What Can You Get Approved For With a 587 Credit Score?

With a 587 credit score, you can likely get approved for a secured credit card, an auto loan, a personal loan from a credit union, or an FHA mortgage with 3.5% down. An unsecured card is possible, but approval isn't guaranteed this close to the bottom of fair credit. You'll pay more than borrowers with stronger scores, because your score sets your rate. At 587, you're 14 points from Experian's near prime auto tier and 83 points from good credit.

Is 587 a poor credit score?

No. FICO's fair range runs from 580 to 669, so 587 sits near the bottom of it, just 7 points above the 580 cutoff. At 670, you'd move into good credit.

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

• Late payments. 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.
• 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.
• 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.

Some lenders will work with a 587 score, but the terms are worse than what borrowers with good credit get: higher rates, lower limits, bigger deposits, and, in some states, higher car insurance premiums.

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

What can you get approved for with a 587 credit score?

More doors are open at 587 than in the poor range, but prices still run high. Knowing which products are reachable can save you an application.

Credit cards

Not every issuer will approve a 587 score for an unsecured card. Cards designed for fair credit are possible, but expect a low limit and a higher APR than cards for good credit. 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 likely approval. You put down a refundable deposit that usually becomes your credit limit. A $500 deposit, for example, 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 when you close the account in good standing, or when the issuer graduates you to an unsecured card after steady on-time payments.

Personal loans

A personal loan at 587 is harder to get than at a higher fair score, but it's a realistic option. 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, repaid over one to 12 months, with rates capped at 28% and application fees capped at $20 under NCUA rules.

Online lenders that work with fair credit are another option. 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 nearly 400%.

Auto loans

Approval for a car loan at 587 is often easier than approval for a personal loan, because the loan is secured by the vehicle you're buying. 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 587 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

With a 587 credit score, a mortgage is possible, with costs depending on the type:

• FHA loans. 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 587, you're 7 points above that cutoff. Below 580, the minimum rises to 10% down, or $25,000 on the same home. Each lender can set higher minimums.
• Conventional loans. Fannie Mae no longer sets a minimum score for loans run through its automated system, but lenders still set their own, so approval at 587 depends on the lender. 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, and you'd pay it through a higher rate or more cash at closing. The next fee band starts at 640, at 2.25%, which would save about $1,000 on a $200,000 loan.
• USDA loans. These 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. At 587, you're below that range.

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 587 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 587 score, your offers are likely to be higher.

The rate applies to the whole balance, so a few points add up. If you can wait to borrow, 14 more points would move you into Experian's near prime tier for auto loans.

5 ways to raise a 587 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, if you can. 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 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 only 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 587, you can get approved for more than a poor score allows, including an FHA mortgage with 3.5% down. But your score still sets a high price. You're 14 points from Experian's near prime auto tier and 83 points from good credit in FICO's ranges. Staying above 580 also keeps the 3.5% FHA down payment open.

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.