What does a 520 credit score mean?

Written by: Tim Devaney

A 520 credit score can be a sign of past credit difficulties or a lack of credit history. Whether you’re looking for a personal loan, a mortgage or a credit card, credit scores in this range can make it challenging to get approved for unsecured credit, which doesn’t require collateral or a security deposit.

Percentage of generation with 300–639 credit scores

“Poor” score range identified based on 2023 Credit Karma data.

Most credit scores range from 300 to 850, and lenders tend to look at scores in the 500 to 600 range as less than ideal. Why does it matter what lenders think? Because they use credit scores to help assess the risk associated with lending money to you.

With a poor credit score, you might have trouble qualifying for credit. Maybe you’ve already been rejected for a credit card you’ve had your eye on, or maybe you only seem to qualify for loans with high interest rates and fees.

If that’s the case, don’t lose hope. Understanding what goes into your credit scores — and yes, you have more than one credit score — is the key to building your credit. Perhaps you’ve already heard that your scores are calculated based on information in your credit reports, but what does that really mean?

In this article, we’ll show you how important credit information can influence your credit scores. Credit bureaus like Equifax, Experian and TransUnion collect this information from lenders and financial institutions and use it to build your credit reports. The information in those reports is then run through various credit-scoring models and, voilà, your scores come out on the other end.

But that’s not the whole story. Let’s take a closer look at how to build credit so you can work toward better financial products. Taking the right steps today could pay off in the future.

• Building your credit
• What credit card can I get with a 520 credit score?
• Personal loans with a 520 credit score
• Auto loan rates for poor credit
• Mortgage rates for poor credit

Building your credit

Figuring out exactly what goes into your credit scores can be complicated. With all the different credit factors — like payment history as well as the age and number of your accounts — that can make up each credit score, there’s no one way to build your credit. The path that’s best for you depends on your specific credit profile.

Age of open accounts by credit score range

But there are some general principles to focus on that can help you build your credit over time, like making at least the minimum payment when it’s due and building up a positive payment history. If your credit is still hovering below 640, paying attention to these factors can make a big difference in your journey to fair credit (and beyond).

Check your credit reports to understand your scores

It’s a good idea to check your credit reports periodically to make sure there aren’t any errors or mistakes that could be affecting your scores. It’s also important to check your reports so you can spot any potential signs of identity theft.

If you do spot any inaccuracies, you can dispute them directly with the credit bureaus. Credit Karma even lets you dispute errors on your TransUnion report directly with our Direct Dispute™ feature.

Pay on time

Your payment history is an important factor for your credit scores. Paying on time, every time on accounts that report to the three main consumer credit bureaus can help you build a positive payment history.

If you’ve made a late payment and caught it before it was reported to the credit bureaus, call your lender as soon as possible. The lender may be able to help you resolve it before the late payment is added to your reports. But if it has been accurately reported, a late payment can be difficult to remove from your credit reports.

Keep your balances low

Keeping your balances low on your credit cards can help your credit utilization rate, or how much of your available credit you’re using at any given time.

The usual advice is to keep your balance below 30% of your limit. That’s a good rule of thumb and a nice round number to commit to memory. But if you can manage to keep your utilization rate lower than 30%, that’s even better.

There’s no credit-building benefit to carrying a balance on your cards if you can afford to pay off the full balance each billing cycle. When it comes to credit-building strategies, it’s best to make consistent charges to the account while keeping the total amount owed under 30% of your credit limit. If you can, pay your statement balance off in full and on time each month so you aren’t charged interest on those purchases.

Give it time

If you’re working on your credit, give it time.

The age of your credit history is another factor that affects your scores, so consider your options if you’re looking to close an old account, which may be working in your favor because of its age. It could still be worth closing the account if the line of credit is costing you an annual fee or if you’re concerned about getting into debt, but be aware of the potential impact on your credit.

You should also give it time if you have any elements on your credit reports that are dragging your scores down. It can be frustrating to have hard inquiries show up on your reports for loans you weren’t even approved for, but these generally fall off your reports within two years and may only affect your scores for one year.

