How Bad is My Bad Credit Score?

We all remember the mixture of fear and anticipation at report card time in school. Were you a straight-A student, or did you live with the parental repercussions of a bad patch of Cs and Ds? Did you squeak through college with a 2.5 GPA?

Credit scores can elicit the same sort of anxiety, as they too are a form of grading of our own personal financial behavior and our bill payment history. But just how bad is a bad credit score, and what does it mean for your credit standing – or your ability to improve your credit?

Breaking Down the Numbers

In general, most major credit agencies and credit bureaus use a point scale model that ranges between 300 and 850. The bigger the number, the better your overall credit status. But like weighted grades in college, your credit score isn’t necessarily a pass-fail system, and many credit rating systems consider anything less than 600 a bad score, though that may seem like an acceptably big number on its own.

Credit scores are generally graded on the following scale:

• Excellent Credit: 750+
• Good Credit: 700-749
• Fair Credit: 650-699
• Poor Credit: 600-649
• Bad Credit: below 600

Different credit score ranges can also occur, depending on the reporting system. FICO scores do follow the 300 to 850 model, the higher number being the best, while the VantageScore 2.0 system used a scale between 501 and 990. Its newer version, VantageScore 3.0, now uses a 300 to 850 range.

On the surface, that may look like a pretty tough standard to reach. And considering that approximately 30 percent of Americans who have credit scores at all find their numbers are under the 601 tipping point, you’re certainly not alone if you discover that you have a less-than-stellar credit score. VantageScore notes that its 2016 average score was just 673.

The good news is that the credit score itself does not necessarily decide whether or not a consumer will be able to access the financial benefits of good credit – that’s up to creditors themselves, and there are many different standards and ranges for acceptable numbers.

Credit bureaus only provide a numerical picture of your credit standing, and it’s up to lenders, banks or businesses to determine what credit score they consider acceptable. Or, more appropriately, an acceptable level of risk: Will a client with a low credit score really be able to pay their bills on time or manage their current financial obligations, based on their credit score track record?

A score hovering around 600 may seem like a disaster, but even some mortgage companies will be willing to work with a minimum score of 580. Credit card lenders are usually more strict, and if you’re looking for a low interest rate or a higher limit, a better credit score will definitely be an advantage.

This is where a comprehensive understanding of your credit score can be a big advantage. By seeing what goes into making up your credit – your payment history, the range of accounts you hold and the amount of credit you’re currently using – you can get a better overview of the realities of your credit score, and start to take those steps toward removing incorrect items or paying down your balances.

There’s professional help available if you want to get assistance with your credit repair. You can also carry on the conversation on our social media platforms. Like and follow us on Facebook and leave us tweet on Twitter.