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516 Credit score: What You Need to Know in 2025
July 1, 2025

TL;DR
A 516 credit score is considered "Poor" by FICO, which means there's a significant opportunity for improvement. Think of it as a foundational starting point from which you can begin building a much stronger credit profile.
What Does a 516 Credit Score Mean?
A credit score of 516 is considered "poor" on the FICO scoring model, which ranges from 300 to 850. This score indicates to lenders that you may be a high-risk borrower, which can create significant hurdles in your financial life. You may find it difficult to get approved for new loans or credit cards. If you are approved, you'll likely face unfavorable terms, such as higher interest rates and stricter conditions, making borrowing more costly.
While this score can feel discouraging, it's not a permanent state. It's a reflection of past financial behavior, but it doesn't have to define your future. Think of it as a baseline from which you can build. Over time, it is possible to improve your credit standing and open up better financial opportunities.
Who Has a 516 Credit Score?
Credit scores tend to improve with age as consumers have more time to build a positive payment history. According to 2023 Experian data, the average FICO score increases with each successive generation:
- Generation Z (ages 18-26): 680
- Millennials (ages 27-42): 690
- Generation X (ages 43-58): 709
- Baby Boomers (ages 59-77): 745
- Silent Generation (ages 78+): 760
Credit Cards With a 516 Credit Score
A credit score of 516 falls into the 'poor' range, which can significantly impact your ability to qualify for most traditional credit cards. Lenders view this score as high-risk, meaning you'll likely be limited to options specifically designed for building or rebuilding credit, such as secured credit cards. These cards typically require a security deposit and may come with higher interest rates and lower credit limits than cards offered to those with good credit.
To find the best card for your situation, a service like Kudos can help by using AI-powered tools to analyze your spending habits and financial preferences. This allows you to compare personalized recommendations from a database of nearly 3,000 cards, helping you find a suitable match without the guesswork.
Auto Loans and a 516 Credit Score
With a 516 credit score, you fall into the subprime borrower category, which can make getting approved for an auto loan more challenging. While financing is still possible, you should expect to be offered significantly higher interest rates, according to a 2025 rate analysis, which increases the total cost of borrowing.
- Super-prime (781-850): 5.25% for new cars and 7.13% for used cars
- Prime (661-780): 6.87% for new cars and 9.36% for used cars
- Non-prime (601-660): 9.83% for new cars and 13.92% for used cars
- Subprime (501-600): 13.18% for new cars and 18.86% for used cars
- Deep subprime (300-500): 15.77% for new cars and 21.55% for used cars
Mortgages at a 516 Credit Score
A 516 credit score significantly limits your mortgage options, but it doesn't eliminate them entirely. Your most viable path is likely an FHA-insured loan, which accepts scores as low as 500, provided you can make a down payment of at least 10%. While some government-backed programs like VA or USDA loans have no official minimum, most lenders require higher scores, making approval difficult. Conventional loans are generally not an option.
If you do qualify for a loan, your credit score will lead to less favorable terms. Lenders view a low score as high risk, resulting in higher interest rates and fees. You can also expect a stricter underwriting process, where lenders scrutinize your income, debts, and financial history more closely. They may also cap the amount you can borrow, further restricting your home-buying power.
What's in a Credit Score?
Figuring out what goes into your credit score can feel like trying to solve a complex puzzle, but it generally boils down to a handful of key elements. The most common factors include:
- Your history of making payments on time is the most significant factor.
- How much of your available credit you're currently using, known as your credit utilization ratio, plays a major role.
- The age of your credit accounts, including the average age and the age of your oldest account, is also considered.
- Lenders like to see that you can responsibly manage different types of credit, such as credit cards and loans.
- Opening several new credit accounts in a short period can be seen as a risk and may temporarily lower your score.
How to Improve Your 516 Credit Score
Improving your credit score takes time and consistent effort, but it is always possible to boost your creditworthiness with proven methods. A 516 score can feel limiting, but by taking the right steps, you can begin to build a healthier financial profile.
- Monitor your credit reports. You can get free credit reports from AnnualCreditReport.com to check for inaccuracies that could be unfairly lowering your score. Disputing and removing errors is a critical first step that can provide a significant boost.
- Establish automatic bill payments. Since payment history is the largest factor in your score, setting up automatic payments ensures you never miss a due date. This builds a positive payment history, which is essential for moving past a 516 score.
- Reduce your credit utilization ratio. High balances on credit cards can signal risk to lenders, so focus on paying them down to keep your utilization below 30%. This demonstrates that you can manage debt responsibly and is a powerful way to improve your score.
- Apply for a secured credit card. A secured card is an excellent tool for someone with a 516 score to build or rebuild credit history. By making a small security deposit, you can get a card that reports your on-time payments to the credit bureaus, proving your creditworthiness over time.
As you work to improve your credit, the Kudos browser extension can help you find the right cards and maximize rewards along the way.
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