How To Improve a 400 Credit Score While Managing Your Debt

A 400 credit score is considered very poor. But it’s not the end of the road. Your score usually reflects tough financial times, not character flaws. While this score makes qualifying for credit harder, you can rebuild. Pay bills on time, lower your balances, and check for credit report errors. These steps improve your score over time. If debt has become unmanageable, exploring options like Chapter 7 bankruptcy could give you the fresh start you need.

Is 400 a Bad Credit Score?

Credit scores range from 300 to 850. Yes, 400 is low. But it’s a starting point. And you’re not alone.

About 16% of people have a score between 300 and 579, according to Experian.

The two most common credit scoring systems are FICO and VantageScore. Both consider a 400 credit score “very poor.”

Having a 400 credit score doesn’t mean you’re irresponsible. Your score isn’t a reflection of your character. It usually means you’ve been through something hard. Many people reach this point after losing a job or getting hit with medical bills. Others struggle with high-interest credit card debt.

What Causes a 400 Credit Score?

A credit score of 400 usually means you’ve had serious financial challenges.

Many people with scores in this range have experienced job loss or medical emergencies. Other life setbacks made it hard to keep up with bills. According to Experian, people in this credit range often carry high debt levels. They also have a history of late or missed payments. The good news? Credit scores aren’t permanent. Even if you’ve made mistakes or gone through bankruptcy, those marks won’t stay forever. You can start rebuilding.

FICO uses five main factors to calculate your credit score:

• Payment history (35%)
• Amounts owed/credit utilization ratio (30%)
• Length of credit history (15%)
• New credit accounts (10%)
• Credit mix accounts (10%)

The main two factors can impact your credit and leave you with a score in the 400s.

How Your Payment History Can Hurt Your Credit Score

Your payment history is the single most important factor influencing your credit score. Most people with scores in the 400s have missed payments. Late payments on one or more credit accounts add up.

If a credit card or loan goes into default or gets sent to collections, your score drops even more. Any one of these actions can seriously hurt your credit.

The fix is probably obvious: Start making regular on-time payments. But if you’re struggling financially, this may not be possible. In that case, seriously look at your debt relief options. Many people in this situation find that high interest rates make escape impossible. If that’s your case, it might be time to consider speak with a bankruptcy attorney for free about Chapter 7.

How Using a Lot of Credit Can Hurt Your Credit Score

The second most important factor is your credit utilization ratio.

Your credit utilization ratio is the amount of credit you’re using compared to what you have available.

For example, you have a $1,000 credit limit and owe $500. Your credit utilization ratio is 50%. That’s considered high. Most experts recommend keeping your ratio between 10% and 30%.

Your credit score may be suffering if you have maxed-out credit cards. If you’re just making minimum payments, your amounts owed will be high. Your score drops.

Again, the solution is easy to see but hard to implement when you’re struggling. If you need credit to get by each month, paying down feels impossible. If that’s causing stress, explore your debt relief options.

When someone falls behind on payments or maxes out credit cards, scores drop quickly. Accounts in collections, charge-offs, repossessions, or recent bankruptcy have major impact.

How a 400 Credit Score Affects You

A credit score of 400 makes it more difficult to get loans. Renting an apartment becomes harder. Buying a car or applying for a job faces obstacles. You might also face higher interest rates for approved loans or credit cards. Sometimes you need a co-signer or must put down a deposit.

Having a low credit score affects things you might not expect. Car insurance costs more, for example.

But having a 400 credit score isn’t a life sentence. It’s just a snapshot of where you’re at right now. With strategy and action, you can start rebuilding your credit.

Can You Get Approved for Credit or Loans With a 400 Score?

It’s tough, but not impossible to get approved for credit with a 400 score.

Most traditional lenders view a 400 score as very risky. You may get denied for personal loans or regular credit cards. If approved, the loan terms won’t be great. Interest rates can be very high. You might need a co-signer or deposit.

Some people turn to secured credit cards or credit-builder loans instead. These products are designed for people with low credit. They can help you rebuild over time. Our partner Kikoff offers credit-building tools designed specifically for people rebuilding their scores.

Can You Rent an Apartment With a 400 Credit Score?

Yes, but it can be more difficult. Many landlords check your credit as part of applications. A score of 400 might raise concerns about missed payments or financial stability. You could face denial or requests for larger security deposits.

Some renters have better luck working with individual landlords. Large property management companies often have stricter credit requirements.

Show proof of steady income and offer references. Write a short letter explaining your situation. Mention if your credit was affected by medical emergency or job loss. Some people also use a co-signer to strengthen applications.

Can You Buy a Car With a 400 Credit Score?

Yes, you can, but it comes at a high cost. Some auto lenders and dealerships specialize in working with low-credit buyers. They often charge very high interest rates. Sometimes rates are double or triple what someone with good credit would pay.

A low score limits your loan options. You may need to make a larger down payment.

Some people wait to buy a car until their credit improves. Others look for ways to buy with cash. Credit unions or in-house financing programs may be more flexible.

Avoid loans with terms that stretch your budget thinner. Don’t make rebuilding financially harder.

Can You Buy a Home With a 400 Credit Score?

With a credit score of 400, you won’t be approved for a mortgage right now. Most lenders require higher credit scores to offer home loans. A 400 score falls below minimum cutoffs. Even flexible programs like FHA loans require higher scores.

Homeownership isn’t off the table forever. Many people improve their credit over time. Pay bills on time, lower your debt, and build positive payment history. These small steps add up. You’ll be in a better position to qualify for a mortgage down the line. If owning a home is your goal, rebuilding your credit is where to start.

