What Can You Get Approved For With a 586 Credit Score?

With a 586 credit score, you can likely get approved for a secured credit card, an auto loan, a credit union loan, or an FHA mortgage with 3.5% down. Some unsecured cards and personal loans are realistic too, though not every lender will approve you. You'll pay more than borrowers with good credit, because your score sets your rate. At 586, you're 15 points from Experian's near prime auto tier at 601 and 84 points from good credit.

Is 586 a poor credit score?

No, but it's close. FICO's fair range runs from 580 to 669, so 586 sits near the bottom of it, just 6 points above the 580 cutoff. At 670, you'd move into good credit.

A score in this range usually means your credit report shows one or more of these issues:

• A late payment. A payment 30 days or more late stays on your report for seven years. Its effect on your score shrinks as it ages, especially when newer on-time payments build behind it.
• High card balances. Using a large share of your available credit lowers your score. Unlike a late payment, this changes as soon as your balances come down.
• A short or thin credit history. A thin credit file, meaning a report with only a few accounts or accounts that haven't been open long, gives scoring models less to go on.

Many lenders will work with a 586 score, though fewer than at higher fair scores. Those that do offer tougher terms, including higher rates, lower limits, and, in some states, higher car insurance premiums than borrowers with good credit get.

Read more >> What Can You Get Approved For With a 620 Credit Score?

What can you get approved for with a 586 credit score?

At 586, more products are open than in the poor range, but prices still run high. Knowing which products are reachable can save you an application.

Credit cards

Some unsecured cards designed for fair credit will approve a 586 score, but not every issuer will. Expect a low limit and a high APR. Before applying, check whether the issuer offers prequalification, which uses a soft credit check that doesn't harm your credit.

A secured credit card is your most reliable option. With these cards, you put down a refundable deposit that usually becomes your credit limit. A $500 deposit gets you a $500 limit, for example. You generally get it back when you close the account in good standing or the issuer graduates you to an unsecured card after steady on-time payments.

Personal loans

A personal loan is realistic at 586, but expect a smaller amount and a higher rate than a borrower with good credit would get. Start with a credit union if you belong to one or can join. Federal credit unions can't charge more than 18% on most loans. Some also offer payday alternative loans (PALs) of up to $2,000 with rates capped at 28%.

Online lenders that work with fair credit are another option, though their rates run higher. Compare offers using prequalification, so only the lender you choose runs a hard credit check. Any of these is cheaper than a payday loan, where a typical $15 fee per $100 borrowed works out to an APR of almost 400%.

Auto loans

Approval for a car loan at 586 is often easier than approval for a personal loan, because your car is the collateral: If you stop paying, the lender can take it back and sell it. That lowers the lender's risk, but it also means falling behind puts your car at risk.

A 586 score falls in Experian's subprime tier (501 to 600). 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 subprime borrower would pay about $5,300 more in interest than a super prime borrower, and about $4,300 more than a prime borrower. Experian sorts these tiers by VantageScore 4.0, so your FICO score may place you a little differently.

If banks and credit unions turn you down, buy here, pay here dealers finance cars themselves. 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 is within reach at 586, and an FHA loan is the most likely fit. Borrowers with scores of 580 or higher can qualify with 3.5% down. On a $250,000 home, that's $8,750 up front. At 586, you're only 6 points above that cutoff. Below 580, the minimum rises to 10% down, or $25,000 on the same home. Each lender can also set higher minimums.

A conventional mortgage is possible but less likely. Fannie Mae no longer sets a minimum score for loans run through its automated system, but lenders still set their own minimums. Fannie Mae also charges lenders an upfront fee on the loans it buys, based on your score and down payment. At 20% down, the fee for scores of 639 and below is 2.75% of the loan amount, compared with 0.375% at 780 or higher. On a $200,000 loan, that's $5,500 versus $750, paid through a higher rate or more cash at closing. The fee drops to 2.25% at 640, or $1,000 less on a $200,000 loan.

USDA loans are for homes in eligible rural and suburban areas with income limits. USDA doesn't set a minimum score, but lenders typically look for 620 to 640, so 586 is likely below what a lender will accept.

A lender can show you an FHA and a conventional quote side by side. Our mortgage calculator can help you compare the monthly payments.

What interest rates can you expect with a 586 credit score?

Expect rates toward the high end of the range a lender offers. The Federal Reserve's averages across all borrowers were 22.15% for card accounts charging interest and 11.86% for 24-month bank personal loans. Those averages cover borrowers at every credit level. With a 586 score, your offers are likely to come in above them.

For auto loans, Experian's subprime averages are 13.52% on new cars and 19.1% on used cars. The rate applies to the whole balance, so even a few percentage points add up. If you can wait to borrow, 15 more points would move you into Experian's near prime tier at 601.

5 ways to raise a 586 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 any past-due accounts current, if you can. If you're juggling more than one, the National Foundation for Credit Counseling (NFCC) can connect you to free or low-cost counseling at 800-388-2227.
3. Pay every bill on time. Payment history is the biggest factor in your score, making up 35% of a FICO Score.
4. Pay down card balances. Using less of your available credit can raise your score as soon as your issuer reports the lower balance, which makes it a fast way to close a small gap.
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, since prequalification uses a soft check.

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

Read more >> How to Build Credit

Bottom line

At 586, you're in fair credit, and an FHA mortgage with 3.5% down is open to you. What your score decides now is mostly the price. Another 15 points moves you into Experian's near prime auto tier at 601, and 84 gets you to good credit in FICO's ranges. Staying at 580 or higher keeps the FHA down payment at 3.5%.

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.