Research shows that credit scores in America have increased steadily in recent years. In 2017, the average citizen’s score actually reached 700 or above – an all-time high. For these individuals, seeking financing and loans will be easier than ever, as lenders will see them as less of a risk.


However, there are still many Americans struggling to secure a personal loan based on their low credit scores. If you have a 400 credit score or a 500 credit score, banks and other lenders will be wary of making a deal with you, believing you’re unable to actually make repayments.

Potential borrowers tend to face rejection when their credit score dips below 580. Financial strife can affect us all, and keeping on top of our debts is harder for some than for others.

Still, it’s not impossible to get a higher credit score. There are numerous steps you can take to improve your rating, and make yourself more eligible for that much-needed personal loan.

Make an Effort to Rebuild Your Credit

Don’t panic if you have a 400 or 500 credit score: personal loans are still within reach. All you have to do to get there is work on rebuilding your credit rating. The first step is to check your report to see exactly how far from a healthy score you really are.

You’re entitled to claim a free report from each of the three credit bureaus each year. Experian, TransUnion, and Equifax will all provide you with the report upon request, so make this a priority.

Make sure there are no mistakes or suspicious additions in your history. If the credit bureaus have made an error, or there’s activity you don’t recognize, your score could be lower than it actually needs to be.

Another vital step in rebuilding your credit rating is making your bill payments on time, including utility and rent charges. If you miss any of these, the credit bureaus will know – they don’t just monitor credit payments.

One simple but effective technique is to set up automatic transfers ahead of the deadline, in case you have a nasty habit of forgetting.

You should avoid shutting down your credit card accounts, even if you don’t plan to use them. Your score will be better if you have a longer credit history, and suggest you’re capable of managing debts.

Consider Finding a Cosigner

If you need a 500 or 400 credit score personal loan as soon as possible, and can’t spare the months of steady payments required to improve your rating, you might want to consider a cosigner.

500 Credit Score Loan

A cosigner is typically a friend or relative with a healthier credit score, who will agree to repay your loan if you’re unable to do so. This is a major request, and takes a lot of trust between yourself and the cosigner, but it can help you get the money you need.

Not all lenders accept cosigners, though. Another option you could take advantage of is spousal income: certain lenders will take your partner’s income into account when considering granting you a loan.

Secured Loans are a Common Alternative

A secured scheme could be an effective solution to secure a 400 or 500 credit score personal loan. This means you would borrow with an asset offsetting your loan, such as your car or savings. Home equity may also be a possibility.

It might not seem ideal, and a little risky, but a secured loan could inspire a lender to make a deal. Just be sure to stay on top of your repayments, and you’ll keep the asset without a problem.

Be Wary of Unethical Predatory Lenders

Don’t let your desperation push you into a bad decision. It can be easy to just go with the first lender who offers you the personal loan you need, but you could end up wandering into a difficult situation, lumbered with repayments and interest rates you can’t hope to cover.

Payday loans, for example, remain a problem. Around 2.5 million Americans depend on payday loans each year, with an average of $15 interest on every $100 borrowed. They might be tempting, but you should approach with caution.

If a deal seems too good to be true, it may well be. Look into any lender’s credentials and reputation before taking out a loan with them. It’s easy to find this information online, so do your research first.

Consider Alternative Ways to Get the Money

If your credit score is low and you need money immediately, think about asking for a loan from a relative or friend before approaching a financial lender. Sounds like a bad idea? Worried about feeling embarrassed? Don’t worry – your friends and family will likely be willing to lend you cash if you’re struggling to cover the costs of a much-needed car, your mortgage, or your bills. There’s nothing to be ashamed of. We all need help from time to time.

Alternative Ways To Get the Money

Obviously, one friend or relative may be unable to offer you the full amount, so consider asking multiple people. This means you’ll owe to more than one party, but they won’t charge interest (presumably!) and will be more lenient regarding payments. Once you’ve paid them back in full and solved whatever problem you needed the money for, you should be able to stay on top of your other outgoings. As a result, your credit score should improve over time, and make you eligible for a personal loan from official lenders in the future.

A 500 or even 400 credit score personal loan need not be impossible if you follow the steps above. Always read the small print before agreeing to any loan, and make sure you can cover the repayments on your income!