Posted 12 weeks ago (February 21, 2012 at 10:00 AM) in Common Financial Questions
Many of our customers come to us without a thorough understanding of their financial status and continually we get questions such as, “What is bad credit?” or “Why does my bad credit effect so many areas of my life?” We believe these are things everyone should know, and we’re here to help you make sense of it.
Education is incredibly valuable to us at SFC and with finance being our business, we sometimes find articles we think are well worth showing our customers. We recently saw an article on credit.com with a beautifully thorough yet easy-to-understand breakdown of credit categories that we thought would be valuable to share to help you understand what bad credit is and what it takes to have good credit.
Where do you fit into these categories?
Excellent Credit
- Credit score above 800
- Excellent credit risk
- Long credit history
- Multiple established credit and loan accounts
- No negative public records
- Qualifies you for the best deals
Very Good Credit
- Credit score between 750 and 800
- Very low credit risk
- Credit accounts paid on time each month
- Qualifies you for some of the lowest rates
Good Credit
- Credit score between 700 and 750
- Low credit risk
- May have had late payments in the past
- All accounts are currently paid on time
- Standard amount of credit card debt
- Qualifies you for competitive interest rates and terms
Fair Credit
- Credit score between 650 and 700
- Moderate credit risk
- May have older negative public records
- May have higher credit card debt balances
- May have too many applications for new credit
- Qualifies you for decent rates, but not the best available
Bad Credit
- Credit score between 600 and 650
- High credit risk
- May have high amounts of credit card debt
- May have late payments, collections, or bankruptcy records
- Difficult to be approved for standard credit products
Very Bad Credit
- Credit score below 600
- Very high credit risk
- Late payments, collection accounts, or public records
- Excessive applications for new credit
- Very high amounts of credit card debt
- Very difficult to be approved for new credit without a co-signer or down payment
No Credit
- No credit score
- Considered a high credit risk by lenders
- Have not been using credit cards and loans regularly
- May be trying to open a first credit account
- Better than having very bad credit
- Qualifies you to be approved for accounts tailored to people with no credit or bad credit
As you can see, knowing where you are in the credit spectrum is important to understanding the way your finances are viewed and handled when trying to take out a loan or open a line of credit.
Bad credit, at its most basic, means that you could have made better choices in the past in regard to managing your money, and you need to prove that you can be trusted to pay back your creditors. You need to pay back your debts, make the payments on time, and in some cases wait many years for your past discrepancies to be replaced with many years of good choices and timely payments.
At SFC, we believe that everyone deserves to be treated with respect and understand that anyone can fall on hard times. That’s why we go out of our way to make no judgments, but instead simply offer what help we can in your time of need.
Do you need help building up your credit and raising your score? We can help with that. Do you need a specific personal loan to help you over a financial hurdle? We can help with that too, and you don’t have to have excellent credit to work with us.
We look at a variety of factors that allow us a wider and deeper view of your entire financial situation to help us determine the true risk level – not simply your credit score. This takes more effort than most lending institutions are willing to put forth, but it’s a service we do gladly because we know that sometimes, “What is bad credit?” can become, “I had no idea…what do I do now?”
If you have questions about credit or how SFC’s lending services can help you move toward a higher score range, give any of our lending experts a call. We are here to help! Or, if you know your way forward and are ready to take the next step toward building your credit with us by taking out a loan, we encourage you to apply online today!