The first time I checked my credit score, it was 520. I remember being surprised that it was not 0 (I now know that the minimum credit score is 300). I had really messed up my credit.
Since I had a credit score in that range, I understand exactly what has to be done (and not done) to end up with 520 credit. Before I get to that, let's talk about whether this is a good or bad score.
Is this a Bad Score?
520 is not a terrible credit score but it definitely is not good. Most financial institutions are going to classify you as having bad credit if you're in this range. That said, some of them will still lend to you in certain situations.
For example, if you have some old derogatory items on your credit and that's why you ended up with a score in this range, you may still have a chance. If you have even six 'clean' months under your belt, it will go a long way towards getting you an approval. If you have two years without derogatory items, even better.
In this case, you may be able to get a loan. That said, the loan will be more expensive than it would be for someone who has clean credit.
Do You Have Recent Derogatory Items?
If you have recent derogatory items, it will be very difficult to qualify for a loan with 520 credit. Your score is shaky at best and the bank will see your late payments. In this situation your best bet is to stop paying late now and work toward getting a loan in about six months. By then you will have a much better chance and likely, a higher score.
Do You Have Credit Card Debt?
If you have high balances on your credit cards, it will make it a lot more difficult to get a loan. The banks are going to see that you're already struggling to pay off the debts you already have.
If your balances are under 30%, they will not look too bad. If they are over 30%, it starts to look suspect. Get over 50%, you're in trouble.
If you find yourself in this situation, you need to get them paid down. The more you can pay them down, the better off you will be.
Why You End Up With 520 Credit
I ended up with a score in this range for a few reasons. First, I did not pay my credit card bills on time. In fact, for a while I stopped paying them at all. This led to two of my credit card accounts being closed.
Since they were not open for very long, I had not established a record of making on time payments. I only made at most four on time payments and then got off track.
I also did not have any loans to help me build credit.
Basically, you end up with credit in this range if you do not have much credit history and make some mistakes with the credit history you do have.