Bad credit is considered to be any credit score between 300 and 580. This range is based on the popular FICO scoring model. There are several other credit bureaus that track your score and they may have slight variations on the exact numbers.
Bad credit is a huge issue for many Americans. Having a low credit score can have many financial consequences. You may have a hard time getting cash in a hurry, getting a mortgage or auto loan, or even a credit card in some cases. The only way around it is to turn your bad credit into good credit.
The following credit score breakdown shows how the FICO scoring model works:
If your current credit score is below 670 your financial life may be difficult. Lenders aren’t as willing to lend to borrowers with fair or poor credit because they may have a history of late or missed payments. These borrowers, according to the lenders, aren’t considered to be very “creditworthy.” This is a term used to describe how trustworthy you are with your money.
The good news is that having poor or fair credit is not a life sentence. You can improve your credit over time through better financial planning, budgeting, and good money habits. The top few factors affecting your credit score are your payment history, the overall amount of debt you’re in, and the length of your credit history. This means the best ways to start improving your score are to always make your payments on time, and lower your overall debt.
While this may sound easy, it really all depends on your income and your specific financial situation. If you’re struggling to make ends meet without needing a quick cash loan, consider seeking out a credit counseling organization. There are some free organizations that will work with you to identify areas of improvement and opportunities to improve your credit.