When it comes to credit, most people already have an idea as to where they stand. Regardless of the knowledge, they have behind, people are able to judge quickly based on their lifestyle what type of credit score they have. They know if it’s good, great, or even bad. These standings can be subjective from the company that you get your credit score from. Since there are many different scoring models out there, I have a widespread between your credit score between the three major credit bureaus. But nonetheless, I’m sure you want to know what a bad credit score is? Well, let’s break it down for you and give you understanding as to what this is.

It goes without saying when you apply for any type of credit whether that be a credit card or even alone, the lender has to make sure that the money they lend to you is in good hands. And to determine this they check your credit score, which is based off your credit report. Two lenders your credit report is a strong indication whether it would work in your favor or against you. Generally speaking, the higher your score the higher the chances are you get alone that you’re asking for, whereas the lower your score is it can be more difficult.

According to the most popular credit scoring models out there after FICO and VantageScore a bad credit score it’s considered anything below 630. Here’s a quick list of what your credit can be considered.

Excellent Credit: 720+

Good Credit: 690 to 719

Fair Credit: 630 to 689

Low Credit: 570 to 629

Bad Credit: 569 and below

Why is your Credit Score Bad?

So you may assume that the two main credit measures decide whether or not your credit score Falls anywhere between excellent to bad credit. That’s a slight misconception, simply because they don’t decide whether or not you’re in that standing. Neither do credit report agencies. To determine whether you have great credit or bad credit it’s highly based on the lender that you’re going to see. The uses a credit score to determine your risk towards them, the higher the risk chances are you may not get what you’re looking for.

So when a lender pulls your credit report to see your credit standing it’s solely up to them to determine what your interest rate will be.

So your credit score is basically a number which can work against you or for you depending on the lender you go to. Which means no matter where you stand, you don’t have an excellent credit score or a poor credit score until your credit report is pulled and a company determines our standing. So for example, if you’re looking to get a credit card with an ideal interest rate and a high credit limit, One Bank may require that you have a credit score of 600 and above. Whereas another bank may require you to have a credit score of 700 to have the same benefits as a bank that requires 600. Do you see the point we’re trying to make?

It goes without saying like we’ve mentioned before the higher your credit score has the better it is for you. So don’t withhold yourself for making a proper plan to increase your credit score over time simply because the lender you go to determine your risk.

What Should You Do if You Have a Bad Credit Score?

Having a good credit score is essential for when you’re looking to make those financial commitments in your life. So you’re getting those Milestones where you need to get a home or a brand new vehicle but you’re stuck in the position with your credit is bad. You have a bad credit score you automatically think that you won’t be approved, or on the brighter side of things, you’ll be approved but have extremely high-interest rates that you may not be able to afford.

So how do you know what to do exactly?

Well it’s nearing those financial Milestones you’ve been waiting for and you don’t want to take the risk and feed the night when you go through the whole process of getting a vehicle or even a mortgage. A great way to avoid all this is getting pre-qualified. Getting yourself pre-qualified for a mortgage, or even on an auto loan can give you great insight. During the pre-qualification stages, you’ll know the amount of the loan you’re entitled to and what interest rates you’d be paying. Which surely beats paying subprime interest rates that can be hard to keep up with.

Your credit score is divided into many factors which are considered before giving a loan. So just because you were approved for pre-qualification doesn’t necessarily mean the lender would go ahead and lend you the money. A credit report changes quite frequently, and these changes in your credit report can I have the lender uninterested in you reject you for the loan.

Getting pre-qualified before any major milestone is a great way for you to make that final informed decision. It allows you to understand what you’re getting yourself into, what type of Interest you’re looking at and what monthly payments will be paying. You’ll be able to budget and see if you’d be able to keep up with these payments without putting yourself in financial strain. It also doesn’t affect your credit score since it’s only a soft credit check.

If you’re having trouble getting approved for credit there are many different things you can do. It isn’t the end of the world if you’re not approved for a loan, you can always improve your credit score over time so you won’t be paying some prime rates and inflated interests on any of your credit accounts.

One thing we recommend is taking a look at your credit report and making sure that everything on there is accurate. And if that’s the case, you can always take it to the next step and get credit repair help. Call us to find out more information on how you can improve your credit score.