If you’ve got a low credit score of 500, getting a loan from a traditional lender is going to be extremely difficult. But the good news is that there are loans available for people with credit scores of 500. Keep reading to find out what they are and how to find a loan that’s right for you.
Can you get a loan with a credit score of 500?
Yes. Even if your credit score is far from perfect, there are loans for people with a credit score of 500. These loans are typically available from alternative lenders that specialize in loans for bad credit borrowers. However, watch out for steep interest rates.
The most important factor to help you qualify for a loan if you have a credit score of 500 is having a steady income. Rather than focusing on your credit score, these lenders will assess your ability to pay back the amount you want to borrow. So if you’re in steady employment and you have an acceptable debt-to-income ratio, your chances of approval will increase.
Compare loans for a 500 credit score
Whether you’re looking for emergency loans for a 500 credit score or long-term financing, explore your options here.
⚠️ Warning: Be cautious with payday loans
High-cost payday loans are unsustainable for borrowing over a continued period of time and are expensive as a means of longer-term borrowing. View payday costs and regulations by province here. If you're experiencing financial hardship call Credit Counselling Canada for free financial counselling (Monday-Friday 8:00am-5:00pm at +1 866-398-5999). You may also want to consider payday loan alternatives.
Maximum borrowing costs of payday loans per province
Always refer to your contract for exact repayment amounts and costs.
Province
Max. cost of borrowing a $100 payday loan
Cooling off period to cancel loan
Max. penalty for returned cheque or pre-authorized debit
Alberta
$15
2 business days
$25
British Columbia
$15
2 business days
$20
Manitoba
$17
48 hours excluding Sundays and holidays
$20
New Brunswick
$15
48 hours excluding Sundays and holidays
$20
Newfoundland and Labrador
$14
2 business days
$20
Nova Scotia
$15
Next business day (2 days for online loans)
$40 (default penalty)
Ontario
$15
2 business days
$25
Prince Edward Island
$15
2 business days
N/A
Quebec
Limit of 35% AIR
N/A
N/A
Saskatchewan
$17
Next business day
$25
1. Installment loans
Installment loans are a type of personal loan for credit scores under 500 or starting at 500. These loans tend to have more lenient eligibility criteria compared to other personal loans, and you can pay back the money you borrow over terms ranging from 3 to 60 months. However, you’ll need to be prepared to accept higher interest rates than you would get on a conventional personal loan.
Features of installment loans for credit scores of 500
Loan amounts: Typically up to $5,000
Loan terms: 3–60 months
Interest rates: 18% – 47%
Chances of approval: Medium
What to watch out for: High interest rates will mean you need to repay much more than you borrow, while origination, prepayment, late payment and NSF fees may apply. You’ll also need to ensure that you’re dealing with a reputable lender.
A payday loan offers fast access to financing – you can apply for a loan, get approved and access your funds all in the same day. You then have a very short time to pay back what you borrow, with a maximum loan term of 62 days. High interest rates also apply, so it’s worth considering payday loan alternatives first.
Features of payday loans for credit scores of 500
Loan amounts: $100 – $1,500
Loan terms: 1 – 62 days
Interest rates: $14 to $17 for every $100 borrowed
Chances of approval: High
What to watch out for: It’s common for payday loans to have APRs of over 400%, so this type of loan is an extremely expensive way to borrow money. Short loan terms make it easy to fall into a cycle of debt, while it’s also essential to keep an eye out for scams and make sure you’re dealing with a legitimate lender.
Car title loans are secured to the title of your vehicle. They allow you to borrow up to 50% of the value of your car and you can also take advantage of fast access to funds. And because you offer your car title as security, you can access higher loan amounts even if you have bad credit.
Most car title lenders require you to take your vehicle in for an inspection before approving your loan, but some offer 100% online approval.
Features of car title loans for credit scores of 500
Loan amounts: $1,000 – $50,000
Loan terms: 3 - 60 months
Interest rates: 9% – 49%
Chances of approval: High
What to watch out for: Read the fine print to find out about any fees and charges that apply to your loan, such as vehicle evaluation, title search and admin fees. Combined with the interest rate, this can result in a high APR. It’s also important to remember that the lender could repossess your car if you can’t repay the loan.
4. Pawn shop loans
A pawn shop loan provides fast access to funds when you offer an item as collateral, such as jewellery, electronics or a musical instrument. You can borrow amounts up to 60% of the item’s resale value and then pay back your short-term loan (plus interest) to have the item returned to you.
Features of pawn shop loans for credit scores of 500
Loan amounts: Approximately 25–60% of the item’s value
Loan terms: Typically 30–90 days
Interest rates: 10–200+%
Chances of approval: High
What to watch out for: High interest rates and short terms can make it difficult to pay back what you borrow. The pawn shop will sell your item and keep the profits if you can’t pay back the loan, while it’s also important to keep an eye out for any hidden fees, such as storage fees.
5. Pay advance
Pay advance apps in Canada are a relatively new way to access emergency cash. Pay advance services allow you to access a small portion of your next paycheque to help you get through until your next payday. There’s no credit check required and some providers don’t charge any interest. It’s possible to access money on the same day in some cases, often for a fee, but funding may take up to three business days in normal circumstances.
