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What is a Bad Credit Score?

Your credit score is one of the most important numbers of your adult life. It affects everything you do as an adult. If you have a high credit score, then you’ll often pay a lower interest rate. On the other hand, if you have poor credit, then you could be denied loans, pay more for housing deposits, not get a job, and more. That said, many people don’t know precisely what a bad credit score is or even how to start with bad credit repair. To make matters more complicated, there are two types of credit scores. 

Types of Credit Scores

FICO Scoring 

As the most popular method, FICO is the go-to when a lender is making a decision. This could be to get a home, car, or credit card, for example. When you have this number, it will be between 300 and 850. Five categories will affect your number by levels of importance. 

  • Payment history: 35%
  • Amounts owed: 30%
  • Length of credit history: 15%
  • New credit: 10%
  • Credit mix: 10%

Other than how things are scored, there are a few things that make a FICO score different from a vantage score. First, you need to have an account open and in your name for six months. Also, that account needs to have reported your payment history to the credit bureau in the past six months. 

Vantage Scoring

The other type of scoring is vantage scoring. This was only created in 2006 and is used by very few companies to date. The number ranges, again, from 300 to 850. However, it uses six main areas; however, rather than being a percentage of your total score, they are ranked by total influence. 

  • Payment history: extremely influential
  • Age and type of credit: highly influential
  • Percentage of credit limit used: highly influential
  • Total balances and debt: moderately influential
  • Recent credit behavior and inquiries: less influential
  • Available credit: less influential

This means that having accounts open and a history of paying them off is most important with other things relevant by not vital to the success of your score. In addition, tax liens and civil judgments are less important in this scoring version.

How Does Your Credit Score Go Down? 

Now that you understand most of the basics, there’s one more thing to go into before we talk about bad scores. That’s how your score can fall in the first place. The main ways are obvious. If you don’t pay your loans, then the credit bureaus will drop your score. 

In addition, you can drop your score by having too many errors on your credit (which isn’t even your fault!) or getting too many credit inquiries. Finally, the biggest way that you can hurt your credit is by maxing out your cards or taking more loans than you need. 

What is a Bad Credit Score? 

At the end of the day, you’re probably here to learn how to improve your credit score. That starts with knowing what a bad credit score actually is. For either type of credit, “bad” is really a range that will depend on what you are looking for. 

With FICO, you can expect a “bad” credit score to be between 300 and 579. With a score in this range, you may be required to pay extra fees and deposits in addition to potentially not being approved at all. 

Similarly, when you have a low credit score with Vantage, then you will have a number between 300 to 499 and be within 5% of people. In this case, chances are you will be denied for any type of credit. 

However, unlike FICO, there are two levels of poor credit. The next level up will be 21% of people with a number range of 500 – 600. While these people will get approved, there is a high chance that they will have to pay extra fees and larger down payments. 

Improve Your Credit Score with Bad Credit Repair!

The best way to fix your credit is to check your credit often, dispute errors, and work with someone who can teach you to do better. If bad credit repair services sound good, then contact LEAF Credit Solutions today!

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