Can You Get a Mortgage or Car Loan With a 500-600 Credit Score?

Can You Get Approved With a 500-600 Score? Yes, but It Costs More

You can get both a mortgage and a car loan with a score in the 500-600 range. But you'll pay significantly higher interest rates than someone with a 700+ score. On a 30-year mortgage, that rate difference can mean tens of thousands of dollars in extra interest over the life of the loan.

Here's the reality check by score range:

What Are the Minimum Scores for a Mortgage?

FHA loans: Minimum 500 with 10% down payment. Minimum 580 with 3.5% down payment. FHA is the most accessible path for low-credit borrowers.

Conventional loans: Minimum 620 for most lenders. Some allow 580 with compensating factors (large down payment, low debt-to-income ratio, significant cash reserves).

VA loans: No official minimum from the VA, but most lenders require 580-620. The VA guaranty reduces lender risk, making them more flexible.

USDA loans: Minimum 640 for automated approval. Manual underwriting may accept lower scores.

Important: mortgage lenders typically use FICO scores 5, 2, and 4 — older models that may differ from what you see on Credit Karma or your bank app. The FICO vs VantageScore difference matters here.

What Are the Minimum Scores for an Auto Loan?

There's no hard minimum for auto loans — it's entirely up to the lender. But here's the general landscape:

Prime lenders (banks, credit unions): Typically want 660+. Best rates go to 720+.

Subprime lenders: Will work with 500-600 scores. Expect rates of 10-20%+ APR.

Buy-here-pay-here dealers: No credit check but terrible terms — 20-30%+ APR, overpriced vehicles, and repo-friendly contracts.

A 600 score might get you a 12% auto loan. A 750 score might get you 5%. On a $30,000 car over 60 months, that could be the difference between $6,700 and $2,900 in total interest. Taking time to work on your credit before buying may help you qualify for a better rate.

Should You Improve Your Credit Before You Apply?

Unless you're in an emergency, it is often worth taking time to work on your credit before a major loan application. Here is a priority order to consider:

1. Pay down utilization. Lower balances can affect your score as soon as your issuers report them.

2. Dispute inaccurate information. Bureaus must investigate within 30 days (up to 45 in some cases).

3. Don't open new credit. Hard inquiries and new accounts lower your score. Freeze applications until after your loan closes.

4. Pay everything on time. One late payment during this window can tank your application.

Even small rate differences add up over a long loan. Ask lenders for quotes so you can see the dollar impact for your situation.