#bad credit rating
What is a Bad Credit Score?
Advertiser Disclosure January 29, 2015 by Gerri Detweiler
Most people have a gut feeling about their credit it s either great, good or bad. But what is a bad credit score really?
First, it s important to understand that there are many different credit scoring models out there and each may use a different scale or numbers to convey information. For example, all FICO score range between 300 and 850 with 300 being the lowest (or worst) possible score, while 850 is the highest (or best) possible score.
The range for VantageScore credit scores has traditionally been between 501 and 990, with the higher number representing the strongest score. But the newer version, VantageScore 3.0, has a range of 300 to 850.
The companies that develop credit scores FICO and VantageScore, for example do not decide which credit scores are good or bad. Nor do the credit reporting agencies that supply the credit reports that are used to create credit scores. Instead, it s up to individual lenders and insurance companies who use these scores to decide which scores demonstrate an acceptable level of risk.
Why Is Your Credit Score Better Or Worse Than Most? See your free credit score, and find out how you compare to other Americans. No credit card required.
They use them in a variety of ways, too:
- Determine the interest rate they will charge for a loan, or in the case of an insurance company, the discount they may offer on an insurance policy.
- Decide whether to extend credit, how much credit to approve, whether to increase (or lower) a customer s credit limit, or even to close a risky account.
In a way, then, there is no such thing as a bad credit score, since the number itself doesn t mean anything until a lender decides how to use it.
In other words, a credit score is only bad when it keeps you from whatever you are trying to accomplish, whether that is to refinance a loan, borrow at a low interest rate, or get the best deal on your auto insurance.
But in the real world, there are some assumptions that can be made about credit scores that fall into different ranges. When you are reviewing a credit score where the range runs from 300 850, you can generally assume the following:
How does my credit score compare to others?
- Excellent Credit: 750+
- Good Credit: 700-749
- Fair Credit: 650-699
- Poor Credit: 600-649
- Bad Credit: below 600
Find Out Where You Stand
You can check your credit score each month using Credit.com s free Credit Report Card. This completely free tool will break down your credit score into sections and give you a grade for each. You ll see, for example, how your payment history, debt and other factors affect your score, and you ll get recommendations for steps you may want to consider to address problems. In addition, you ll also find credit offers from lenders who may be willing to offer you credit. Checking your own credit reports and scores does not affect your credit score in any way.
These are very general guidelines but they are by no means set in stone! Remember, every lender is different and will decide for itself how it will use credit scores to make decisions. Also, what will be considered bad credit by one lender may be perfectly acceptable to another. For example, with many mortgages, the minimum score required may be a 620, while some credit card issuers offering low-rate cards may reject applicants whose scores are lower than, say 680.
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I just got hit for 5 (so far) ITA fees (foreign transactions) for $15 each totaling $60, taken by the bank for petty eBay purchases as small as $4.55 (300% fee) paid through PayPal, even though my bank s only involvement was to send money to PayPal in a domestic transaction (the actual paying is done by PayPal).
Seems the definition of international transaction isn t the only thing that has been changed – the fee is being charged even if your bank thinks that who they are transferring money to is going to use it for international payments. Clearly a fee gouge job, and the bank keeps quoting policy and regulations but will not furnish WHAT policies and regulations they are referring to.
This ITA fee crookery has become so widespread, that the federal rules on international transactions have been changed effective October 31st – two months ago. My bank (your bank) cannot even process a foreign transaction unless they notify you of the fee and give you time to cancel it.
My credit union (!) Visa card charged me 2% with an ASOS.com purchase made via PayPal. Is this legal if there has been no disclosure of this additional charge at the time of the transaction by either the company or by PayPal?
I am sorry but I am not sure where you are getting that impression. Paid collections remain on consumers credit reports for 7.5 years regardless of whether they are medical collections or not. And I don t know what you mean about won by a consumer in the court of law. I am not following this either: Some of mine were sold before they were ever in default, but lo and behold, they are being treated as if they were in collections when they were never in collections. Did you post elsewhere? I am not familiar with that scenario.
http://www.Credit.com/ Gerri Detweiler
I am sorry I didn t understand your question. (And yes, I read the article and wrote it!
I guess what s confusing me is that you say you had collection accounts that weren t in default but had been paid in full. That s not a typical scenario so without knowing what exactly happened it s hard for me to comment on the credit reporting issues that resulted. Were you an identity theft victim perhaps?
At any rate, the fact that you won the lawsuits wouldn t automatically remove them from your credit reports; the credit reporting agency would have no way of knowing what happened in the courts. Either the furnisher of the information would have to stop reporting it or you would have to dispute it. Sometimes attorneys handling these kinds of cases will make that a stipulation of the agreement, or the judge may order it. But again, without knowing the specifics of your situation it s hard to comment.
I hope that s helpful.
I beIieve A Penny was referring to this article (http://finance.yahoo.com/news/fico-credit-score-better-debtors-183053850.html ) about recent changes to the FICO credit reporting. I venture to guess they believed they were responding to that article, hence their question for you regarding your reading of this article.
http://www.Credit.com/ Gerri Detweiler
Ah thanks. It makes more sense to me now.
A 73% debt to available credit ratio is high and can definitely hurt your scores. In addition, a collection account especially a recent one can drop a credit score significantly. Is it on your credit reports? If so then it is considered negative. We wrote about collection accounts here: The 7 Biggest Questions About Debt Collections Your Credit
I have a question I have three credit cards one secure one retail and one regular credit card but my score always go down never up and I never miss a payment and my cards are kept under 20% why is that and how long does it take for a credit card to benefit my score instead of hurt it
It s hard to know from what you are describing what the problem might be. Have you checked your credit reports? Here’s how to get your free annual credit reports. Credit scores are calculated from information in your credit reports, so it s important that those be accurate.
Paying the collection won t help your credit score in the long run. Can you negotiate to have them not report it if you pay it? That would be ideal. If so, get it in writing.
Don t close the accounts. That will make the ratio worse. It s looking at balances compared to available credit limits. If you can pay down your balances that should help.