A bad credit score 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.
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:
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:
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.
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.
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