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What is a Bad Credit Score?

Holly D. Johnson - Contributor Updated: 25 January 2023 5 Min Read
Reviewed By Bestcovery - Editorial Team
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A low credit score can impact your life in numerous ways, but it’s not something that happens on its own. The fact is, bad credit only comes about when someone uses credit irresponsibly in some way, such as making late payments or letting accounts go into default.

If you are worried you have bad credit but you’re unsure where your score falls on the scale, it can help to know how bad credit looks with scoring models like FICO and VantageScore. Read on to learn about credit score ranges with both models, the factors that go into determining credit, and the steps you can take to turn your situation around.

Key Takeaways for Bad Credit Scores:

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What is bad credit? FICO vs. VantageScore

If you’re wondering where your credit score falls on the scale from good to bad, you should first check which scoring model is being used. Two of the most popular credit scoring models are FICO and VantageScore, and each one has a slightly different scale when it comes to defining good, excellent, fair, and poor credit. Let’s take a look at both.

Credit scores From FICO

In terms of credit scores, FICO scores are the most common and popular credit scores out there. FICO scores are used by 90% of top lenders when making credit decisions. Scores from FICO range from a minimum credit score of 300 to 850 maximum based on creditworthiness. It goes without saying, but higher scores are better overall.

When it comes to understanding what counts as poor credit, scores in this range include any number from 579 down to 300.

Here’s a table to help you understand each rage of FICO credit score:

Credit Score Range Scores
Excellent 800-850
Very Good 740-799
Good 670-739
Fair 580-669
Poor 300-579

Credit scores From VantageScore

Just like with FICO scores, credit scores from VantageScore range between 300 and 850, and credit scores on the high end are considered the best. However, VantageScore offers several different models, with the two newest being VantageScore 3.0 and 4.0.

In terms of bad credit, VantageScore breaks down poor credit into two different categories depending on severity:

For example, someone with poor credit will have a VantageScore from 500 to 600, whereas scores below this range are considered very poor.

Credit Score Range Scores
Excellent 781-850
Good 661-780
Fair 601-660
Poor 500-600
Very Poor 300-449


Payment history (35%)

Payment history makes up 35% of credit scores using the FICO scoring model, and this factor mostly encompasses a person’s reliability when it comes to making payments. While on-time payments look good with the credit bureaus in this category, late payments and accounts in default can cause significant damage to scores.


Amounts owed (30%)

The amount someone owes versus the credit limit available on their card is called their credit utilization, and it makes up 30% of a person’s FICO score. Generally speaking, experts suggest keeping your credit utilization below 30% for the best results in this category. This means maintaining a balance of $1,000 or less for every $3,000 in available credit.


Length of credit history (15%)

Length of credit history makes up another 15% of FICO scores, and this factor rewards people for having had a credit card for a longer period of time. This means credit newcomers need to work on building up several years of payment history on their credit reports with credit bureaus like Experian, Equifax, and TransUnion.


Credit mix (10%)

Credit mix refers to the different types of credit accounts a person has, such as personal loans, credit cards, mortgage loans, and more. Your credit mix makes up another 10% of your FICO score. More types of credit look better in this category.


New credit (10%)

New credit also makes up 10% of a person’s credit score, and this category takes into account how many new credit cards or loans a person has taken out. Applying for a new line of credit can cause someone to take a hit in this category — even if they were denied. Fortunately, impacts on your credit score resulting from new credit tend to be short-lived, only lasting a few months.

Unexpected factors that impact your credit score

Many unexpected things can leave you with a bad credit score, such as keeping a high balance on your credit card. For example, you might think you’re using credit the right way as long as you’re keeping up with your monthly payments and staying up-to-date with your account. However, charging a lot to your credit card is the second biggest factor in determining your score — amounts owed — and it can cause you to take a big hit on your credit score.

Another unexpected factor that can hurt your credit score is opening new accounts or applying for new credit cards. While the impact is typically short-lived, you should know every new credit account you apply for results in a “hard inquiry” on your credit reports. Each hard inquiry can cause your credit score to drop by a few points right off the bat, which tends to catch credit newcomers off guard. Keeping your new credit requests to a minimum can help improve a bad credit score.

What can you expect if you have a bad credit score?

If you wind up with a poor credit score with any of the major credit bureaus, you will quickly find that your life becomes more complicated and expensive.

If your credit score dips into the low range, here are some of the consequences you’ll likely face.

Higher insurance rates

Auto insurance companies look at credit scores when they determine rates, and they tend to believe people with poor credit pose a higher level of risk. Ultimately, this means a bad credit score can leave you paying higher insurance premiums than your peers.

Trouble getting an apartment

If you apply for an apartment and you have poor credit, you may not be able to get approved as a tenant. After all, bad credit is a red flag for property owners who will want you to pay your rent on time each month, just like a credit card. Therefore, you may need to have a cosigner to get approved. If you do end up getting approved, it’s possible you may also have to pay a higher security deposit upfront.

