520 Credit Score Personal Loans: Options for Borrowers with Poor Credit

If you have a 520 credit score, you may be wondering what your options are for obtaining a personal loan. While a 520 FICO score is considered “very poor” credit, there are still potential loan opportunities available, though they will likely come with higher interest rates and fees. This guide will explore everything you need to know about 520 credit score personal loans, including:

What a 520 credit score means
Personal loan options for 520 credit scores
How to improve your chances of approval
Alternatives to consider
Tips for rebuilding your credit

Understanding a 520 Credit Score

A 520 FICO credit score falls into the “very poor” credit category. FICO scores range from 300-850, with 520 being significantly below average. According to Experian, only about 16% of consumers have FICO scores below 580 in the very poor range.

Some key facts about 520 credit scores:

It’s 134 points below the average FICO score of 714
Scores this low often reflect serious delinquencies or defaults
Many lenders consider 520 too risky for approval
Interest rates and fees will be high for any loans approved

A 520 score indicates to lenders that you are a very high-risk borrower. This makes it challenging, though not impossible, to obtain a personal loan.

Personal Loan Options for 520 Credit Scores

While many traditional banks and lenders will not approve personal loans for borrowers with 520 credit scores, there are some options to consider:

1. Online Lenders Specializing in Bad Credit

Some online lenders focus specifically on providing personal loans to borrowers with poor credit scores. These lenders typically offer:

Loan amounts from $500 to $5,000
APRs ranging from 35% to 150% or higher
Short repayment terms of 3-36 months
Quick approval and funding

Examples of online lenders that may consider 520 credit scores include:

OppLoans
RISE Credit
Avant
LendUp

2. Credit Unions

Some credit unions offer small personal loans or “payday alternative loans” (PALs) to members with poor credit. These tend to have:

Lower interest rates than online lenders (28% APR cap on PALs)
Small loan amounts of $200 to $2,000
Short repayment terms of 1-12 months
Membership requirements

3. Secured Personal Loans

Offering collateral like a vehicle title or savings account can improve your chances of approval with a 520 score. Secured loans typically have:

Lower interest rates than unsecured loans
Higher loan amounts available
Risk of losing your collateral if you default

4. Co-Signed Loans

Having a co-signer with good credit can help you qualify for better loan terms. But the co-signer becomes equally responsible for repayment.

Comparing 520 Credit Score Personal Loan Options

Loan Type	Typical APR Range	Loan Amounts	Pros	Cons
Online Bad Credit Lenders	35% – 150%+	$500 – $5,000	Fast approval, less strict requirements	Very high rates, short terms
Credit Union PALs	Up to 28%	$200 – $2,000	Lower rates, regulated terms	Must be a member, small amounts
Secured Loans	Varies	Up to value of collateral	Lower rates, higher amounts	Risk losing collateral
Co-Signed Loans	Varies	Varies	Better terms with good co-signer	Co-signer equally responsible

How to Improve Your Chances of Approval with a 520 Credit Score

While challenging, there are ways to increase your odds of getting approved for a personal loan with a 520 credit score:

1. Check Your Credit Reports

Review your credit reports for any errors that may be dragging down your score. Dispute any inaccuracies you find with the credit bureaus.

2. Make All Payments On Time

Your payment history is the biggest factor in your credit score. Make at least the minimum payment on time for all accounts.

3. Lower Your Credit Utilization

Try to use less than 30% of your available credit limits. Pay down credit card balances if possible.

4. Consider a Secured Loan

Offering collateral can improve your chances of approval and potentially get you better rates.

5. Get a Co-Signer

A co-signer with good credit can help you qualify for better loan terms.

6. Show Proof of Income

Demonstrating stable income can help offset a low credit score for some lenders.

7. Apply with Multiple Lenders

Shop around and compare offers from several lenders that work with poor credit borrowers.

Alternatives to 520 Credit Score Personal Loans

Given the high costs associated with personal loans for 520 credit scores, consider these alternatives:

1. Secured Credit Cards

A secured credit card requires a cash deposit and can help you build credit with responsible use.

2. Credit-Builder Loans

These loans are designed to help establish credit and typically have lower rates than personal loans for bad credit.

3. Borrowing from Family/Friends

While not always ideal, borrowing from people you know can be less costly than high-interest loans.

4. Local Assistance Programs

Some local non-profits and charities offer small loans or grants to people in financial need.

5. Increase Income

Finding ways to earn extra income can help you avoid borrowing altogether.

Tips for Rebuilding Your Credit Score

To improve your options in the future, focus on rebuilding your credit score:

Make payments on time and in full whenever possible
Keep old accounts open to increase average account age
Avoid opening new lines of credit frequently
Pick one or two major bills each month to pay early
Consider a balance transfer card with an introductory 0% APR period

Your journey to improving your credit score won’t happen overnight, but consistent effort over time will make a significant difference. Remember, every step you take towards better financial health is worth it.

Borrowers with 520 credit scores face limited options for personal loans due to their very poor credit standing. However, there are still avenues like online bad credit lenders and secured loans available if you need cash quickly. The key is shopping around, comparing terms carefully, and doing what you can to improve your odds of approval.