500 Credit Score: What It Means & How to Boost It

If your credit score is sitting around 500, you’re probably hearing “no” more often than “yes” when you ask for credit. That number tells lenders you’re a high‑risk borrower, which means higher interest rates or outright denial. The good news? A 500 score isn’t set in stone – you can move it up with a few focused actions.

Why a 500 Score Holds You Back

Most banks and building societies in the UK use the 0‑900 range as a quick risk filter. Anything under 600 is seen as risky, and 500 sits deep in the red zone. That’s why personal loan offers disappear, credit cards are either denied or carry sky‑high APRs, and mortgage options shrink to a handful of specialist lenders.

When you apply for credit with a 500 score, lenders expect you to default. To protect themselves, they either raise the interest rate dramatically or reject the application outright. The result is more money spent on interest if you do get a loan, and less flexibility in choosing a product that fits your needs.

Credit utilization – the amount of credit you’re using compared to your limit – also suffers. With a low score, you’re often stuck with low limits, so even modest spending pushes utilization high, which feeds back into the score and keeps it low.

Payment history is the biggest factor in most scoring models. Missed or late payments, even a single one, can drag a 500 score down further. Lenders see that as a pattern, not an isolated slip, and they’ll price you accordingly.

How to Raise a 500 Score

First step: get a copy of your credit report from the major agencies (Experian, Equifax, TransUnion). Look for errors – a wrong address, a duplicate entry, or an outdated missed payment. Dispute any mistake; fixing it can add a few points instantly.

Second, tackle high credit utilization. Pay down balances on credit cards or other revolving credit until you’re using less than 30% of the total limit. If you can’t pay it all off, at least reduce it enough to lower the utilization ratio.

Third, focus on on‑time payments. Set up direct debits or automatic reminders so you never miss a due date. Even if you can only afford the minimum payment, paying on time beats a missed payment every single time.

Fourth, add a mix of credit if you don’t already have it. A small, secured credit card that you use responsibly can show lenders you can handle different credit types. Keep the balance low and pay it off each month.

Fifth, avoid new hard inquiries for a few months. Each application for credit generates a hard pull, which can shave a few points off a 500 score. Let your existing accounts age and improve before you start applying again.

Finally, be patient. Credit scores don’t jump overnight. Consistently good habits over three to six months will start moving the needle, and you’ll see better offers, lower rates, and more options.