520 Credit Score
Is 520 a good credit score? 520 credit score loan & credit card options. How to improve a 520 score.
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.
Here’s an overview of a 520 credit score:
- Credit Rating: Bad
- Loan Options: Limited
- Loan Cost: High
- Best Option: Secured credit card
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.
520 Credit Score Loan & Credit Card Options
Credit cards and auto loans offer the best approval odds for someone with a 520 credit score. For example, people with credit scores below 580 take out roughly 12% of car loans versus only 6% of mortgages, according to 2017 Equifax data. You can find a full breakdown by account type in the table below.
Percentage of All New Accounts Opened, by Credit Score
|Credit Score of 300-539||Credit Score of 540-579||Credit Score of 580-619|
|Home Equity Loan||1.1%||2.5%||8.4%|
Source: Equifax - Q3 2017 Consumer Credit Trends
Just because you can borrow with a 520 credit score doesn’t mean you should. You may not qualify for attractive terms at this point. And a little bit of credit improvement could 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.
520 Credit Score: Reasons & Remedies
Regardless of what caused the damage, the best treatment for a credit score of 520 is a steady dose of positive information into your credit report. And the best way to get that going is to open a secured credit card account. Whether you lock the card in a drawer or use it to make purchases and pay the bill on time every month, positive info will stream into your report, offsetting previous mistakes.
That said, let’s take a closer look at some of a 520 credit score’s common causes and what to do about them.
Here’s what can lead to a 520 credit score:
- Delinquency & Default – 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.
Remedy: 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.
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.
- Repossession / Foreclosure – 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.
Remedy: 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.
- Bankruptcy – 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.
Remedy: You’ll need to clear this with the court if you’re currently in bankruptcy proceedings, but when the time is right, simply opening a secured credit card will let the healing process begin. 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.
Credit Cards for a 520 Credit Score
The one thing anyone with a 520 credit score should do is open a secured credit card. Even if you don’t use it to make purchases, a secured card can help improve your score by adding positive info to credit report on a monthly basis. It 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.
You can find examples of both types of credit cards for people with a credit score of 520 in the table below.
Here are some of the best credit cards for a 520 credit score:
OpenSky® Secured Visa® Credit Card
Credit One Bank® Platinum Visa®
The First Progress Platinum Elite Mastercard® Secured Credit Card
Indigo® Mastercard® for Less than Perfect Credit
|Annual Fee||$35||$39||$29||$0 - $99|
|Rewards Rate||N/A||0 - 1% Cash Back||N/A||N/A|
|Purchase Intro APR||N/A||N/A||N/A||N/A|
|Transfer Intro APR||N/A||N/A||N/A||N/A|
|Regular APR||18.89% (V)||25.49% (V)||22.24% (V)||24.9%|
|Details, Rates & Fees||Learn More||Learn More||Learn More||Learn More|
Of course, there’s a lot more to repairing a 520 credit score than simply picking the right credit card. You have to use that card responsibly, keep up with your other financial obligations and keep your credit report clear of negative information.
You can always see your latest credit score and report for free on WalletHub, the only site with free daily updates. And below, you can check out some additional resources that should come in handy on your way to top WalletFitness®.
Top 10 Resources for a 520 Credit Score
- Bad Credit Guide
- Why Did My Credit Score Drop? Top 10 Causes
- What’s Included in Your Credit Report & When Does It Get Updated?
- How to Rebuild Credit in 7 Steps & How Long It Will Take
- Why On-Time Bill Payments Are Important & How To Never Miss A Due Date
- How To Improve Your Credit Utilization
- How To Pay Off Credit Card Debt: The Best Way & Tips
- Debt Solutions Overview: Compare Options, Avoid Credit Score Damage & Save
- Most Common Credit Card Mistakes & Tips to Avoid Them
- What Is a Secured Credit Card? Definition & Examples
Pro Tip: Check out your personalized credit analysis to see where you need to improve and exactly how to do it.
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