August 23, 2024

A bad credit score generally refers to a credit score that is considered below average and may indicate to lenders that you are a higher risk borrower. Credit scores typically range from 300 to 850, with higher scores indicating better creditworthiness. While the exact definition of a “bad” credit score can vary depending on the scoring model used (e.g., FICO, VantageScore), the following general ranges are commonly accepted:

• 300-579: Poor — Scores in this range are typically considered bad or poor credit. Borrowers with scores in this range may have difficulty getting approved for loans or credit cards, and if they are approved, they are likely to face higher interest rates and less favorable terms.
• 580-669: Fair — While not as low as the “poor” range, scores in this range are still below average and may limit your borrowing options. You might still get approved for credit, but likely at higher interest rates.

A bad credit score can result from various factors, including:

1. Late Payments: Consistently making late payments on your bills or loans can significantly lower your credit score.
2. High Credit Utilization: Using a large portion of your available credit can negatively impact your score.
3. Defaulting on Loans: Failing to repay a loan or having a loan go into collections can severely damage your credit score.
4. Bankruptcy: Filing for bankruptcy can have a long-lasting negative effect on your credit score.
5. Short Credit History: Having a limited credit history can also contribute to a lower score, as lenders have less information to assess your creditworthiness.

• If you have a bad credit score, it’s important to take steps to improve it, such as paying bills on time, reducing your credit card balances, and addressing any errors on your credit report. Improving your credit score can help you qualify for better loan terms and interest rates in the future.