You may know that a good credit score can help you qualify for loans and credit cards. But what happens if your credit scores aren’t quite where you want them to be? Show
Read on to learn about bad credit scores and how they might affect you, plus a few tips that may help you improve your score. Bad or Poor Credit Score RangesA credit score represents “a snapshot of a person’s creditworthiness,” the Consumer Financial Protection Bureau (CFPB) says. And that’s why the CFPB says potential lenders might use your credit score to make decisions about things like approving loans and extending credit. Credit-scoring companies use different formulas, or models, to calculate credit scores. There are many different credit scores and scoring models. That means people have more than one score out there. Most range from 300 to 850, according to the CFPB. And the CFPB says some of the most commonly used credit scores come from FICO® and VantageScore®. But how they determine scores and their definitions of what constitutes poor credit differ. It’s important to remember that credit decisions—and what’s considered a bad score—are determined by potential lenders. But here are some more details about how FICO and VantageScore generally view credit scores. Source: MyFICO.com Poor Credit Scores From FICOFICO considers a credit score to be poor if it falls below 580. According to FICO, a person with a FICO score in that range is viewed as a credit risk. Why? Their research shows that about 61% of those with poor credit scores end up delinquent on their loans. This level of risk could make it difficult to get approved for credit cards, mortgages, car loans and more. A poor score can come with other consequences too. For example, you may need to pay a fee or put down a deposit to get a credit card or home utilities. Source: VantageScore.com Poor Credit Scores From VantageScoreLike FICO, VantageScore credit scores range from 300 to 850. But how it judges scores is a little different. For example, VantageScore makes a distinction between poor and very poor credit scores. The company says a credit score is poor if it’s between 500 and 600, while a score from 300 to 499 is called very poor. “In general, people with higher scores can get more credit at better rates,” VantageScore says. So you could have trouble getting approved for higher-limit, low-interest cards if your credit score falls at 600 or below. What Determines Credit Scores?Scoring companies and models may be different, but scores have a few things in common. For starters, according to the CFPB, they’re all calculated based on data from credit reports. According to the CFPB, scoring models might incorporate the following information from your reports:
Keep in mind that past bankruptcies, foreclosures and collections activity may also figure into your credit score. And the CFPB says those things can sometimes affect scores for 10 years or longer. How Bad Credit Can Affect YouEveryone’s situation is different, but you can see how bad credit scores might affect you when you look at some of the places in life where credit can come into play and where higher scores might help:
That’s just a quick look at the importance of credit. If you’re not satisfied with your credit scores, there are steps you can take to improve them. Ways to Help Improve Bad Credit ScoresWith time, credit scores can improve. In general, you can help yourself by committing to responsible credit use and good financial habits. Here are some strategies that might help:
Building Your Credit ResponsiblyYou’re not alone if you have a less-than-perfect credit score. Looking for a chance to adopt new habits that could help your score? You could start by learning more about what it takes to rebuild your credit or get a credit card if you have bad credit. Learn more about Capital One’s response to COVID-19 and resources available to customers. For information about COVID-19, head over to the Centers for Disease Control and Prevention. Government and private relief efforts vary by location and may have changed since this article was published. Consult a financial adviser or the relevant government agencies and private lenders for the most current information. We hope you found this helpful. Our content is not intended to provide legal, investment or financial advice or to indicate that a particular Capital One product or service is available or right for you. For specific advice about your unique circumstances, consider talking with a qualified professional. Your CreditWise score is calculated using the TransUnion® VantageScore® 3.0 model, which is one of many credit scoring models. It may not be the same model your lender uses, but it can be one accurate measure of your credit health. The availability of the CreditWise tool depends on our ability to obtain your credit history from TransUnion. Some monitoring and alerts may not be available to you if the information you enter at enrollment does not match the information in your credit file at (or you do not have a file at) one or more consumer reporting agencies. What is the lowest acceptable credit score?Here are the credit score ranges for each category:. Very poor: 300 to 579.. Fair: 580 to 669.. Good: 670 to 739.. Very good: 740 to 799.. Excellent: 800 to 850.. Is a credit score under 600 bad?A credit score of 600 or below is generally considered to be a bad credit score. And if your credit is low, you may qualify for a loan but the terms and rates may not be favorable. Credit scores between 601 and 669 are considered fair credit scores.
Is a credit score of 550 OK?Your score falls within the range of scores, from 300 to 579, considered Very Poor. A 550 FICO® Score is significantly below the average credit score. Many lenders choose not to do business with borrowers whose scores fall in the Very Poor range, on grounds they have unfavorable credit.
Is 620 a bad credit score?A FICO® Score of 620 places you within a population of consumers whose credit may be seen as Fair. Your 620 FICO® Score is lower than the average U.S. credit score. Statistically speaking, 28% of consumers with credit scores in the Fair range are likely to become seriously delinquent in the future.
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