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Loans With a 500 Credit Score: What Actually Exists and What to Avoid

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At 500, most mainstream unsecured personal loans are out of reach, and the loans that remain open to you range from fairly priced to very expensive. The cheapest options at this score are usually not "bad credit loans" at all. They are products built around collateral or membership: a loan secured by your own savings, a credit union payday alternative loan, or a credit builder loan. This page starts with those, explains what they cost under the rules that govern them, and then covers the high-cost products you should price carefully before you sign.

Key takeaways

  • 500 is in FICO's "Poor" band (below 580). Experian counted 14.7% of consumers there in 2025.
  • Federal credit union payday alternative loans (PALs) are capped at 28% APR under NCUA rules, with an application fee of no more than $20.
  • Savings-secured and credit builder loans are built for this band and can help rebuild a file.
  • A typical payday fee of $15 per $100 equals almost 400% APR, per the CFPB. Exhaust the cheaper options first.

This page is part of our hub on personal loans by credit score.

What does a 500 credit score mean for borrowing?

myFICO puts scores below 580 in its "Poor" range and says a score there "demonstrates to lenders that you are a risky borrower." Experian's 2025 data put 14.7% of consumers in the 300 to 579 band, up from 13.2% in 2024.

Most mainstream lenders draw their line above you. Bankrate says you'll "typically need a credit score of at least 580," though "some lenders accept scores as low as 300." Avant says on its own site that you may qualify with a minimum score of 550. At 500 you are 50 points below that.

Those who do get unsecured offers at this band pay for it. LendingTree's Q2 2026 average APR for "Poor (under 580)" was 30.51%.

What are the safer options with a 500 score?

Start here, in roughly this order.

1. A loan secured by your own savings. Many credit unions lend against money you already have on deposit. First Tech Federal Credit Union, for example, prices its share secured loan "as low as" its savings rate plus 3.00%, lets you borrow as little as $500, and offers terms up to 96 months. Its published example: $18,635 at 3.88% APR for 60 months, which is $18.36 a month per $1,000 borrowed. The trade is that your savings are pledged until the loan is repaid.

2. A credit union payday alternative loan (PAL). Federal credit unions can offer two kinds under 12 CFR 701.21:

FeaturePAL IPAL II
Amount$200 to $1,000Up to $2,000
Term1 to 6 months1 to 12 months
Membership required firstAt least 1 monthNot required by the rule
Application feeUp to $20, reflecting actual costUp to $20, reflecting actual cost
RolloversNot allowedNot allowed
LimitNo more than 3 PALs in 6 months, 1 at a timeSame

The rule allows a rate 1,000 basis points above the NCUA Board's general ceiling. The Board kept that ceiling at 18% in February 2026, which puts the PAL maximum at 28%. On $1,000 at 28% over six months, the payment is $180.54 and the interest is $83.24, computed by Loans Generator. Add the maximum $20 fee and the total cost is $103.24.

3. A credit builder loan. The CFPB describes these as loans where "the money is not yours for spending," held as savings while you make small payments "usually over six to 24 months," and released to you at the end. They don't solve an emergency today. The CFPB's own research found they worked better for people who entered without existing debt, and that taking one on appeared to make it harder for some borrowers to keep up with other loan payments. Our explainer on credit builder loans covers how to pick one.

4. A secured installment loan from a finance company. OneMain advertises "secured and unsecured loan offers" from $1,500 to $30,000 at 11.99% to 35.99% APR. Collateral such as a vehicle can open an offer an unsecured lender would decline, but you can lose the collateral if you fall behind.

Representative example. For a $5,000 loan at a 10% APR over 36 months, the monthly repayment would be $161.34. Over the term, the total repayment would amount to $5,808.24, with $808.24 in interest. The loan terms range from 6 months to 12 years, with APRs between 5.99% and 35.99%. The exact rate you receive depends on factors like your creditworthiness, loan size, and repayment schedule. Better rates are typically offered to those with excellent credit.

What does borrowing $1,000 cost at 500, by product?

Cost to borrow $1,000, three ways Bar chart: PAL $103.24 for six months, 35.99% installment $205.52 for twelve months, payday $150 for two weeks. Cost to borrow $1,000, three ways Credit union PAL, 28%, 6 mo $103.24 Installment, 35.99%, 12 mo $205.52 Payday, $15 per $100, 2 wks $150.00
PAL figure is interest at the 28% ceiling (12 CFR 701.21 plus NCUA's 18% ceiling) plus the $20 maximum application fee. Payday fee from the CFPB; it buys two weeks, and each new loan costs another fee.
ProductRules or termsCost of $1,000
Federal credit union PAL I28% maximum, 6 months, fee up to $20$103.24 in interest and fee over 6 months
Installment loan at 35.99%12 months$205.52 in interest over 12 months
Payday loan at $15 per $1002-week term$150 in fees for two weeks

The payday line is the one to look at twice. The CFPB says payday finance charges range from $10 to $30 per $100 depending on state law, that $15 per $100 is common, and that this "equates to an annual percentage rate of almost 400 percent for a two-week loan." The $150 buys two weeks. If you can't repay in full at the end, a new loan means a new fee. For a $1,000 need, compare all options side by side on our $1,000 loan options page.

Cost warning. If a lender advertises "no credit check" or "approval for any score," find the APR in the disclosure before you do anything else. A payment that looks small can hide a triple-digit APR. If you're already rolling payday loans over, our plan to break the payday loan cycle shows the way out.

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How do you move from 500 toward 550 and above?

The jump from 500 to the mid-500s opens the first mainstream lenders, and the 550 credit score guide shows what they publish. Steps that help, in order:

  1. Pull your reports and dispute errors. The FTC says free weekly reports from all three bureaus are available at AnnualCreditReport.com.
  2. Get current on anything past due. myFICO lists payment history among the factors in a FICO Score.
  3. Open one reporting account you can manage. The CFPB lists secured credit cards and credit builder loans as ways to start or rebuild a credit history.
  4. Keep balances low on any card you have. Utilization is one of the factors myFICO lists.
  5. Stop applying for unsecured loans you're unlikely to get. Each formal application adds a hard inquiry.

No one can tell you how long this takes, and you should distrust anyone who promises a score by a date.

Who this is for

Borrowers with scores around 500 who need money now or soon and want to know which options won't make things worse.

What to do next

Call your bank or a credit union first and ask about a savings-secured loan or a PAL. If neither works, compare APR and total cost on any offer before you sign.

Common questions

Can I get a personal loan with a 500 credit score?

Some lenders will consider low scores, and Bankrate notes some accept scores as low as 300. Most mainstream unsecured lenders set their line higher, and offers at 500 tend to be secured or expensive.

What is the cheapest loan with a 500 credit score?

A loan secured by your own savings at a credit union is usually the lowest-cost option, followed by a federal credit union PAL capped at 28%.

How do I get a payday alternative loan?

Ask a federal credit union. For a PAL I you must have been a member for at least one month. The application fee can't exceed $20.

Are credit builder loans worth it at 500?

They can help build a record if you have room in your budget. The CFPB found they worked best for people without existing debt.

Is a secured loan risky?

Yes, in one specific way: you can lose the collateral, whether that's savings or a vehicle, if you don't repay.

How we researched this

We read the PAL rule on eCFR, the NCUA's rate ceiling notice, CFPB guidance and research, and lender pages on October 1, 2026, and computed all cost figures.

Sources

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