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Credit Scores and Reports

What is a bad credit score?

In general, a bad FICO score or VantageScore is anything below 580 and 500, respectively, but prospective lenders ultimately decide on the quality of your credit


Although the three credit bureaus technically determine your score, each lender has its own guidelines according to the level of risk it’s willing to take.

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Many people wonder what a bad credit score is – and the answer is complicated.

According to FICO, a credit score below 580 is considered “poor,” and a score that ranges from 580 to 669 is “fair.” And according to VantageScore, anything below 500 is considered “poor,” while a score that ranges from 601 to 660 is “fair.”

But there’s more to it than that – depending on what you’re trying to obtain credit for, a “bad” credit score might be lower (or higher) than you think.

Keep reading to get the experts’ take on what constitutes a bad credit score – and see how yours stacks up.

Who determines what a bad credit score is?

The three major credit bureaus – Experian, Equifax and TransUnion – calculate your credit score with all of the data they have about you.

“But any lender or financial institution that is responsible for extending credit will ultimately determine what a good or bad credit score is,” said James Lambridis, founder and CEO of DebtMD, a fintech platform that connects people with professionals to help them become debt-free.

Most lenders and issuers create their own guidelines on what credit scores they will accept for financial products. However, these are just guidelines, and other factors like income and recent credit history are also taken into account.

For example, according to Todd Christensen, an accredited financial counselor and editor at for MoneyFit, a 615 credit score might indicate too much of a risk for a lender to approve a loan.

A different lender may want to take greater risks (tied to higher interest rates and therefore higher rewards), so it might approve a loan for someone with a 575 credit score.

So, in the eyes of the first lender, 615 is a bad credit score, but for the second lender, a bad credit score is below 575.

The effects of a bad credit score

A bad credit score can result in higher interest rates on your mortgage, car loan and credit cards. It can also affect you in other areas, such as renting an apartment or purchasing a cellphone plan.

“While your credit score may seem to be just a number, not maintaining it can cost you hundreds, if not thousands of dollars in the long run,” Lambridis said.

And a bad credit score can even affect the amount of any security deposits you might owe when renting an apartment or connecting utilities.

Additionally, car and truck insurance – as well as homeowners and private life insurance monthly premiums – typically go up if you have a lower credit score, Christensen said.

“And more and more banks and credit unions are using your credit scores in their decisions to approve your application for a new checking account,” he added.

Although your score is not used during any sort of hiring or job interview process, Christensen said, your credit report can be used, and a lower credit score indicates there is negative activity on your report.

What hurts your credit score?

Your FICO credit score is broken down into categories: payment history, credit utilization ratio (how much credit you have available compared to how much credit you are currently using), length of credit history, mix of credit types and new credit.

There are many ways to damage your credit score, Christensen said, from missing payments to filing for bankruptcy, maxing out your credit card and carrying large balances.

Having too much debt and high utilization rates will cause your credit score to go down, Lambridis said, but one thing that can really hurt your score is missing a payment.

Late payments can have a severe negative impact on your credit and typically remain on your credit report for seven years.

In addition, applying for too much credit at the same time triggers multiple hard inquiries and can ding your score.

So, if you’re thinking of applying for new credit lines to increase your credit utilization ratio, think hard.

Closing accounts can also hurt your score. It lowers your total available credit, which can increase your credit utilization, resulting in a lower score.

Your creditworthiness isn’t just your score

“I think often we confuse creditworthiness and credit scores,” said Dino Selita, president and co-founder of The Debt Relief Company.

For example, Selita said, if your debt-to-income ratio is too high, your exceptional credit score may not mean much to your lender and you still might not get great terms on a mortgage.

“In my 0pinion, someone who has an extremely low debt-to-income ratio and great loan-to-value ratio (the ratio between the loan amount and the value of the asset securing the loan) is sometimes more creditworthy than a consumer with a great credit score and not as great ratios,” he said.

How to improve a bad credit score

Now that you know what is a bad credit score is ultimately determined by the lender, it’s important to get your score as high as possible before you start applying for credit. Here’s how:

  • Because the amount you owe makes up 30% of your credit score, reducing debt can have a positive effect on your credit score.
  • Keep an eye on your credit report so you can protect yourself from identity theft, which can wreak havoc on your score. (You can now request a free copy of your credit report from all three credit bureaus at
  • Shoot for a healthy mix of credit types and avoid applying for credit lines you don’t really need.
  • Above all, make your payments on time, and pay your card balances in full if possible.

Bottom line

No one wants a bad credit score. As you now know, having one can affect your financial health in a number of ways. If your score is low, start now to improve it so you can eventually get better interest rates and loan products. If you do what’s suggested and stick to the plan, these habits will keep your credit score well within the range of good-to-excellent.

Editorial Disclaimer

The editorial content on this page is based solely on the objective assessment of our writers and is not driven by advertising dollars. It has not been provided or commissioned by the credit card issuers. However, we may receive compensation when you click on links to products from our partners.

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