What Is a Bad Credit Score?

June 18, 2020 | by Jacob Hamilton

bad credit

A bad credit score is below 670 on your FICO Credit Report. Similarly, a bad VantageScore sits at 660 and lower. A negative credit score is a heavy burden to carry. It can prevent you from getting approved for mortgage loans, eligibility for an apartment, buying a car and even from getting certain jobs.

Many want to improve their credit scores, but are unsure how to repair their bad credit. Understanding your credit report can be confusing. Determining which credit score model to use, which factors are most important and how your payment history plays a role can be overwhelming.

First, know that a negative credit score isn't forever, but you have to start working to improve it today. Let’s start by examining how your credit score is calculated.

How Is a Credit Score Calculated?

The three major credit bureaus, EquifaxⓇ, ExperianⓇ and TransUnionⓇ use your credit report as factor in calculating your FICO Score and VantageScore. Both give ranks based on a range of 300 to 850 and determine if you're a low-risk or high-risk borrower. However, the two scores vary slightly in what they consider bad, fair, good and excellent credit.

FICO Score

The FICO Score is the most used of the two credit models. Developed by the Fair Isaac CorporationⓇ, it’s an industry standard. It uses the 300 to 850 range to group consumers into five categories.

fico ranking score

FICO determines your score by pulling information from your credit report and dividing it into five weighted factors.

Payment History - 35 percent

How consistently bill payments have been made in full and on time.

Amount Owed - 30 percent

The total amount of money owed on your credit accounts, whether open or closed.

Length of Credit History - 15 percent

The length of time that the credit accounts have been open.

New Credit - 10 percent

The amount of newly opened credit accounts and loans.

Credit Mix - 10 percent

The types of credit that make up the credit report (credit cards, student loans, mortgages and medical).

If your credit score is 680 or below, lenders consider you “subprime.” They will reject your applications for loans, leases and lines of credit. If approved, you may have to pay a higher interest rate, which means spending more on monthly payments.


The VantageScore is an alternative to the FICO Score. It pulls credit report information from TransUnionⓇ and ExperianⓇ.

ranking score

As you can see below, the VantageScore analyzes your credit report to determine your score using a slightly different scale than FICO.

Payment History - 40 percent

How consistently bill payments have been made in full and on time.

Age of Credit - 21 percent

The length of time that the line of credit has been in use.

Credit Utilization - 20 percent

How much credit is being utilized, or how much credit debt has occurred.

Balances - 11 percent

The amount owed on credit balances and if payments are delinquent.

Recent Credit - 5 percent

How many and how frequently new lines of credit are opened.

Available Credit - 3 percent

How much credit is available on open balances, compared to used.

What Causes a Bad Credit Score?

New or old, there are a lot of factors that can cause you to have a bad credit score. Here are a few that can push you into bad credit territory:

Late Payments

Payments are not made on time or within the given grace period.

Partial Payments

Payments are made below the required monthly balance.

Skipping Payments

Loan payments are missed and credit card bills aren’t paid during the billing cycle.

Accounts in Collections

Accounts are sent to a collections department or agency, to recoup funds when the borrower fails to make payments.


A lender gives up on pursuing a collection and writes-off the balance as a financial loss. This results in lowering the borrowers credit score.


A borrower’s home is foreclosed when they fail to make mortgage payments. The lender sells the property to collect on the loan.

foreclosures filed

Repossession (Repo)

Property items such as cars, furniture, or electronics are taken back by the initial party that sold them, due to failed payments.

strong>Filing for Bankruptcy

A debtor files for bankruptcy when they need financial relief from making payments on certain loans and credit accounts.

Closing Credit Card Accounts

When a credit card is paid off and closed, the credit history is lost and affects the overall credit history on a credit report.

If you experience any of the following circumstances, you should check your credit report. Understand how negative marks affect your score and begin putting together a plan to improve your credit score.

How Does Bad Credit Affect You?

Your payment history is crucial to your credit score. If payments are frequently missed, lenders will flag your credit or loan application. It’s a financial burden that can prevent you from achieving important milestones in life.

For example, if you apply for a car lease or increased line of credit, lenders will examine your credit report and may deny your request. Simply put, having a bad credit score can make you seem “financially irresponsible” to lenders.

having bad credit

Negative credit can affect opportunities and life goals more than you may think. It's connected to buying a home, vehicle, opening business and even employment opportunities.

Here are six ways areas of your life that negative credit can affect.