If you have derogatory marks like accounts in collections or late payments on your reports, they should fall off your reports in seven years. Bankruptcies can stay on your reports for up to 10 years.

What credit card can I get with a 520 credit score?

You might have a hard time getting approved for a credit card with poor credit scores.

The good news is, Credit Karma can help. You can log in to your account to see your personalized Approval Odds for a number of different credit cards. While your Credit Karma Approval Odds aren’t a guarantee that you’ll be approved for a particular card, they can help you find a credit card that matches your current credit profile.

Here are some common options you may come across.

Secured credit cards

Applying for a secured credit card might be your best bet if your credit still needs some work. With a secured card, you’ll pay a security deposit upfront. This security deposit typically sets your credit limit. So if your security deposit is, say, $300, your credit limit may also be set at $300. This gives the issuer some insurance in case you close the account without paying off your debt.

Because secured cards pose less of a risk for credit card issuers, they may be more readily available to someone with poor credit. And a secured card can benefit you as a borrower if the lender reports your on-time payments and other credit activity to the three main credit bureaus.

Unsecured credit cards

If you can’t afford a security deposit, you might be able to find an unsecured credit card. The trade-off is that it will potentially come with an annual fee — which is arguably worse than a security deposit because it’s typically nonrefundable. You could also face higher interest rates.

Store credit cards

Store credit cards typically incentivize you to shop at a particular retailer. This type of card can be secured or unsecured, so it’s not technically a third category. But store credit cards are worth talking about as an option if you’re building credit.

Why? Because you might have a better chance at getting approved for a store credit card with poor credit. The potential downside is that these cards tend to come with high interest rates, and you may only be able to use them at a specific store. On the other hand, they might offer rewards and benefits that make sense if you already shop at the store in question.

If you’ve looked into all of these options and still can’t find a card that you can get approved for, you may have other options. Consider asking a family member or trusted friend to add you to their credit card account as an authorized user. But first, familiarize yourself with the pros and cons of being an authorized user on a credit card.

Compare offers for credit cards for poor credit on Credit Karma to learn about more options.

Personal loans with a 520 credit score

You might find it challenging to get approved for a personal loan with poor credit scores.

Given your current scores, you might not have the luxury of shopping for the best personal loans with the lowest interest rates. Instead, you may have to settle for a personal loan with a high interest rate — not to mention other fees, such as an origination fee.

This could make a personal loan seem very unappealing to you, especially if your intention with the loan is to consolidate high-interest credit card debt. The APR on your personal loan could be just as high, if not higher, than the interest rate you’re currently paying on your credit cards.

On the other hand, if your goal with a personal loan is to finance a major purchase, you should ask yourself whether it’s something you need right now. If it can wait until after you spend some time building credit, you may qualify for a personal loan with a lower APR and better terms later down the line.

If you’re really in a pinch for cash and you’re having a difficult time finding a personal loan you qualify for, you might be considering a payday loan. While everyone’s situation is unique, you should generally be wary of these short-term loans that come saddled with high fees and interest rates. They can quickly snowball into a cycle of debt that’s even harder to climb out from.

Before you apply for a payday loan, consider whether you have any other options. You can also compare personal loans on Credit Karma to learn more about what’s available to you.

Auto loan rates for poor credit

Mortgage rates for poor credit

Next steps

It can be more difficult to get approved for loans and other offers if you have bad credit. If you can, give it time. The more you build up your credit, the more likely it is that you’ll start to qualify for better offers.

If your applications for credit are being denied and you don’t understand why, you have the right to ask and get an answer. This is also the first step to take if you suspect a lender is discriminating against you. It’s illegal for lenders to discriminate based on certain protected traits, such as race, gender, religion or marital status, and there are steps you can take to protect your rights as a borrower.

It may be tempting to go with a credit repair company for a quick fix. Be aware that these can be expensive, and sometimes companies that advertise these types of services can make misleading claims about what they can do for you. If you’re looking for guidance on navigating your personal credit situation, consider credit counseling instead.

Poor credit can leave you feeling discouraged, but it comes with a long runway for improvement — and a lot of goals to celebrate along the way. Knowing how to read and understand your credit scores and credit reports can help you understand how to take the next step in your financial journey.