I blogged in the past about what a good credit score is but I wanted to address what a bad credit score is.
Consumers’ perception of what a bad credit score is will differ. For the most part, I would say a bad credit score is a score too low to get approved for any prime credit. Prime credit means you get the best lending terms available including the lowest interest rate.
There are many different credit scores and some have different score ranges. The most commonly used credit score by lenders is FICO. Keep in mind, FICO has many different versions(models) of scoring software as well as industry-specific scores which have different ranges. The standard FICO range is 300-850. The good news is I have never seen a 300 credit score on any credit report. Even if a consumer has past credit issues, their score should be above the minimum.
Lenders each have their own guidelines on what their minimum credit score (if any) is. Many lenders look at the actual credit report as well as the score. At times, information on the credit report may compensate for a low credit score. For example, an auto lender may take that into consideration if a consumer has a history of perfect auto payments.
The bottom line is it’s best to always maintain the highest credit score at all times. A bad credit score may not always lead to credit denials, but any new credit often comes with an increased interest rate to offset the additional risk.