How to Get a Loan With a 600 Credit Score

Securing a Loan With a Credit Score of 600

Your credit score is one of the most important numbers in your financial life. It’s a reflection of your financial habits, showing lenders how likely you are to default on your debt payments. A good credit score signals that you're a reliable borrower who is likely to repay your debts on time. That translates to more loan options and possibly better terms.

According to FICO and VantageScore — the two most commonly used scoring models in the financial industry — a good credit score ranges between 670 and 739, and 661 and 780, respectively.

But what if your score is below these ranges? More specifically, what does having a 600 credit score mean for your ability to get a loan?

In this guide, we’ll explain how a 600 credit score impacts your loan eligibility, explore the types of loans you may still qualify for, and share some actionable steps to increase your chances of securing favorable terms.

What does a 600 credit score mean?

A 600 credit score typically falls into the fair or poor credit range, depending on the scoring model used. It tells lenders that while you may have had some credit challenges in the past, you're not necessarily the highest-risk borrower.

This score puts you in a position where loans are still within reach, but they often come with trade-offs. First, you’re likely to face higher interest rates compared to borrowers with good or excellent credit. Additionally, lenders may impose stricter requirements, such as requiring a higher income and a lower debt-to-income (DTI) ratio.

Secured loans

A secured loan is a type of installment loan that requires collateral, such as a car or home to back the loan.

This collateral reduces the lender’s risk, making them more likely to approve your loan application, even with a 600 credit score. Furthermore, the presence of collateral often results in lower interest rates compared to unsecured loans. The risk of secured loans, however, is that if you fail to repay, the lender can seize the collateral to recover their money.

Unsecured loans

Unsecured loans are cash loans that do not require you to put up collateral. Instead, lenders assess factors like your credit score, income stability, and debt-to-income (DTI) ratio to determine whether to approve you. These types of loans are available from a wide range of providers including banks, credit unions, and online lenders.

Admittedly, these loans might be harder to qualify for than secured loans if you have a 600 credit score. If you decide to apply, be prepared for a potentially more stringent approval process and potentially higher interest rates.

Payday loans

Payday loans are short-term loans that you typically repay with your next paycheck. These loans are available without a credit check, making them accessible even to those with a 600 credit score. However, payday loans come with extremely high fees, so approach them with extreme caution and pay them off on time to avoid being trapped in a cycle of debt.

Co-signed loans

A co-signed loan involves a borrower with bad credit finding someone with a good credit history (a co-signer) to vouch for them. Ideally, this would be a family member of a close friend. The co-signer agrees to take on responsibility for the loan if you as the borrower defaults.

Co-signed loans often have more favorable terms, such as lower interest rates, because the co-signer's creditworthiness reduces the lender’s risk. However, if the borrower defaults, the co-signer's credit is also affected, i.e., the late payments or missed will show on their credit records.

If you apply for these loans, commit to consistent, on-time payments to avoid damaging not just you and your cosigner’s credit, but also your personal relationship.

Bad credit personal loans

Some lenders specialize in giving personal loans to persons whose credit score falls below the “good” category, like a 600. Not surprisingly, these loans often come with higher interest rates and stricter terms. Still, they could be a viable option if you’re struggling to get approved by traditional banks.

Family or friend loans

Borrowing cash from family or friends is also an option for people with a 600 credit score. The main advantage of these loans is that they come with little to no interest and flexible repayment terms. However, to avoid misunderstandings or strained relationships, treat the arrangement professionally. If possible, draft a written agreement outlining the repayment terms, and make it a priority to repay on time.

How to successfully apply for a loan with a 600 credit score

Applying for a loan with a 600 credit score takes strategy and preparation to improve your approval chances and secure the best possible terms. Here’s how to set yourself up for success.

Research and compare lenders

Not all lenders evaluate a 600 credit score the same way. For example, while traditional banks may offer higher interest rates or stricter terms, many online loan lenders may be more flexible and offer competitive rates even with such a score. Take the time to research and compare different lenders to understand their requirements and lending practices. This will give you a better idea of where you might have the best chance for approval and favorable terms.

Prequalify for loan offers

Before submitting a formal application, consider prequalifying with multiple lenders. Prequalification gives you an estimate of the loan amount, rates, and terms you might receive — without affecting your credit score. It’s a great way to explore your options and narrow down your choices without committing to a full application. Keep in mind, though, that prequalification doesn’t guarantee approval

Avoid applying to multiple lenders simultaneously

A common mistake among people with fair to poor credit is submitting too many applications in a short period to multiple lenders. You might think you’re increasing your chances of getting a loan, you could actually be doing the opposite.

Many applications in a short time window can lead to multiple hard inquiries, which may temporarily lower your credit score. So instead of taking this route, focus on pre-qualified offers to identify the best match before formally applying.

Secure a co-signer if possible

A co-signer with good credit can greatly improve your chances of approval and help you qualify for better terms, such as a lower interest rate. The co-signer’s credit provides additional assurance to the lender, reducing their risk.

Gather necessary financial documents beforehand

Most lenders require documentation to assess your financial stability and ability to repay. Commonly required documents include:

• Proof of income: This includes copies of recent pay stubs, tax returns, or bank statements that show your income level and financial stability.
• Proof of identity: Usually valid driver's license or government-issued ID.
• Employment history: Details about your current and past employment.

By organizing these documents beforehand, you’ll be ready to respond quickly to lender requests, speeding up the approval process.

Tips for improving your credit score

A higher credit score opens the door to more loan options and better terms. If you're debating whether to improve your credit score before applying for a loan, it often makes financial sense to do so. For example, raising your score from 600 to 650 could help you qualify for lower interest rates or better loan conditions, as lenders typically group borrowers into credit bands. Even small improvements can make a big difference.

If you’re ready to work on improving your score, here are some proven strategies to help you get started:

Make all payments on time

According to myFICO, your payment history makes up to 35% of your credit score. To make sure you never miss a payment, set up reminders or enroll in automatic payments. Do that not just for loans and credit cards but also for utilities, rent, and any other recurring payments that may be reported to the credit bureaus.

Diversify your credit mix

Your credit mix is another element that credit scoring models use to compute your score. If your credit history only includes one type of credit, like installment loans, adding other types, such as revolving credit can positively impact your score. Needless to say, be sure only to take on credit or debt you can manage effectively.

Check your credit report for errors

Mistakes or inaccuracies on your credit report — like incorrect accounts, missed payments that were paid on time, or accounts that don’t belong to you — can drag your score down unfairly. Regularly review your credit reports and dispute any inaccuracies you find. Fixing errors on your report can provide a quick boost to your credit score.

Pay down existing debt

Reducing your outstanding debt is another quick way to improve your credit score. Focus on paying off high-interest accounts first, like credit cards. Reducing balances improves your credit utilization ratio (the percentage of available credit you're using), which is another big factor in your credit score. Ideally, aim to keep your credit utilization under 30%.

Wrapping up: Take charge of your financial future with RISE Credit

Getting a loan with a 600 credit score may present challenges, but it’s far from impossible. As seen, you have a lot of options including secured loans, co-signed loans, and even bad credit loans. Additionally, there are steps you can take to improve your chances of successfully applying for a loan. That includes researching and comparing multiple lenders, prequalifying for offers, and securing a co-signer.

Beyond these immediate solutions, remember that improving your credit score over time will give you access to better loan options and terms down the road.

RISE Credit offers personal loans with a quick and straightforward application process, making it easier to access the funds you need. Apply today and take the first step toward financial confidence and a brighter future.