Introduction

Bad credit scores with FICO is below 670, while a bad “Vantage Score” credit scores are below 661.
Bad credit scores result from negative information on your credit reports, such as delinquencies and bankruptcies.

Bad credit scores will make you less likely to qualify for loans and will increase your interest rates. A credit score reflects your trustworthiness as a borrower, expressed as a three-digit number ranging from 300 to 850. Lenders equate higher scores with lower risk and lower scores with higher risk. Scoring models, such as FICO and Vantage Score, use data from your credit reports to calculate your scores and provide them to lenders when you apply for credit.

The best borrowers have a long history of on-time, consistent payments. Consequently, if you’re starting your credit journey or missed a loan payment or two, you will not be viewed favorably. Your credit score will reflect this, resulting in worse rates and more expensive loans. That said, credit scores have steadily risen over nearly two decades, though as of April 2022, 24.3% of people still have credit scores below 649, according to FICO.

Credit scores are rising, in part, due to the abundance of information available to consumers. You can also employ various services that can help you along the way, keeping tabs on your credit reports. You can find the best credit monitoring services here.
This article is a great place to start your credit journey. See what constitutes a “bad” credit score and what that means for you as a borrower.

What Is a Bad Credit Score?

A bad credit score, also called a sub-prime credit score, is any credit score that falls below the “good” risk category, which varies slightly between FICO and Vantage Score, the two primary scoring models used to calculate credit scores. A low credit score results from harmful information on your credit report, such as a late payment or delinquency on your credit report.

What is a bad FICO credit score?

FICO breaks its risk categories into the following:

Poor: Below 580
Fair: 580-669
Good: 670-739
Very good: 740-799
Excellent: 800 and above

Under FICO, any credit score below 670 is considered a bad credit score or a subprime credit score.

What is a bad Vantage Score credit score?

Vantage Score breaks borrowers into the following risk categories:

Very Poor: Below 499
Poor: 500-600
Fair: 601-660
Good: 661-780
Excellent: 780-850

A bad Vantage Score credit score is under 661, slightly more generous than FICO. Vantage Score isn’t used as often as FICO in lending decisions.

In general, having a credit score below 661 according to the Vantage Score model could indicate potential challenges in accessing credit or loans at favorable terms. Borrowers falling within the “Fair” category may encounter higher interest rates, stricter borrowing requirements, or even outright rejection when applying for credit products. While Vantage Score provides a different perspective on creditworthiness compared to FICO, it’s essential for individuals to monitor and improve their credit scores across both models to enhance their financial opportunities and stability.

What’s the Difference Between Having a Bad Credit Score and No Credit Score?

If you have no credit score, you don’t yet have any credit history with the three major credit bureaus — Equifax, Experian, and TransUnion. On the other hand, if you have a bad credit score, you have a credit history, and one or more factors on your credit file are holding your score back.

A credit delinquency, a loan or credit card payment over 30 days late, will stay on your credit report for seven years before falling off. bankruptcy will remain on your credit report for 10 years before falling off. Until these fall off, delinquencies and bankruptcies will continue to slow any progress you make toward building credit.

That’s why having no credit score is, in many ways, better than having a bad credit score because you’re starting from a clean slate. However, getting approved for credit can still be challenging when you have no credit score since lenders won’t have any credit history on which to base an approval decision.

When starting with no credit score, it’s crucial to establish a positive credit history by using credit responsibly. This can be achieved by applying for a secured credit card or becoming an authorized user on someone else’s credit card. Making timely payments and keeping credit card balances low are key to gradually building a strong credit profile. Over time, as you demonstrate responsible credit behavior, lenders will be more willing to extend credit to you. While it may take some patience and effort, the journey of transitioning from no credit score to a good credit score is definitely achievable with the right financial habits in place.

About Virtual Prospects Marketing

Virtual Prospects Marketing is the leading subprime dealer retention expert, generating quality leads that are 100 percent TCPA, FCC and CRTC compliant. The company’s mission is to deliver credible and cost-effective subprime application and dealer services including lead generation, verification services, stealth voice drop, lead CRM services, data mining, and much more.

Learn more about Virtual Prospects Marketing at https://www.v-pmarketing.com