month and don’t use the card at all. If there are no purchases to pay for, you’ll automatically receive credit for paying on time.
   If your 520 credit score is the result of bankruptcy and the proceedings are ongoing, you may need to clear your new secured card with the court. Bankruptcy is the worst thing that can happen to your credit score, reducing even scores in the high 700s to the mid-500s, according to FICO. And it generally takes scores 7-10 years to fully recover. Unfortunately, there’s no way to lessen the impact. But you can speed up the process by placing a deposit on a secured credit card and locking it in a drawer, or making purchases and paying the bill on time every month.

5. Get Personalized Advice From WalletHub

   The best approach to improving a 520 credit score is to check the Credit Analysis page of your free WalletHub account. This will tell you exactly what problem areas to focus on and how to correct them.

Top 10 Resources for a 520 Credit Score

1. Bad Credit Guide
2. Why Did My Credit Score Drop? Top 10 Causes
3. Free Credit Score Simulator
7. How To Improve Your Credit Utilization

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