Many people have less-than-perfect credit, but just because their credit score is below 460 doesn’t mean that they don’t still want and need credit. Part of rebuilding a credit score is to show that you can handle credit responsibly and you need open credit lines to do that. Though many banks feel that people with scores under 460 are too high of a risk, some lenders will work with you.
Unfortunately, if you're interested in a home of your own, you'll likely need to work on your credit score for a while. The Federal Housing Administration issues mortgages for those with low credit scores, but they'll only go as low as 500 and even that is rare. If your score is less than 580, you'll also need 10 percent down. Even the most lenient financial institutions will only go as low as the 500-600 range. If you can find someone to co-sign on your mortgage, you might be able to get into a home until you can improve your credit to refinance in your own name.
Most cities require you to own a car to be able to get around and there are some companies that are willing to finance a car for you if your score is below 460. Lending Tree and Auto Credit Express are two lenders who accept those with credit scores as low as 460. However, you'll likely pay much higher interest rates and many lenders won't let you know exactly what rate they'll give until you apply.
Many credit card companies are willing to accept you as a customer even if you have a credit score below 460. But most of these cards have high fees, including but not limited to annual fees, monthly membership fees and a one-time joining fee. These cards also have high interest rates; however, they are a way of establishing good credit history. Secured credit cards may be another great option if your credit score needs some work. Both Citi and Capital One have secured lines of credit that will require a deposit but offer interest rates in the 23 to 25 percent range. The beauty of secured credit cards is that after a year of timely payments the bank may unsecure your card and give you a higher limit.
There are some companies that allow you to buy merchandise on credit from them with scores below 460. One such company is Fingerhut; they have a catalog full of items from computers to TVs that you can purchase with the credit they extend you.
If you can't get credit, consider other options. Many smaller banks and credit unions have a second-chance option for those trying to rebuild their credit. You'll pay higher fees but over time, you may find this helps you rebuild your credit.
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