538 Credit Score: Good or Bad? Auto Loan, Credit Cards


538 credit score.

You just did a credit check and found out you have a 538 credit score. But what does that score mean?

Now that you know your credit score, you should be aware of a couple of pieces of information about your credit. The first is that a 538 score is considered poor credit. Poor credit is any credit score between 300 and 629.

When you have a 538 credit score, a few disadvantages come with having poor credit. A few examples include; difficulty receiving a decent loan, getting some jobs, or finding suitable housing.

In Short: Having a 538 credit score will mean higher rates on an auto loan or mortgage, and you will likely need to put more down as a security deposit. Lenders are typically more about skeptical lending money to someone with poor credit.

There are still a ton of different ways to raise your 538 credit score. Given enough time, you could go from 538 to 600, 700, or even 800+ credit.

Below, you’re going to find every possible step to improving your credit. You will also find out if it’s possible to get a personal loan, mortgage, or auto loan with a score of 538.

What Can You Get With a 538 Credit Score?

Here is everything you can expect to get with a 538 credit score:

  • New Car Auto Loan: 8.54% APR
  • 3-Year Personal Loan: 28.28% Interest Rate
  • Mortgage / Home Loan: Unlikely
  • Credit Card: 21.57% Interest Rate

As you can see, with this credit score you can expect to receive an 8.54% APR on a new car auto loan, a 21.57% interest rate on a credit card, and a 28.28% interest rate on a 3-year personal loan.

It is unlikely that you would be able to get a mortgage with 538 credit.

Related: 537 Credit Score

Is It Possible To Get An Auto Loan With a 538 Credit Score?

It is possible to get an auto loan with a 538 credit score. However, be warned that it will most likely result in a higher interest rate. With your credit, you can expect to receive an auto loan with an APR of 8.54%.

Receiving a higher interest rate on your auto loan means you will have higher payments each month. This interest adds up and it results in you paying more money in the long run. When it comes to auto loans you really want to get as low of an interest rate as possible.

Imagine for a second that you just got a 60-month $10,000 car loan. Experian’s Q1 2022 State of the Automotive Finance Market report states that subprime car loans (501-600 credit score) will have an average APR of 10.87% for new cars.

The monthly payments would come out to be about $217. In total, you would pay $3,007 in interest over the length of the loan.

That scenario changes significantly when you change your credit score. If you didn’t have a credit score of 538, but instead your score was 785, you would get an average APR of 2.40% on a new car (according to the Experian report).

If you instead received a $10,000 60-month car loan with a 2.40% APR the monthly payment would be $177. You would pay a total of $622 in interest.

72-Month Auto Loan Example Amortization Schedule With A 538 Credit Score

YearsStarting BalanceMonthly PaymentTotal Principal PaidTotal Interest PaidRemaining Balance
1$24,000.00$427.13$3,199.72$1,925.87$20,800.28
2$20,800.28$427.13$6,683.58$3,567.60$17,316.42
3$17,316.42$427.13$10,476.83$4,899.94$13,523.17
4$13,523.17$427.13$14,606.93$5,895.43$9,393.07
5$9,393.07$427.13$19,103.80$6,524.15$4,896.20
6$4,896.20$427.13$24,000.00$6,753.54$0.00

Can You Get a Personal Loan With a 538 Credit Score?

Anyone with a 538 credit score will have a tough time getting a personal loan. Though it is not completely impossible. Generally, you will need to have a credit score of 610+ to even qualify for a personal loan. With this credit, a 3-year personal loan will typically have around a 28.28% interest rate.

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Many use personal loans to help consolidate other types of debt with higher interest rates. One example of this is credit card debt. Although, it would be illogical to do if you can’t get a personal loan with an interest rate that is lower than your original debt.

It’s always important to weigh the pros and cons of obtaining a personal loan. If you do get a personal loan with a 538 credit score, a 28.28% interest rate is extremely high. Always analyze each loan with caution. Make sure there are more advantages to taking out the loan than disadvantages.