Can You Get a Job With a 400 Credit Score?

In most cases, yes! Many employers don’t check your credit. But it depends on the job. Employers in industries like finance, government, or security are more likely to run credit checks.

A low credit score might raise concerns in certain roles. Jobs involving handling money or sensitive information may face scrutiny.

A credit check isn’t the same as a credit score. Employers don’t always focus on the number alone. They may look for patterns like unpaid debts or recent bankruptcies.

If your credit comes up, explain your situation honestly. Focus on what you’re doing to move forward. Many people with low scores still find steady work. Being up front and showing progress helps.

Does a 400 Credit Score Affect Your Insurance Rates?

In many states, having a low credit score affects your insurance rates.

Some car and home insurance companies use credit-based insurance scores. These scores help set your rates. They’re not the same as your regular credit score. But they’re based on similar information.

If your score is low, you might pay more for insurance. Even if you’ve never filed a claim. You can’t always avoid this. Improving your credit over time leads to better rates in the future. In the meantime, shop around and ask about discounts. Find the most affordable coverage available.

How To Get Approved for Credit or Loans With a 400 Credit Score

If you need a car to get to work or want a credit card for emergencies, getting approved with a 400 credit score feels like an uphill battle. But there are still options. Start small, offer extra security, or work with lenders who understand rebuilding after financial hardship.

Here are a few strategies that may help:

• Consider a co-signer
• Shop around and compare lenders
• Offer a bigger down payment or deposit

Consider a Co-Signer

Some people ask a trusted friend or family member with better credit to co-sign a loan. Lenders see this as less risky. They may be more likely to approve your application.

Keep in mind that if you miss payments, it hurts your co-signer’s credit too. Be confident you can handle the payments.

Shop Around and Compare Lenders

Not all lenders have the same approval standards. Some specialize in working with people who have low credit scores. Others work with recent bankruptcy filers.

Try looking into credit unions, online lenders, or auto dealerships offering in-house financing. Check the interest rate and total cost before accepting any offer.

Some lenders target people with low credit. They offer loans with extremely high interest rates and extra fees. Take your time to read everything carefully. Fully understand what you’re agreeing to. Avoid any deals that could make your financial situation worse.

Offer a Bigger Down Payment or Deposit

If you’re applying for a car loan or another secured loan, offering more money up front sometimes improves approval chances. It reduces the lender’s risk. It shows you’re committed to the loan.

Even though the terms might not be ideal at first, using these options wisely helps you start rebuilding. Over time, that opens the door to better offers, lower rates, and more financial stability.

How To Fix a 400 Credit Score

If you’re starting from a credit score around 400, rebuilding can feel overwhelming. But it’s absolutely possible. Your credit score won’t jump overnight. With consistent steps and a little patience, it will get better over time.

We’ve already covered two of the most important tips for improving your credit score:

Focus on making on-time payments consistently.

Lower your credit card balances when you can.

Here are some other ways to jump-start your credit-boosting journey:

• Get a secured credit card or credit-builder loan
• Review your credit report and dispute any errors you find
• File bankruptcy to get a fresh start

Start With a Secured Credit Card or Credit-Builder Loan

If your credit score is low, secured credit cards and credit-builder loans are helpful tools. Many people use them to start rebuilding.

A secured credit card requires a deposit. Usually a few hundred dollars becomes your credit limit. It works like a regular credit card. If you make on-time payments and keep your balance low, it improves your credit over time.

If you’ve struggled with using and repaying credit cards in the past, this is a good low-risk way. You can build better financial habits.

A credit-builder loan works a little differently. You make fixed monthly payments. But you don’t get the money right away. Instead, the lender holds it in a savings account until the loan is fully repaid. These payments are reported to the credit bureaus. They can help boost your credit score if you pay on time.

The bonus here is obvious: You build credit while building savings.

Both options are often available through credit unions or local banks. They’re made specifically for people rebuilding after financial setbacks. Our partner Kikoff offers credit-builder accounts and secured cards designed for people improving their scores.

Review Your Credit Reports for Errors

Credit reporting errors are more common than most people realize. One way to get an easy win is to view your credit reports. Report any errors you find.

You can get free credit reports from all three major credit bureaus at AnnualCreditReport.com. The bureaus are Experian, Equifax, and TransUnion. Look for accounts that should show a zero balance, duplicate debts, or anything that doesn’t look right. If you find a mistake, you can file a dispute with the credit bureau. Get it corrected.

To learn more, read our guide on disputing credit report errors.

File Bankruptcy To Get a Fresh Start

Many top credit-building tips have something in common. They assume you have the funds to make at least the minimum payment. But for many people, bad credit results from trying to manage overwhelming debt.

No one misses a credit card payment because they want to. They miss it or are late because the funds simply aren’t there.

High interest rates, low wages, and high cost of living make it feel truly impossible to make ends meet. If you’re drowning in debt and can’t see a way out, it might be time to start fresh. Chapter 7 bankruptcy can give you that fresh start. You can speak with a bankruptcy attorney for free to see if you qualify.

Many people say they wish they’d filed sooner. If you’re worried that your credit score will fall even further, you’re not alone. But bankruptcy isn’t always as damaging as people fear. Especially if your credit score is already low from missed payments, collections, or defaulted loans.

Plus, in many cases, continuing to struggle with unpayable debt does more long-term harm. Once your debts are discharged in Chapter 7, you get a chance to reset. You’re no longer weighed down by old bills. Rebuilding your credit over time becomes easier.

Many people who file for Chapter 7 start seeing credit improvements within 1-2 years. Especially true for those who start rebuilding right away. Pay new bills on time and use secured credit tools.