What Is A Bad Credit Score?
The question of “what is a bad credit score?” is not as simple as it might seem. People who have a score that is on the high end of “bad” according to the FICO scale may be able to get a fair amount of credit, though at a higher interest rate. For example, someone who has a FICO score of 660 is considered to be “below average.” But is that “bad?” If that score is raised by 10 points, it moves into the “good” rating. So how bad is that number really? Click on the “Bad Credit Score” video below:
There are three major credit reporting agencies that companies and creditors use to determine the risk of lending money to an individual. The three are TransUnion, Experian, and Equifax. Each uses the same basic method for determining your credit score, or FICO score. This is a number between 300 and 850 that lenders use to determine not only how much money you can borrow, but the interest rate (APR) you will be charged. The better your credit score, the lower the interest rate and the more money will be available to you to borrow.
The basic rule to apply is a credit rating below 600 will cause the interest rate charged on any money you borrow to be very high, while the amount available to you will be relatively small. The reason is that a FICO score below 600 is viewed as a very risky investment by the lender.
If you have the problem of having a bad credit score, here are a few helpful tips:
1. Visit Credit Sesame now. This is a link that will allow you to view your credit report from each of the three major credit bureaus once per year. It will highlight the areas you need to improve on, as well as provide you with a detailed report of your credit history – the same report many lenders view before making a lending decision.
2. Go to Myfico now where you will be offered a number of services to help keep track of your credit. The most important link is free, which is the one that tells you where you can learn more about your FICO score. It is both helpful and informative.
3. The website www.bankrate.com provides free rate information to consumers on more than 300 financial products, including mortgages, credit cards, new and used automobile loans, money market accounts, certificates of deposit, checking and ATM fees, home equity loans and online banking fees. They have a page that helps you to understand how you can improve your credit score: http://www.bankrate.com/finance/debt/7-simple-ways-improve-credit-score-1.aspx.
There are other resources on the Internet that will help you manage your finances and your credit and help you understand what is a bad credit score. Take advantage of the many free services and sources of information to prevent you from keeping or getting a bad credit score. Your financial future depends on it. Reviewing credit reports helps you catch signs of identity theft early.