What Can You Get Approved For With a 342 Credit Score?

With a 342 credit score, a secured credit card is your most realistic approval. An auto loan or a small loan from a credit union may also be possible. Unsecured cards, most personal loans, and mortgages are mostly out of reach for now.

If you do find a lender willing to approve you, you'll likely pay more, because your score sets your interest rate. Your nearest milestone is 500, 158 points away. At that score, FHA mortgages open up with 10% down.

Is 342 a poor credit score?

Yes. FICO's poor range runs from 300 to 579, and 342 sits in the lower half of it. Fair credit starts at 580, which is 238 points away.

A score this low usually means your credit report includes several negative marks like these:

• Missed payments. A payment 30 days late gets reported and stays for seven years. Several late payments, or one that stretched to 90 days, do more damage than a single slip.
• Accounts in collections. This is a debt handed off to a collection agency, often a medical bill or an old card balance. A collection also stays for seven years, counted from the original delinquency.
• Charged-off accounts. A lender wrote the debt off as a loss, usually after about four to six months of no payment. You still owe it, and it still reports to the bureaus.

Lenders read that as a high risk you won't repay, so approvals are harder. When one comes through, the terms reflect the risk. Expect higher rates, bigger deposits, and larger down payments. In some states, a low score can also mean higher insurance premiums.

What can you get approved for with a 342 credit score?

Few financial products are open at 342, and approval isn't guaranteed even for those. Knowing which ones to try can save you an application.

Credit cards

Most credit cards are unsecured, which means nothing of value backs them. Those cards are very hard to get with a 342 score.

A secured credit card is the likeliest approval. You put down a refundable deposit that usually becomes your credit limit. For example, a $500 deposit gets you a $500 limit. The issuer holds the deposit while the account is open and keeps it if you don't pay.

You generally get the deposit back in one of two ways. You can close the account in good standing, or the issuer can graduate you to an unsecured card after steady on-time payments.

Some subprime unsecured cards accept low scores, but a 342 may still fall short. If you're approved, expect a low limit, a high rate, and fees. Before applying for any card, check whether the issuer offers prequalification. It uses a soft credit check, so it won't add a hard inquiry to your report.

Personal loans

A personal loan from a bank or online lender is very hard to get at 342. If you're approved, expect a small amount, a short term, and a high rate. For example, you might get $500 to repay over six months.

If you need a small loan, start with a credit union. Some federal credit unions offer payday alternative loans (PALs) of up to $2,000, repaid over one to 12 months. Application fees are capped at $20, and rates can't go higher than 28%. A PAL is worth asking about if you belong to a credit union or can join one.

A PAL is much cheaper than a payday loan. With a payday loan, a typical $15 fee per $100 borrowed works out to an APR of nearly 400%.

Auto loans

An auto loan is one of the easier loans to get approved for, even with a 342 score. Approval still isn't certain, and a lender may ask for a larger down payment.

Auto loans are easier to get because your car is the collateral: If you stop paying, the lender can take it back and sell it to satisfy the loan. That lowers the lender's risk, but it also means falling behind puts your car at risk.

A 342 score falls in Experian's deep subprime tier (300 to 500), 159 points below where subprime starts at 501. Your credit score plays a major role in the interest rate you're offered on a car loan. On a $20,000, 60-month new car loan at average rates, a deep subprime borrower would pay about $6,900 more in interest than a super prime borrower. Experian sorts these tiers by VantageScore 4.0, so your FICO score may place you a little differently.

Banks and credit unions may turn you down at 342. If they do, buy here, pay here dealers finance cars themselves. Treat them as a last resort. They often require weekly or biweekly payments and charge much higher rates than traditional loans.

Use an auto loan calculator to check payment amounts before you sign.

Mortgages

A mortgage isn't realistic with a credit score of 342. FHA loans have the most flexible credit requirements, but they start at scores of 500 with at least 10% down. Lenders can set their own minimums higher.

If you want to buy a home, work on both building your score and saving money for a down payment. Our mortgage calculator can show what 10% down looks like on a home in your price range.

Read more >> What Can You Get Approved For With a 560 Credit Score?

What interest rates can you expect with a 342 credit score?

Expect rates near the top of whatever range a lender offers. Card accounts charging interest averaged 22.15% in the Federal Reserve's G.19 release. In the same release, 24-month bank personal loans averaged 11.86%. Those averages cover borrowers at every credit level. With a 342 score, your offers are likely to be higher.

The rate applies to the whole balance, so even a few points add up. If you can wait to borrow, build toward 500 first. It's 158 points up, and it's where FHA mortgages open with 10% down.

5 ways to raise a 342 credit score

1. Check your credit reports for errors. You can get all three for free every week at AnnualCreditReport.com. If something is wrong, like an account that isn't yours or a late payment you made on time, dispute it with the bureau. Disputing is free.
2. Bring past-due accounts current. For accounts already in collections, it can be hard to know which to pay first. The National Foundation for Credit Counseling (NFCC) can connect you to free or low-cost counseling at 800-388-2227.
3. Pay every current bill on time. Payment history is the biggest factor in your score, making up 35% of a FICO Score.
4. Keep card balances low. Using less of your available credit helps your score.
5. Apply only when you need to. Each application can add a hard inquiry, which takes a few points off for about a year. Prequalify first where you can.

If your report is thin on positive accounts, adding one helps. A Kikoff Credit Account reports your payments to all three bureaus.

Progress is often slow at first. Late payments and collections lose weight as they age, and each month of on-time payments adds to your record.

Read more >> Which Debt Should I Pay Off First?

Bottom line

A 342 score still leaves you a few options. A secured card is the easiest to get, and an auto loan or a credit union PAL may be possible. But your score doesn't just decide whether you're approved. It also sets the rate on every dollar you borrow.

At 500, 158 points up, FHA mortgages open with 10% down, though lenders can set higher minimums. Building your score before your next application is how you get a lower rate.

Kikoff brings credit building, bill and rent reporting, AI-powered disputes, credit monitoring, and debt negotiation into one place. Sign up with no credit check. Plans start at $5 a month.