Do I Have A Bad Credit Score?

September 10th, 2012 | Author:

[I]n today’s society, we hear so much talk about the importance of good credit scores. But many of us do not understand what creates a “good” credit score and what causes a “bad” credit rating. It is important to first remember that terms such as good and bad are merely ways for lenders to determine with whom they will do business. In most cases, your prospective lender has no idea who you are as a person. If your credit score is below 650, it is technically considered bad and it will be much more difficult for you to get credit.

The lowest possible credit score is 300, while the highest possible credit rating is 850. If your credit score is below 300 to 650, a lender very well may deny your request for credit. Fortunately, many lenders will work with you especially if your score is in the 500s or 600s. Once your rating dips below 500, you have very few lending choices and should consider not borrowing money until you can get your credit score in order.

Some people who always pay their bills on time are surprised that technically they have a bad credit rating. However, timely payments alone are not enough to create a great credit score. If you have high balances on your credit cards or a lot of new accounts, these are “red flags” to potential lenders. On a credit card with a $1,000 limit, you should keep a balance of about $333 or less. Otherwise, your credit rating suffers. Scientific data shows that people who keep their credit card balances close to the available limit are at greater risk of defaulting on their financial obligations.

If you did not pay bills on time or at all, you will have a harder time increasing your credit rating. The good news is that most negative credit only lasts for seven years. As each year passes, your credit score will increase as long as you pay your other obligations on time.

If you do have a bad credit rating, be careful about the companies with which you conduct business. Some make sizable profits from preying on people with credit scores below 650. If an interest rate is unreasonable, then walk away from the loan. Getting a new car is really not worth it if you know you cannot afford the payments and will end up losing your car as well as further damaging your credit rating.

Posted in Credit Score

Newest Answers

Get a Better Credit Score in 2017

January 22nd, 2018 | Author:
h

[I]f you have a goal to improve your credit score for the new year, you need to set up steps to help you achieve this goal. For many, they read all kinds of information about how to get a good credit score, and it can be overwhelming. Sometimes, it can sound so easy but not […]

Continue Reading »

Why You Need to Check All Three Credit Reports

January 19th, 2018 | Author:
h

[T]here are three major credit reporting agencies: Experian, Equifax and TransUnion. All of them provide a credit report which lists your personal information and credit accounts. You can get one report for free each year or purchase extra reports through the agency sites. Many people just get one credit report, but you really should get […]

Continue Reading »

What is the Right Amount for a Credit Limit?

January 18th, 2018 | Author:
h

[A]s you get credit cards, you will notice they give you a credit limit. This is the maximum amount you can spend on the card without paying some of it off first. Credit card companies often increase your credit limit as you prove responsible handling the amount you have. You may wonder if more credit […]

Continue Reading »

Buying a Car with Bad Credit

January 12th, 2018 | Author:
h

[I]f you have bad credit, it can be difficult to qualify for a car loan. However, it’s not impossible. Before you go out and apply for money to purchase a vehicle, there are some things you should know. Check Your Credit Before you fill out any applications for car loans, you need to take a […]

Continue Reading »

What Does No Credit Mean?

January 10th, 2018 | Author:
h

[M]any people hear that they have bad credit, which means they haven’t always been responsible with their credit accounts. However, it is another situation entirely when a person is told they have no credit. You may wonder how that’s possible and what it really means for your future. No Credit Doesn’t Mean Never Any Credit […]

Continue Reading »

What You Need to Know about TransUnion

January 8th, 2018 | Author:
h

[T]ransUnion is one of the three credit bureaus which stores information about consumers and their credit history. It provides this information to creditors and to consumers. TransUnion was founded in 1968, and it now has more than 200 offices through the US and the world. How TransUnion is Different TransUnion is similar to the other […]

Continue Reading »

What You Should Know about Equifax

January 5th, 2018 | Author:
h

[E]quifax is one of the three major credit reporting agencies which provides information used on your credit report. It has a credit score which will impact your ability to get approved for new credit. All of these agencies aren’t the same, so here is some information you should know about Equifax. Equifax is headquartered out […]

Continue Reading »