What Is a Bad Credit Score? And How to Fix One.



Bad credit can mean you will pay a higher interest rate when borrowing money than if you had a good credit score. It can also affect your eligibility for a loan or line of credit. However, increasing your credit score and getting your personal finance goals back on track is possible. Lenders use your credit score to evaluate you for a loan or line of credit and to determine your interest rate.

What is considered a bad credit score and what can you do to fix it? Here’s what you need to know.

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What is considered bad credit?

A bad credit score is generally considered to be one that’s below 579 on the FICO scoring model or below 600 on the VantageScore model. Bad credit is caused by blemishes in your credit history, such as late bill payments, bankruptcy, charge-offs and more.

The two main credit scoring models are FICO and VantageScore. These scoring organizations evaluate the credit reports provided by the three main credit bureaus (Experian, Equifax and TransUnion). They use different parameters to determine what in the reports signifies a good, bad or fair credit history. Among the factors used are your payment history, amounts owed, length of credit history, new credit and credit mix.

Both FICO and VantageScore range from 300 to 850 on their scores, although what each model considers to be a poor score differs slightly.

FICO score

FICO (an acronym for Fair Isaac Corporation) has been the industry leader in credit scoring systems since the release of its first credit score in 1989. FICO considers any score of 579 and below to signify poor credit, and people whose scores are within this range are considered by lenders to be a credit risk.

The full breakdown of the FICO score range is below.

  • Poor: 300-579
  • Fair: 580-669
  • Good: 670-739
  • Very good: 740-799
  • Exceptional: 800-850


VantageScore is the other main credit scoring system; it was founded in 2006 as a joint effort by the three credit reporting agencies. In contrast to FICO, VantageScore deems poor credit to range in score from 500 and 600. The agency also has a very poor range, of between 300 and 499.

The full breakdown of the VantageScore range is below.

  • Very poor: 300-499
  • Poor: 500-600
  • Fair: 601-660
  • Good: 661-780
  • Excellent: 781-850

How to improve your credit score

When it comes to how to fix poor credit and increase your credit score, it’s wise to tailor your approach to your particular financial situation. Start by checking your credit score, which you can do for free through your bank or credit card company or directly from a credit bureau.

Then, assess the factors that are affecting the score you’ve received, and consider steps to remedy them.

You should, of course, avoid late payments on your bills. Maintaining a low credit utilization ratio — the credit you are using compared to your available credit — is another effective way to improve your score. Many experts recommend keeping your credit utilization rate at a maximum of 30%, but using even less can positively impact your score.

Lowering your credit utilization ratio might be all you need to get your credit back on track. If you are carrying high-interest debt, you night want to seek  a low-interest personal loan or credit card that could help you to consolidate your debt and reduce interest charges.

If you suspect your credit score is lower than it should be, a reputable credit repair company can help you remove errors on your credit report. You might also want to consider contacting a credit counseling agency accredited by the National Foundation for Credit Counseling to help you decide the right steps to take.

Don’t expect instant improvement. Depending on the issues you have, it can take six months or more for the work you’ve put in to be reflected in a higher credit score. Negative items, like a late payment, can stay on your credit report for years.

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What affects your credit score

Your credit score is affected by the following factors:

  • Payment history
  • Credit utilization
  • Length of your credit history
  • Credit mix
  • New credit accounts

Understandably, your ability to pay your debt back on time is the thing lenders strongly care about when considering you for a new credit account. Consequently, payment history comprises 35% of your FICO credit score and VantageScore considers this factor to be “moderately influential.”

Your credit utilization ratio is important because it tells lenders how much you rely on credit for your expenditures. It makes up 30% of your FICO score and is “extremely influential” in determining your VantageScore. Keeping down the proportion of credit you use is a big part of cultivating a good credit score.

Other influential factors are the length of your credit history, credit mix and new credit accounts opened. Lenders like to see people with a mixture of healthy borrowing experiences. People with multiple different credit accounts such as auto loans, secured credit cards and mortgages benefit the most from this credit-mix factor. Having too many new credit accounts can negatively affect your score because models measure the hard inquiries to your credit report, and too many such “pulls” can shave points from your score.

What is a bad credit score FAQs

Where can you check your credit score?

You can check your credit score in a number of ways. Your credit card company may include a free credit score in your monthly statements or offer a way to check it. You can also check it on websites like Credit Karma or myFICO. Any personal credit check counts as a soft inquiry and does not negatively affect your credit score.

What happens if you have a bad credit score?

People with bad credit scores are more limited in what financial products they can access than people with high credit scores. It can affect eligibility for anything from car loans to credit limit offerings. It can also cause lenders to impose higher interest rates. It’s possible to fix bad credit, though. Being conscious about available credit and managing credit accounts mindfully can help increase a credit score.

What is the average credit score?

The average FICO score is 714 and the average VantageScore is 698. These vary by year and are often used as an indicator of the nationwide credit status.

Summary of our guide to understanding a bad credit score

Financial institutions use credit scores to measure your credit risk. A bad credit score is classified as below 579 on the FICO score model and below 600 on the VantageScore model. Your credit score is based on your payment history, credit utilization, credit age, credit mix and new credit accounts. There are many reasons you have a bad credit score. Figuring out why your score is low and taking steps to improve will help raise your score over time and help you reach your financial goals.

Víctor’s research and writing have covered topics such as identity theft prevention, personal finances and parental control apps. He holds a B.A. in Hispanic Studies from the University of Puerto Rico, Río Piedras Campus. He collects board games and vinyl records in his spare time.

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