What is Bad Credit?
If a person has a history of not making timely payments on their debts or owes an excessive amount of money, they are said to have bad credit. Low credit scores, usually under 580 on a scale of 300 to 850, are frequently a sign of bad credit. Obtaining a loan or credit card will be more difficult for those with poor credit.
When someone has bad credit, it means they have a history of making late payments on their debts and are likely to continue doing so in the future. Low credit scores are frequently a result of it. Based on their payment history and present financial circumstances, businesses might also have poor credit.
A person (or business) with poor credit will have a difficult time getting a loan, especially at rates that are competitive. This is because they are viewed as riskier borrowers than average. Both loan types—secured and unsecured—as well as both are subject to this, albeit there are solutions for unsecured loans.
Key Takeaways
- A person is considered to have bad credit if they have a history of not paying their bills on time or owe too much money
- Bad credit is often reflected as a low credit score, typically under 580 on a scale of 300 to 850
- People with bad credit will find it harder to get a loan or obtain a credit card
Examples of Bad Credit
FICO scores range from 300 to 850, and historically, debtors are regarded as having negative credit if their scores are 579 or lower. Experian estimates that 62% of borrowers with scores of 579 or below are likely to experience major future loan defaults.
Fair scores are those between 580 and 669. These borrowers pose a far lower risk to lenders than those with poor credit ratings since they are significantly less likely to become seriously late on loans. In contrast to borrowers who are closer to that top 850 level, even borrowers in this range could be subject to higher interest rates or struggle to obtain loans.
It goes without saying that this is the reason we carefully review your credit to find any negative items that are unfairly affecting your credit score.
What's your Credit Costing You?
You could be spending thousands of dollars more on interest over the lifetime of a loan. Our team will give you the tools and knowledge to fix your credit without spending thousands of dollars.