A bad credit score indicates that a person is a high credit risk based on the credit score generated from the information in their credit report.

When we talk about credit scores, we are referring to a number used to determine your creditworthiness.

Your credit score is generated by a formula based on the information contained in your credit reports.

The most commonly used credit score used in the lending industry today is the FICO Score which typically has a range of 300 to 850.

Consumers with FICO Credit Scores of 800 or higher are considered to have exceptional credit.
Consumers with FICO Credit Scores that range from 740 to 799 are considered to have very good credit.
Consumers with FICO Credit Scores that range from 670 to 739 are considered to have good credit.
Consumers with FICO Credit Scores that range from 580 to 669 are considered to have fair credit.
Consumers with FICO Credit Scores of 570 or below are considered to have Poor or Bad Credit.

To put things in further perspective, according to a 2019 study done by Experian, the average FICO credit score in the US is 703.

For most lenders, a bad credit score means that the consumer is at a very high risk of defaulting on a loan.

This is why lenders will protect themselves by giving consumers with bad credit scores loans with high-interest rates, high upfront fees, or denying the loan altogether.

A person with a poor credit score will find that their access to credit will be minimal at best.

1. Pay your bills on time
2. Keep your credit card utilization at 30% or less
3. Do not close old accounts
4. Limit inquiries to one every 6 months
5. Carry a good mix of credit

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