12-Month 538 Credit Score Personal Loan Example Amortization Schedule

MonthsStarting BalanceMonthly PaymentTotal Principal PaidTotal Interest PaidRemaining Balance
1$25,000.00$2,416.06$1,826.92$589.15$23,173.08
2$23,173.08$2,416.06$3,696.89$1,135.24$21,303.11
3$21,303.11$2,416.06$5,610.92$1,637.27$19,389.08
4$19,389.08$2,416.06$7,570.07$2,094.19$17,429.93
5$17,429.93$2,416.06$9,575.38$2,504.94$15,424.62
6$15,424.62$2,416.06$11,627.95$2,868.44$13,372.05
7$13,372.05$2,416.06$13,728.89$3,183.56$11,271.11
8$11,271.11$2,416.06$15,879.34$3,449.18$9,120.66
9$9,120.66$2,416.06$18,080.47$3,664.11$6,919.53
10$6,919.53$2,416.06$20,333.47$3,827.18$4,666.53
11$4,666.53$2,416.06$22,639.56$3,937.15$2,360.44
12$2,360.44$2,416.06$25,000.00$3,992.77$0.00

36-Month Personal Loan Example Amortization Schedule With A 538 Credit Score

MonthsStarting BalanceMonthly PaymentTotal Principal PaidTotal Interest PaidRemaining Balance
1$25,000.00$1,037.86$448.72$589.15$24,551.28
2$24,551.28$1,037.86$908.00$1,167.72$24,092.00
3$24,092.00$1,037.86$1,378.12$1,735.47$23,621.88
4$23,621.88$1,037.86$1,859.31$2,292.14$23,140.69
5$23,140.69$1,037.86$2,351.84$2,837.47$22,648.16
6$22,648.16$1,037.86$2,855.98$3,371.20$22,144.02
7$22,144.02$1,037.86$3,372.00$3,893.04$21,628.00
8$21,628.00$1,037.86$3,900.18$4,402.72$21,099.82
9$21,099.82$1,037.86$4,440.80$4,899.96$20,559.20
10$20,559.20$1,037.86$4,994.17$5,384.46$20,005.83
11$20,005.83$1,037.86$5,560.58$5,855.91$19,439.42
12$19,439.42$1,037.86$6,140.33$6,314.02$18,859.67
13$18,859.67$1,037.86$6,733.75$6,758.46$18,266.25
14$18,266.25$1,037.86$7,341.15$7,188.92$17,658.85
15$17,658.85$1,037.86$7,962.87$7,605.07$17,037.13
16$17,037.13$1,037.86$8,599.24$8,006.57$16,400.76
17$16,400.76$1,037.86$9,250.60$8,393.06$15,749.40
18$15,749.40$1,037.86$9,917.32$8,764.21$15,082.68
19$15,082.68$1,037.86$10,599.74$9,119.65$14,400.26
20$14,400.26$1,037.86$11,298.25$9,459.00$13,701.75
21$13,701.75$1,037.86$12,013.22$9,781.90$12,986.78
22$12,986.78$1,037.86$12,745.03$10,087.94$12,254.97
23$12,254.97$1,037.86$13,494.10$10,376.74$11,505.90
24$11,505.90$1,037.86$14,260.81$10,647.89$10,739.19
25$10,739.19$1,037.86$15,045.60$10,900.97$9,954.40
26$9,954.40$1,037.86$15,848.88$11,135.55$9,151.12
27$9,151.12$1,037.86$16,671.08$11,351.21$8,328.92
28$8,328.92$1,037.86$17,512.67$11,547.49$7,487.33
29$7,487.33$1,037.86$18,374.09$11,723.93$6,625.91
30$6,625.91$1,037.86$19,255.80$11,880.08$5,744.20
31$5,744.20$1,037.86$20,158.30$12,015.44$4,841.70
32$4,841.70$1,037.86$21,082.06$12,129.54$3,917.94
33$3,917.94$1,037.86$22,027.59$12,221.87$2,972.41
34$2,972.41$1,037.86$22,995.41$12,291.92$2,004.59
35$2,004.59$1,037.86$23,986.03$12,339.16$1,013.97
36$1,013.97$1,037.86$25,000.00$12,363.06$0.00

Is a 538 Credit Score Good Enough For a Mortgage?

You could technically get a mortgage with a 538 credit score. It would have to be an FHA loan with a down payment of 10%.

Even then, it would be worthwhile to wait and increase your credit score from 538 to avoid very high interest rates.

Two of the most well-known mortgage loans are conventional and FHA loans. They both can be used to acquire real estate.

The difference is that conventional loans usually require a higher minimum credit score (620) compared to FHA loans.

If you want to put 3.5% down with an FHA loan, you will need a minimum credit score of 580.

As mentioned earlier, you could get an FHA loan with 10% down since your credit score is over 500.

It would not be possible to get a conventional loan with a 538 credit score. Your best bet would honestly be to get an FHA loan with a 10% down payment.

Types of Credit Cards You Can Get With a 538 Credit Score

With a 538 credit score, you have two primary options when it comes to credit cards; secured and unsecured credit cards. Both have their own benefits and potential downsides.

It should be noted that with this credit score any credit card you get will likely have a 21.57% interest rate.

