What Is a Bad Credit Score, Plus How to Fix Bad Credit
A bad credit score is a credit score lower than 499 which means you have bad credit. FICO and Vantage are two companies that measure and produce credit scores . Credit scores can range between 300-850 depending on the scoring system. Here is a general breakdown of credit score ranges:
- Bad credit score: 300 to 499
- Poor credit score: 500 to 579
- Low credit score: 580 to 619
- Average/OK credit score: 620 to 679
- Good credit score: 680 to 699 (Average American score is 682)
- Excellent/very good credit score: 700 to 850
- The higher the number the better your credit score.
What is bad credit?
Bad credit is a low level in a person’s credit status. This happens when you don’t pay your credit card bills or maintain a high level of money owned on your credit cards. A credit history and credit scores depends on other factors such as timeliness of payments, available credit limit, and the amount owed. So if an individual doesn’t make timely payments or get defaulted on a loan, they may eventually end up with this type of credit. Employers, land lords and other organizations read bad credit as the borrower not being able to manage their money and is a high level credit risk. This makes them more unlikely to lend or offer loans to you.
How to fix a bad credit score?
Bad credit doesn’t last forever but you have to have a plan, stay discipline and us will power to make sure you stick to the plan. The steps below will help you improve your credit score over time.
- Try to pay your bills on time. Late payments have a huge negative impact on your credit score.
- Keep your balances low on credit cards as high outstanding debt can affect a credit score.
- Don’t apply for new credit accounts unless it’s required. Opening accounts to have a better credit mix. It probably won’t improve your credit score.
- Pay off your debts rather than moving it around. Also, don’t close unused cards as a short-term strategy to improve your credit score.
- Apply for no fee credit card or zero percent credit cards to keep credit card fees down.
- Once you start taking these measures, it takes approx. six months of on-time payments to make a difference in your credit score.