  1. Leasing/Buying a Vehicle: Trouble getting approved to buy or lease a car.
  2. Getting a Mortgage: Low credit can sometimes prevent you from being able to get approved for a mortgage.
  3. Renting an Apartment: It can be difficult to get an apartment lease.
  4. Getting a Job: Bad credit may impact your ability to get certain jobs, especially in finance and government.
  5. Starting a Business: It can make it difficult to take out a small business loan.
  6. Increasing Your Credit: It can affect being approved for increased credit.

How Does Bad Credit Affect Employment?

Industries such as finance, government and high-end retailers will generally check your credit score, but employers can't discriminate against hiring you for having a low credit score.

How to Repair Your Bad Credit Score

Repairing your bad credit score starts with admitting where you financially stand and then getting help from someone you trust. It may not be where you want to be right now, but it is where you have to start.

They can, however, still see a specific version of your credit report, but must follow the employment regulations of the Fair Credit Reporting Act (FCRA).

Before performing a credit check during an interview, the employer must state in advance that it's a part of the process. You must agree and have the option to receive a copy of the final report. This will allow you an opportunity to contest any errors on the credit report.

So, while they can’t discriminate, it may not appear favorable in their final decision if you have a bad score.

how to start fixing bad credit

It's easy to get advice about fixing your credit from family, friends and hundreds of websites on Google, but be careful because there's not a one-size-fits-all solution.

Everyone's situation is different and what works for some may not work for others. Some people can fix their credit on their own, while others may need a little guidance. Whichever method you're considering, decide on one that you’re comfortable with.

Here are a few options to consider when beginning your credit repair journey.

  1. Regularly review your Annual Credit Report and credit score.
  2. Checking your credit report allows you to see all of the activity in your open accounts. You can see things like changes to the report, processed transactions and dispute errors. Being aware of what’s happening on your credit report is the key to improving your credit score.

  3. Create a money management plan to organize bill payments.
  4. Getting organized with your money will help you make payments on time and have more control over your finances.

  5. Pay bill minimums on time.
  6. Paying a bill's minimum should be your new priority. You may not be able to pay off the entire balance, but meeting the monthly minimum shows creditors that you care about your financial health.

  7. Speak with lenders about applying for payment assistance programs.
  8. Sometimes all you have to do is ask for help! Many lenders will offer financial hardship programs to those that can't make regular payments. For example, debt solutions programs can help minimize monthly payments, which can help raise your credit score.

  9. Ask a family member to be a cosigner on your credit.
  10. Asking someone that you trust to be a cosigner may not be easy, but can be a solution to helping you improve your credit. Essentially, the person you ask will need to have "good" to "excellent" credit. They will vouch to the lenders that you will make payments on time. (However, if the borrower—A.K.A. you—missed any payments or is delinquent, then the cosigner will be responsible.)

  11. Apply for a secured credit card.
  12. Secured credit cards work by allowing you to deposit a set amount of money on the card. These cards are shared with the three credit bureaus and appear on your credit report, helping you build positive credit.

    Sign up for a credit freeze or credit lock.

    A credit freeze is a free service that will only allow the lenders that you approve to perform credit pulls. This is also a good method for preventing identity theft and credit fraud.

    A credit lock is like a credit freeze, but it’s overseen by the three credit bureaus and requires a monthly service fee. The main difference between the two is that credit locks allow you to lock and unlock your credit report at will.

  13. Consider hiring a credit repair service.
  14. Hiring a credit repair service may be an option that you've never considered, but could also be a saving grace. These companies will help you develop a financial plan to improve your credit score. They will negotiate with credit companies and the credit bureaus on your behalf.

    Having bad credit doesn't have to be something that you accept as part of your life. Deciding to improve your bad credit score is a step towards making a positive change and rebuilding your credit to be even better than before.

How Long Does It Take to Fix a Bad Credit Score?

Negative marks from collections, missed payments and Chapter 13 bankruptcy can stay on your credit report for seven years. In more extreme cases, Chapter 7 bankruptcy can remain for up to 10 years. So, there isn't a given time for how long it can take to fix a bad credit score. It all depends on your history and the negative items incurred.

Know Your Options

Checking your credit report and making a financial plan can help you turn around your bad credit. Seeking the help of family or a credit adviser can only increase your odds for success. Try applying a few of these strategies and don't be surprised if you see your credit score begin to rise.

Jacob Hamilton

Jacob Hamilton

GM of CreditRepair.com

With his master's degree from the University of Phoenix, Jacob has been working as the General Manager for CreditRepair.com for 2 years. Jacob is passionate about consumer finances and doing everything he can to make credit repair accessible....

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