Secured Credit Cards

Secured credit cards are a good way to build credit for anyone with a poor credit score. There are a couple of benefits but also drawbacks that you should be aware of.

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Getting approved for a secured credit card is a lot easier compared to getting an unsecured credit card. The overall process of getting approved is not as difficult and some secured credit cards even offer rewards like cashback.

A required security deposit, higher interest rates, and fees are a couple of drawbacks of getting a secured credit card.

Note: Your credit limit for a secured credit card is often determined by how much you initially deposit.

Unsecured Credit Cards

An unsecured credit card is a good choice for anyone looking to get a credit card without depositing any money as collateral.

Having the option of no initial security deposit is one benefit to an unsecured credit card. That said, if you do have a 538 credit score, this type of credit card will likely have an annual fee.

It’s best to avoid credit card annual fees unless the value you receive from getting the card is higher than the yearly fee.

What Can Impact Your 538 Credit Score

Here are five of the most common factors that will impact your 538 credit score.

1. Credit History Length

How long have you been using a credit card or making monthly payments on your auto loan? The length of your credit history plays a big part in determining your overall credit score.

Closing a credit card that you opened years ago could actually do more harm than good. As a general rule, try to avoid closing old credit cards whenever possible.

2. Credit Utilization Rate

Your credit utilization rate is another factor that is taken into account when determining your credit score.

You can figure out your total credit utilization rate by taking your credit card balance plus all other revolving lines of credit. Then divide that by the combined credit limit of your credit cards and other revolving lines of credit.

3. Payment History

Your credit history and utilization rate both play a part in determining your credit score. But one of the largest factors that impact your credit score is your payment history.

If you miss a payment your 538 score likely will drop significantly. Your payment history makes up more than a third of your total credit score.

4. New Credit

New credit also affects your credit score. An example of new credit would be getting a new credit card.

Hard credit inquiries, sometimes referred to as hard credit checks, could reduce your credit score by a handful of points.

This decrease in credit is typically only temporary and not something to be overly worried about.

5. Mix of Credit Types

If you’re trying to maximize your credit score and want to increase it from 538, you will need a mix of credit types. An example of this would be; getting a mortgage, opening 2+ credit cards, and an auto loan you could pay on time each month.

Best Ways To Improve a 538 Credit Score

These are the four best ways to improve a 538 credit score.

1. Always Pay on Time

When you set out to improve your credit score from 538, you will want to start by proving to lenders that you’re responsible with your money.

By always paying on time, it signals to lenders that you are a low-risk borrower and are likely financially responsible.

The best and easiest way to do this would be by making on-time credit card payments. This point is even more valid if you are someone with poor credit (a 538 score).

2. Catch Up on Missed Payments

If you have any missed payments that you need to catch up on, get to pay those off as soon as possible. This will prevent your credit score from any further harm.

With a 538 credit score, your goal should be to improve it as much as possible. That means paying off any debts that have accrued.

When you catch up on missed payments you also don’t have to worry about the possibility of debt collectors knocking on your door.

Being sued by credit card companies or debt collection agencies is another downside to not catching up on your late payments.

If you have a 538 credit score, there’s a good chance you have probably missed a payment or two. Catching up on those payments should be your main priority. That way it prevents your debt from ending up in collections.

3. Check Credit Reports For Errors

Checking credit reports for errors is another good tip for improving your 538 credit. If you do find errors, it is actually possible to dispute them.

Disputing these errors may sound like a difficult endeavor. But it is well worth your time.

If you have poor credit, you should always check your credit report for any errors that may be hindering your score.

4. Get a Secured Credit Card

Secured and unsecured credit cards are both similar in the sense that each type can help improve your credit score.

The differences arise when looking at which ones you actually qualify for with a 538 credit score.

With a secured credit card there is the requirement of making a security deposit as collateral.

The card issuer likely will then match the amount of money you deposited, and that will be your credit limit.

When it comes to secured credit cards, the security deposit can be as low as $200 to as much as $5,000.

If you decided to deposit $750 towards a secured credit card, you would typically receive a $750 credit limit.

What To Do Next

So now you know all the factors that influence your credit score. But what now? Now it’s time for you to improve your 538 credit score by following the tips previously listed.

Don’t forget to pay off your credit card. Pay your mortgage and auto loan monthly payments on time.

If you do even just that, you will be well on your way to improving your credit score.

There’s a chance you will run into someone saying it’s possible to “immediately†improve your credit. Be careful with offers like that. There are a lot of scams in the credit repair industry.

Building up your 538 credit score isn’t something that happens overnight. However, given enough time, your credit score can be fixed.

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