When it comes to paying back the loan, the pay advance service will typically automatically deduct the money from your bank account on your next payday.
Features of pay advance apps
Loan amounts: Varies depending on the service, but typically around $100
Loan terms: Repayment by your next payday
Interest rates: No interest, but you may pay a subscription fee or express fee
Chances of approval: Medium to low
What to watch out for: Check the fine print to find out what fees apply when you use the service, and also whether there are late payment fees. You’ll also need to budget carefully to make sure you can cover expenses once your repayment is deducted from your next pay.
6. Credit card cash advance
A credit card cash advance allows you to access money from your card balance. You can get the cash you need from your bank or ATM machines, but you’ll pay interest on the money you use and cash advances aren’t eligible for interest-free days. Compare cards with low cash advance rates to find an affordable option.
Features of credit card cash advances
Loan amounts: Maximum daily limits are typically $500 or less
Loan terms: Open
Interest rates: Approximately 23% + fee
Chances of approval: Not applicable
What to watch out for: Daily, weekly and monthly cash advance limits commonly apply, so you may not be able to access the amount you need. Cash advances also attract high interest rates. Interest starts accruing straight away, and you’ll need to pay a cash advance fee.
Can I get loans for a bad credit score of 500?
Yes, it’s possible to get loans with a 500 credit score even though that’s considered bad credit by most lenders. Lenders who offer these types of bad credit loans often serve borrowers with credit scores as low as 300. The types of loans you can get with a bad credit score of 500 include installment loans, payday loans and car title loans. Keep in mind that bad credit loans tend to come with high interest rates.
How to increase your chances of loan approval with a credit score of 500
There are a few simple things you can do to improve your chances of getting approved for a loan with a credit score of 500.
Provide collateral. If you can provide collateral, such as your car, and apply for a secured loan, you’ll increase your chances of approval and also be able to access lower interest rates. Just remember that you run the risk of losing that asset if you fall behind on repayments.
Get a cosigner. Applying for a personal loan with a cosigner, provided your cosigner has strong credit, can greatly increase your loan approval chances and help you get a better rate. But if you can’t make repayments, the cosigner becomes liable for paying off the loan.
Avoid NSF transactions. Lenders will consider your income and existing debt to determine your ability to repay the loan. So if there are any NSF transactions on your account, this will make you look like a risky prospect to a lender. But if you don’t have any NSF transactions in the last 60–90 days, this will enhance your chances of loan approval.
How do I get an emergency loan with a credit score of 500?
All of the loan options listed above provide fast access to funds, but payday loans and credit card cash advances are the fastest.
If you’ve already got a credit card, it’s easy and convenient to get a cash advance from your card. Just make sure you’re aware of the interest rate and cash advance fee that will apply to your transaction before deciding if it’s the right option.
Payday loans allow you to get cash within an hour in some cases so you can take care of emergency expenses. But high APRs and short loan terms mean you should always consider a range of payday loan alternatives first.
Credit scores in Canada range between 300 and 900. A credit score of 500 falls within the “poor” credit score category.
Lenders use credit scores to assess how well potential borrowers handle their credit. Poor and fair credit scores indicate that someone has had trouble managing their debt load in the past, which means there is a greater chance they may default on a new loan. Lenders compensate for that higher risk by charging high interest rates on bad credit loans.
Before you apply for a high-interest loan with a credit score of 500
If you have a credit score around 500, taking out a high-interest loan might seem like the best solution to your money troubles now, but it could have an even more detrimental impact on your finances in the long run. That’s why it’s a good idea to get in touch with a credit counselling agency before you take out a loan.
A credit counsellor can sit down with you to assess your finances and your level of debt. They can advise you on the best way to get out of debt and provide tips on how to manage your money wisely.
If you need help, visit 211.ca to get connected to the right support in your province or territory. From financial assistance and education to free or low-cost legal services, it’s easy to find the support you need.
Frequently asked questions about loans for a 500 credit score
Yes, it is possible to get a loan with a credit score under 500. Some bad credit lenders offer loans to people with credit scores as low as 300. However, your options will be limited and you'll be charged high interest rates. Applying to a broker platform that offers bad credit loans, like Loans Canada or LoanConnect, can help narrow down loan options based on what you can qualify for.
Loans for credit scores of 500 are available from online lenders, pawn shops and pay advance services. Make sure you compare a range of options before deciding which loan is best suited to your financial situation.
Yes, personal loans for people with credit scores of 500 are available from select alternative lenders that accept borrowers with bad credit. Be sure to compare loan APRs and terms, plus make sure you're dealing with a reputable lender to find a loan that's right for you.
Tim Falk is a freelance writer for Finder. Over the course of his 15-year writing career, he has reported on a wide range of personal finance topics. Whether you're investing in stocks and ETFs, comparing savings accounts or choosing a credit card, Tim wants to make it easier for you to understand. When he’s not staring at his computer, you can usually find him exploring the great outdoors.
Compare some of the best bad credit loans in Nova Scotia.
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