Missed job opportunities

Employers can request a modified version of your credit reports for hiring purposes, and it’s possible you may miss out on job opportunities if they don’t like what they see. For example, late payments, charge-offs and accounts in default are not a good look when you’re applying for a new job or hoping to get a promotion with the same company. Unfortunately, many people associate these topics with irresponsibility.

Higher fees and interest rates

Having bad credit also means paying more each time you borrow money. In fact, loans and credit cards for bad credit tend to have much higher interest rates and you’ll pay more loan fees as well.

Average loan rates and APRs by credit score tier

When you look at average loan rates by credit score tier, it’s easy to see why having good credit is important. You’ll pay a lot more in interest over time if you have fair credit or poor credit. Therefore, moving up into a higher credit tier can lead to significant savings.

*How much interest will you pay based on your credit score? –* Based on research carried out by Bankrate, you can see that consumers with excellent credit scores can end up paying up to 60% lower interest rates on their personal loans than those with poor credit.

Here is a table showing average loan interest rates based on credit score range:

Credit score Average Loan Interest Rate
720 - 850 10.73% – 12.50%
690 – 719 13.50% – 15.50%
630 – 689 17.80% – 19.90%
300 – 629 28.50% – 32.00%

What are your credit options with bad credit?

Consumers with poor or very poor credit are typically limited to the following options:


Know your credit score

The first step to improving a bad credit score is taking steps to find out where your credit score falls. Fortunately, quite a few platforms let you see a version of your credit score for free, including Capital One CreditWiseand Chase Credit Journey. If you have a checking account, most banks can access your credit score for free upon request. In the meantime, you should also take steps to look over your credit report from the three major credit bureaus. Fortunately, you can do this for free using the website AnnualCreditReport.com.


Keep up with your bills & pay on time

Since we established that your payment history is the most important factor in your credit score, paying your bills on time can have a significant impact. Consider which steps you need to take to avoid late payments, whether that means writing a note on your calendar or requesting your card issuer to move all your payment due dates to a specific time of the month.


Pay off your debt

Your credit utilization makes up 30% of your FICO score, and carrying high levels of debt can hurt you in this category. On the flip side, paying down debt to get your utilization rate below 30% can do wonders for your credit score. Keep your credit card usage lower than 30% of your total line of credit and you should see a gradual improvement.


Avoid new credit for a while

Since new credit inquiries can ding your credit score, it’s best to avoid them while you’re trying to improve your credit. If you do have to borrow money, consider limiting new inquiries as much as you can or using credit that’s already available.


Keep unused credit card accounts open

Since the length of your credit history also impacts your credit score, you’ll want to keep old accounts open — even if you’re not using them. Once your credit score moves into the good range, you can close old accounts you don’t want open anymore.


Set up automatic payments

Setting up autopay on your credit cards and other loans can help you avoid late payments and future damages to your credit score. If you don’t want to set up autopay for the full amount you owe, you can also just set up automatic payments for at least the minimum payment amount.


Consider credit-building products

Consider credit-building products that can help you boost your score, including secured credit cards and credit builder loans. You can also use an app like Experian Boost to get credit for subscription services and utility bills you pay.

How to maintain a good credit score

Once you have a good credit score, maintaining it requires many of the same steps you took to improve it. For example, you’ll want to keep your debt below 30% of your available credit, and you should make sure all your bills are paid early or on time.

Other steps that can help you maintain good credit include using different types of credit to improve your credit mix and avoiding too many hard inquiries on your credit reports.

At the end of the day, keeping your credit score in the “good” range is a lot easier than repairing bad credit after making mistakes in the past. With that in mind, your best bet is to work on boosting your credit score into the excellent range and then use your credit responsibly so it stays there.

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Holly D. Johnson
Holly D. Johnson Contributor

Holly D. Johnson is an award-winning personal finance writer who covers topics like insurance, investing, credit and family finance. As a leading voice in the travel and loyalty space, Johnson has traveled with her family to more than 50 countries over the last decade. 

The author has also written extensively on the power of household budgeting, and she even co-authored a book on the topic. Zero Down Your Debt: Reclaim Your Income and Build a Life You’ll Love was originally published in 2017, and it teaches families how to use zero-sum budgeting to reach their financial goals. She is also the co-owner and founder of the family finance and travel website, ClubThrifty.com.

Johnson’s 10+ years of writing have focused on helping families make important financial decisions at each stage of their lives. The author also applies the financial principles she teaches to her own life, and she is currently on track to retire in her late 40’s with her partner. She currently lives in Central Indiana with her husband and children, and she is a regular contributor for Bankrate, CNN, Forbes, U.S. News and World Report Travel and many other notable publications.