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581 Credit score: What You Need to Know in 2025
July 1, 2025
TL;DR
While a 581 credit score presents some challenges, it's best viewed as a starting point for building a stronger financial future. This score falls within the 'Fair' FICO credit range, meaning you're in a prime position to take actionable steps toward significant improvement.
What Does a 581 Credit Score Mean?
A 581 credit score falls into the "poor" range on the FICO scoring model, which spans from 300 to 850. Lenders often see scores below 670 as subprime, meaning a 581 can create significant financial obstacles. You may face difficulty getting approved for new credit cards or loans. If you are approved, you'll likely be offered higher interest rates and less favorable terms, making borrowing more expensive.
While this score presents challenges, it's not a permanent financial sentence. Think of it as a baseline from which you can build. With time and a focus on positive financial habits, you can improve your credit standing. A higher score can eventually unlock better lending options and more financial flexibility down the road.
Who Has a 581 Credit Score?
While age isn't a direct factor in your credit score, there is a clear trend of scores increasing over time. This is largely because older consumers have had more time to build a positive payment record and a longer credit history. Here’s how average FICO scores broke down by generation in 2023, according to data from Experian:
- Generation Z (ages 18-26): 680
- Millennials (ages 27-42): 690
- Generation X (ages 43-58): 709
- Baby Boomers (ages 59-77): 745
- The Silent Generation (ages 78+): 760
Credit Cards With a 581 Credit Score
A credit score of 581 falls into the "poor" credit range, which can make qualifying for a traditional credit card a bit of an uphill battle. Most mainstream lenders view this score as high-risk, meaning you'll likely face rejections for many of the popular unsecured cards that offer rewards and low interest rates. However, this doesn't mean you're completely out of options; it simply means you'll need to focus on products specifically designed for credit-building, such as secured credit cards.
To simplify your search, fintech company Kudos offers free, AI-powered tools that provide personalized recommendations based on your financial goals. Its Dream Wallet feature can even analyze your spending habits and offer insights into how a new card might impact your credit score.
Auto Loans and a 581 Credit Score
A 581 credit score places you in the subprime borrower category, which lenders consider a significant risk. Consequently, you will likely face much higher interest rates than applicants with good credit and may find it more difficult to get approved for a loan.
According to a recent automotive finance analysis, here are the average interest rates for new and used car loans across different credit score brackets:
- 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 581 Credit Score
With a 581 credit score, your options are limited, but not zero. You likely won't qualify for a conventional or jumbo loan, which typically require scores of 620 and 700, respectively. However, you are in range for an FHA loan, which allows scores as low as 580 with a 3.5% down payment. You might also find a lender for a VA or USDA loan, but most prefer higher scores.
A 581 score will directly impact your loan terms. Lenders view this score as higher risk, leading to higher interest rates than those offered to borrowers with better credit. You will also almost certainly have to pay for mortgage insurance, such as the FHA's required mortgage insurance premium (MIP), and may face stricter underwriting.
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 factors.
Your payment history tracks whether you've paid past credit accounts on time.
Credit utilization is the percentage of your available credit that you're currently using.
The length of your credit history considers the age of your oldest account, newest account, and the average age of all your accounts.
Credit mix refers to the variety of credit products you have, such as credit cards, retail accounts, installment loans, and mortgages.
New credit accounts for how many new accounts you've recently opened and the number of hard inquiries on your report.
How to Improve Your 581 Credit Score
Improving your credit score is always possible with consistent and strategic financial habits. Whether you have a FICO® score or VantageScore, there are proven methods to boost your creditworthiness and build a healthier financial profile.
- Monitor your credit reports regularly. You can get free reports from all three major bureaus to check for errors, which can prevent inaccuracies from dragging down your 581 score.
- Set up automatic bill payments. Since payment history is the single most important factor in your credit score, ensuring you never miss a payment is a critical step in rebuilding from a 581 score.
- Lower your credit utilization ratio. Aim to keep your balances below 30% of your credit limit, as this shows lenders you aren't over-reliant on debt and can significantly improve your score.
- Become an authorized user on another person's account. If you have a trusted friend or family member with a strong credit history, their good habits can be added to your report and help lift your score.
As you work on these habits, using a tool like Kudos can help you make smarter decisions with your credit cards to maximize rewards.
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Editorial Disclosure: Opinions expressed here are those of Kudos alone, not those of any bank, credit card issuer, hotel, airline, or other entity. This content has not been reviewed, approved or otherwise endorsed by any of the entities included within the post.
